More worrying than the tough belt-tightening measures commanded by Greece?s fresh bailout deal with the European Union and the International Monetary Fund — also known as the second memorandum — is the ongoing recession and the absence of any policies to encourage growth and economic recovery.
European governments are trying to combat the eurozone?s debt crisis by prescribing the recipe of internal devaluation in the hope of boosting competitiveness. They do so despite the fact that the signals from the debt-ridden nations under financial supervision have been far from encouraging.
Greece is the worst off among the nations of the euro area. According to many analysts, but also according to an IMF report that was recently leaked to the media, the restructuring of debt and the new loan — which essentially amount to an orderly default within the contours of the eurozone — will not be enough to make Greece?s loan sustainable.
The reason for this is, of course, the contracting economy. The recession can only be tackled with a good dose of political will. The market and society are both frozen and devastated. Liquidity is low and so is morale. That means the two fundamental conditions for an upswing are gone.
This is something that our European partners and lenders — Germany in particular –> must realize if they really want Greece to once again stand on its own two feet, if they really want it to be in a position to fulfill its obligations to its citizens and to its partners.
Otherwise, the EU?s southeastern flank runs the danger of coming apart, of being reduced into a fragmented shell ruled by a poor excuse for democracy, with pauperized masses that have surrendered to poverty and hatred.
Greece?s fate is inextricably linked to that of Europe. Germany has the power to influence this fate for the better. All it has to do is to think in historical terms, in other words to recall its own fate during the course of the 20th century: how it was destroyed by the malignity of its creditors and how it got back on the path of recovery thanks to the generosity of its lenders after the Second World War.
It?s up to Germany to decide whether if the 21st century will see it with a new historical face, or if it will end up a hegemon over ruins.