Dangerous end-games

It is very hard to understand the end game that some people have conjured up in their minds. What is the objective of the adjustment program that has been imposed on Greece?

The reasonable answer would be: reforms, fiscal stability and a return to economic growth. But by pushing the Greek government beyond its limits, none of the three goals will be achieved. If the leftist opposition party was a typical European reformist party, one would naturally expect that reforms would be safeguarded, if not intensified. However, given SYRIZA’s public language, this is clearly not the case. Instead, leftist officials have declared their intention to dismantle most of the reforms, including the privatization currently under way. Fiscal discipline, which was achieved after a great deal of sacrifice, also will be at risk should Greece change government. Finally, those early signs of economic growth will be undone by uncertainty which will grow as the country nears election time. The final blow will be dealt by a new government in uncharted waters. Of course our creditors are pondering their options in terms of getting back the money that they have lent Greece. After all, that money will hardly be secure without growth, fiscal discipline and reforms.

Responses to all that differ. Representatives of the International Monetary Fund and the European Central Bank appear to be sticking to the mantra that “we are following a set procedure, we do not negotiate depending on political developments in your country.” German Finance Ministry officials perhaps deem that an election in Greece is most probably unavoidable and their only solution is to put off negotiations until the dust has settled. At the same time they want to put a straitjacket on Greece that will dictate the moves of the current government’s successor. For their part, European Commission chief Jean-Claude Juncker and Economic Affairs Commissioner Pierre Moscovici are thinking along more European lines. They see the political risk and are doing all they can to save the game.

Sure, Athens has made mistakes but this is not the right time to analyze them. Where we now stand, there is not too much room for maneuver. If the troika pushes for more measures it will accelerate political developments and increase instability without really achieving any of its its aims. This hardly makes any sense – that is unless some people out there believe that Greece should leave the eurozone or go through yet another painful adaptation in order to really change. Risky stuff, no doubt.