Nothing to celebrate
Greece is triumphant, or at least that is what some are trying to convince citizens as they await the disbursement of the next tranche of aid. We share the relief of the moment, though not the vapid rhetoric that comes with it.
Based on the memorandum signed by Greece under caretaker Prime Minister Lucas Papademos and its creditors in March 2012, the country was to receive – on the condition that the terms of the deal were implemented – 31.3 billion euros in July, mainly for the recapitalization of local banks, 5 billion euros in September and 8.3 billion in December. That comes to a total of 44.3 billion euros, which is what the government is hoping for today.
However, because of the country’s political leaders – every one of them, to a greater or lesser extent – the country was led to two general elections. The fiscal adjustment program was derailed, passions flared, and political and social rifts widened. The bad news does not end there.
The government has had to implement an additional 2 billion euros’ worth of cost-cutting measures to meet the 13.5-billion-euro target set out in the new deal. The new agreement includes a number of painful labor reforms that will entail more salary cuts in the private sector. Moreover, the country’s creditors established a monitoring mechanism to determine where the money from the loans goes, meaning that the Greek government – thankfully – has ceded control of the disbursement of the funds.
Last but not least, there are also those who hail the fact that Greece has been granted a two-year extension to meet its fiscal targets, which according to estimates will mean an additional 32.6 billion euros. It will also mean more taxes and further cuts.
The leaders of the European Union do want Greece to remain in the eurozone, but the price of the political system’s foot-dragging will always fall on the people’s shoulders.
The only thing that the country’s once-biggest parties have achieved is elevating SYRIZA to the main opposition and pushing right-wing voters to the Independent Greeks and Golden Dawn. The leaders of the three-party coalition don’t hesitate to launch barbs at the other parties even though they are their own creations, while the flight of voters to the extremes will likely pick up pace once the measures of the new fiscal adjustment program are enforced retroactively.
The situation as it stands right now is not the fault of the troika, nor of Germany’s Finance Minister Wolfgang Schaeuble and Chancellor Angela Merkel. The problem with Greece is its political leaders, who will either finally evolve into rational beings or will suffer a defeat even more crushing than that being suffered by the country’s ailing economic system.