Time for action ? from Greece and the EU

Only coordinated action by Greece and our partners in the EU will be able to break the vicious cycle of recession and inertia that has gripped the Greek economy. One side alone cannot achieve the miracle: our partners must convince themselves that they really do want to save the euro (and help us in the process); we must convince them that we are making an effort to pull our weight. These assurances demand specific measures in order to create trust and change the current picture of equivocation on both sides.

Populist media and politicians have caused immense damage to Greece and Europe from the start of the crisis. In a hail of snide comments, in the absence of a common fund and other mechanisms which could support any eurozone member who found it difficult to borrow, and with their government’s complicity, prominent German news media targeted the ?bad? Greeks as trying to get their hands on the Germans’ hard-earned savings. When EU bailout mechanisms were finally established it was too late for Greece ? but for the eurozone as well ? because the markets had realized that the eurozone was unprepared and vulnerable in the crisis. No number of serious articles, analyses and proposals that were written since then could change the initial images that have determined the issue. The almost daily statements by German (and other northern European) politicians and economists, as well as the populist parameters of the debate in Greece, have reaffirmed stereotypes on both sides and complicated the efforts of politicians who have to keep explaining their actions to their citizens. Policies, in other words, are held hostage by the simplistic perceptions that politicians helped create.

Saving Greece and the common currency is primarily an issue of confidence. In this age of instant information and hasty analysis, we are continually told of our partners’ doubts about rescuing Greece, about the lack of an overall plan to protect the euro, about questions over whether the Greeks are prepared to do all they can to contribute to the titanic effort. The result of this failure of trust in each other is most evident in the way the crisis has spread to several other eurozone countries and now shakes the foundations of the common currency.

So how will we persuade each other as to the seriousness of our intent? How will we ourselves believe that the crisis will end and that we are on the right track for the exit?

For Greece, the top priority is to escape the danger of our country finding itself outside the eurozone. This fear affects everyone’s behavior, from the consumer who does not spend (because he has no money or because he is saving it) to the business which shuts down or stops investing. As long as consumers and businesses are not spending, as long as the government slashes its public investment program in a bid to save money, production will keep dropping and we will be stuck in recession; the result is that wage-earners and pensioners will keep being called on carry the burden of austerity. If confidence were established, we could begin to take steps toward growth.

The latest round of cuts in wages, pensions and subsidies that is being discussed is a confession of the lack of growth and the failure of our tax system to catch evaders. The irony is that even as the majority of Greeks is suffering, the message that we are sending the world is that the Greeks are not keeping to the commitments that stem from the agreement with their creditors. When economic reforms are not implemented, when the public administration remains chaotic, citizens’ sacrifices are in vain ? and, what’s worse, we lose the battle of impressions abroad. As long as this cycle is not broken, citizens’ living standards will drop and our funds will dry up, leading to further economic, political and social problems.

Whatever happens, it is most unlikely that wage-earners and pensioners will be able to keep plugging the holes in our finances. The policy of squeezing them has already resulted in the political system’s fragmentation. In Europe, the fire will not be quenched as long as the proposals of leading countries remain just words, without implementation. It is clear that for Greece, for Spain, for Italy and for other countries much time has been wasted. In Athens last Thursday, European Commission President Jose Manuel Barroso declared that Greece must show with its actions that it wants to be saved. Let Europe do the same with regard to its interest in saving the euro. Only if it takes concrete action will the rescue of all us begin.

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