Many respected analysts at home and abroad argue that Greece?s international creditors should have withheld a loan installment last March.
Greece was in much better shape, society had a greater tolerance level and our foreign lenders were not as edgy as they are now. Also, the country was not as close to defaulting and our eurozone partners had not prepared themselves for such an event. The troika briefly considered it, while European Union leaders also raised the issue, but in the end they decided against pulling the plug.
Officials at the International Monetary Fund and at EU headquarters are these days debating whether that was a fatal mistake and who is to blame. Hard as we here in our own little microcosm may find it to believe, people like Poul Thomsen, the IMF?s mission chief to Greece, are being attacked for adopting positions that favor Greece too much.
Let?s think for a moment what would have happened then if the troika had indeed withheld the loan tranche. George Papandreou, who was prime minister at the time, would have been forced to a) ask conservative leader Antonis Samaras to enter a coalition government, b) under the threat of a default on payments, pressure his Socialist party to make painful changes, or c) call for early elections.
It seems most likely that the violent shock of a default on payments would have resulted in a crisis coalition — before or after general elections — that would have specific objectives and one big weapon: the message that the lies are over.
Greece would have then spared itself the Cannes fiasco, the worsening of fiscal balances and the dismantling of the state. Meanwhile, the return-to-the-drachma scenario would not be very appealing to those who were suffering.
None of this happened. The lies keep coming despite the shock at Cannes. The political parties continue to operate much like before, but the cynical opportunists are gradually being exposed. Some talk about a velvet divorce with a generous alimony payment from the eurozone, while others talk about the ?inevitable? return to the drachma.
Amid this mess, the political system turned to Lucas Papademos, a former central banker, to save the country. Politicians urge him to get on, but they are in fact doing all they can to stop him. They would be pleased to see tragedy strike while he was in charge so that they could turn around and say: ?What can we do? We did not get the money, even though Papademos was in power.?
I assume he is too smart to do them any favors.