Wednesday Jul 23, 2014 Search
Weather | Athens
31o C
23o 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)  
Front-line threats
Testing behavior
Unequal after death
Chinese investment
EU praises Greece’s progress in departure from troika criticism
Overhauls in Greek markets, the economy and public administration are delivering results, the European Commission said Wednesday, signaling divisions among official creditors over the countr...
KKE chief slams Israel´s Gaza offensive
Communist Party (KKE) chief Dimitris Koutsoumbas has accused Israel of engaging in “genocide” against Palestinians as Tel Aviv's offensive in Gaza Strip continued. “Despite the problems faci...
Inside News
EU clears National Bank of Greece´s restructuring plan
The European Commission has approved National Bank of Greece's (NBG) restructuring plan, which includes reducing NBG's stake in Turkey's Finansbank . NBG was one of Greece's big four banks t...
Greek economy to grow 0.7 percent this year, IOBE says [Update]
Greece's economy should grow 0.7 percent this year, pulling clear of a six-year recession, but its soaring unemployment rate is likely to drop less than hoped, the country's leading economic...
Inside Business
TRACK & FIELD
Athens, the Marathon capital of the world for good
Paco Borao, the man who restored Athens as the Marathon capital of the world with the establishment at the Olympic Sports Center of the headquarters of the International Association of Marat...
TRACK & FIELD
Pole vault record on same day as three doping cases
Greek track and field had a mixed weekend, as on the same day as Katerina Stefanidi matched the national record in pole vault as well as the leading result in Europe so far this season, thre...
Inside Sports
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. EU clears National Bank of Greece´s restructuring plan
2. EU praises Greece’s progress in departure from troika criticism
3. KKE chief slams Israel´s Gaza offensive
4. Greek economy to grow 0.7 percent this year, IOBE says [Update]
5. Former SDOE chiefs given more time to prepare their defense
6. Greek economy expected to grow 0.7 pct in 2014, IOBE think tank says
more news
Today
This Week
1. Hedge fund Dromeus turns Greek tragedy to triumph with 160 pct gain
2. Front-line threats
3. Testing behavior
4. Parts of Thessaloniki university campus sealed off as police investigate bomb threat
5. Police release new photos of fugitive Roupa
6. Greek economy expected to grow 0.7 pct in 2014, IOBE think tank says
Today
This Week
1. Ex-Credit Suisse banker taps lesson for Greek rebound
2. The cost of excellence
3. Greece seen in third bailout as bonds not enough, economists say
4. Climber dies in Mount Olympus fall
5. Summer storms cause problems in Thessaloniki, spread across the country
6. Greek banks able to tap investors after stress tests, HFSF Says
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2014, H KAΘHMEPINH All Rights Reserved.