It was inevitable that the Greek state would run out of money at the end of the month. There was not enough money to pay for public sector salaries and pensions, or to pay back the International Monetary Fund.
Alexis Tsipras, Greece’s leftist prime minister, would have to announce the nation’s internal and external default, while the banks would remain closed. All that, of course, would be a catastrophe.
The government’s pledges before the January 25 national elections proved to be pie in the sky. Some officials were carried away by their own fantasies, most probably because they had never even run the smallest state agency, and they had never made any sort of negotiations with international institutions. They drafted a rather simplistic plan and just hoped it would work out.
However, the Russian or Chinese money never came, the Greek economy went back into recession, the people stopped paying taxes; government officials started to feel the ground slipping from beneath their feet. Four months went to waste, and that came at a cost that will be shouldered by the most vulnerable in Greece’s already beleaguered society.
Tsipras has many daunting challenges ahead of him now. It will not be easy at all to ensure that this package of draconian measures, which is set to receive the institutions’ approval before the end of the week, gets through Parliament without suffering a notable number of defections from his party. He will suffer what the other prime ministers of the memorandum era that went before him have had to experience. However, those who line up ahead of everyone else to criticize him will be the exact same people who stood by his side all these years and cast blame on others.
The prime minister has one real chance to turn the ship around and not sink where others wrecked the vessel during their efforts to reach safety. If he adopts all the measures listed in the Greek government’s proposals and maintains the statist and populist growth model, he will sink without trace. It will be twice as bad for him because he will have to bear the political cost of the measures but at the same time he will see the recession and unemployment leave a damaging effect.
This means that he will have some tough decisions to take when the faint-hearted and extremists jump ship. He can seek out new alliances and a new type of economic policy. Nobody is suggesting that this will be an easy task. But, then again, what will be easy for Tsipras, who was in such a rush to become prime minister?