Thursday October 23, 2014 Search
Weather | Athens
24o C
14o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
OK, no memorandum, but what then?

The most effective way for Greece to maintain its ties to the eurozone within the context of a less aggressive austerity program would be to increase the number of people the troika negotiates with. SYRIZA leader Alexis Tsipras will have to choose whether he will contribute toward containing the crisis or opt instead for a leading role in the final act of the Greek drama.

By Babis Papadimitriou

If the electorate wants a government but without the memorandum, then we’ll probably have to head back to the polls, and the parties might as well give the people a chance to explain what exactly they were looking for when they cast their ballots.

Unfortunately all of this matters very little in light of the acceleration of the economic crisis, because one of the first questions we should be addressing is what we would replace the memorandum’s austerity program with. As international capital steadily flees the European bond market and other investments on the continent, the channeling of fresh funds into the eurozone via the European Central Bank remains the only likely alternative. Yet even though the ECB has supplied eurozone banks with huge amounts of money (some 1 trillion euros), new loans are only being issued in countries that still maintain a decent level of economic activity. States such as Germany and the Netherlands can bankroll their own economies from their primary surplus.

However, Greece cannot, and this could prove a problem for those who made pre-election promises to pull out of the bailout agreement. Representatives of SYRIZA and the Independent Greeks insist that the government’s current revenues are sufficient to cover public sector salaries and pensions if we stop “paying interest to the foreigners.”

They are making three mistakes, however.

The first is that this is absolutely not true given that tax revenues remain insufficient to meet the country’s costs and are certainly not enough to cover salaries and pensions -- even if the state continues to withhold payment from its suppliers. Secondly, they are factoring into the state revenues money sources which are not constant and are set to cease -- funding from the European Union and emergency levies such as the property tax and the solidarity tax.

Furthermore, if the “I won’t pay” mentality prevails on a governmental as well as a societal level, it is certain to be the economy’s undoing.

Finally, correcting the “injustices” and reversing the “cutbacks” stemming from the memorandum will dramatically increase the state’s operating costs, while banks will be irreversibly damaged by skyrocketing delays in debt servicing and hundreds of businesses closing down.

The idea put forward by some leftists groups for a three-year freeze on interest payments on the bailout loans is something that could be put up for negotiation with Greece’s creditors -- the European Central Bank, the European Commission and the International Monetary Fund. Their representatives are unlikely to refuse to discuss a proposal that could help to avert a rift between Greece and the eurozone, and they may even be anticipating a request for the write-down of Greek debt to be extended to the interest due in the next three years and to the payments arising from the first memorandum. Of course it’s pretty certain that they would only discuss these possibilities on the condition that all the other terms of the memorandum would be adhered to.

In conclusion, the most effective way for Greece to maintain its ties to the eurozone within the context of a less aggressive austerity program would be to increase the number of people the troika negotiates with. SYRIZA leader Alexis Tsipras will have to choose whether he will contribute toward containing the crisis or opt instead for a leading role in the final act of the Greek drama.

ekathimerini.com , Monday May 7, 2012 (21:11)  
Careful what you wish for
Taking care of our key industry
The ECB collateral for Greece must be lowered to 5 pct
The past, present and future of the Greek debt crisis
Cyprus seeks EU response over Turkey´s EEZ violation
Cyprus is to raise the issue of Turkey’s violation of its exclusive economic zone (EEZ) at Thursday’s European Council meeting after Turkish Prime Minister Ahmet Davutoglu raised the specter...
Thirteen indicted for inmate torture
Thirteen correctional officers and their former warden will stand trial in Serres, northern Greece, over the death of Albanian inmate Ilie Kareli on March 27 at Nigrita Prison. Kareli was tr...
Inside News
Athens weighs its LNG and CNG options
Energy Minister Yiannis Maniatis met on Wednesday with officials from six leading shipping companies in the liquefied natural gas (LNG) sector, as he is weighing the possibility of Greece as...
Greece ranks among global leaders in tourism growth
Tourism in Greece has done particularly well in 2014, having grown 16.7 percent year-on-year, while the head of the World Tourism Organization stressed on Wednesday the added value this grow...
Inside Business
SOCCER
Roberto´s heroics make Kasami´s goal count
Pajtim Kasami’s goal and Roberto’s heroics in goal saw Olympiakos claim one of the biggest wins in its history on Wednesday downing Italian champion Juventus 1-0 to boost its chances of reac...
SOCCER
Third-division Iroditos punished heavily after fan death
Greek third division team Irodotos has been docked 15 points and ordered to play 10 matches behind closed doors following the death of an Ethnikos Piraeus supporter, the Hellenic Football Fe...
Inside Sports
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. Roberto´s heroics make Kasami´s goal count
2. Athens weighs its LNG and CNG options
3. Greece ranks among global leaders in tourism growth
4. Global oil price drop sends local fuel prices back to 2010 levels
5. Buy big house, become a citizen
6. Cyprus seeks EU response over Turkey´s EEZ violation
more news
Today
This Week
1. At least 11 banks to fail European stress tests, three in Greece, report says
2. Cyprus to block Turkey's EU talks after EEZ violation
3. EU’s Juncker wins Commission-team approval with investment vow
4. Juncker’s EU commission team set for parliamentary green light
5. Taprantzis resigns from privatization agency TAIPED
6. Fallen tree, smashup cause traffic jams in Athens
Today
This Week
1. Istanbul skyscraper casts shadow over Greece's banking ambitions
2. Coalition shooting itself in the foot
3. Greece’s closed society is central to its current malaise
4. Greece must stick to reforms, says Schaeuble
5. The past, present and future of the Greek debt crisis
6. Samaras’s crumbling Greek exit lacks backing from economists
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2014, H KAΘHMEPINH All Rights Reserved.