Curse and godsend
One thing has become strikingly clear as Greece’s great economic drama unfolds: The Greeks will have to pull themselves out of the mess on their own. Despite the danger that the eurozone faces as a whole, despite the threat its debt crisis poses to Europe’s political unification and irrespective of the responsibility of predatory investors, the rest of Europe sees Greece’s problem as comeuppance for years of profligacy and political cowardice. European policy is now being shaped by public opinion in each country – and the public is in no mood to see other countries benefit when its own is facing benefit reductions and a shaky future. This is a logical reaction. But it is also undeniable that European governments have been very slow to formulate policy toward the Greek crisis and, at least in some cases, they have been at the forefront of criticizing Greece and, thereby, isolating it. (This may be aimed at taking the focus off their own possible problems, letting off steam or warning other possible fiscal miscreants that they can expect no bailouts.) The result of all this has been to raise the stakes in a very dangerous bluff. Ratings agencies – declaring their skepticism as to Greece’s austerity measures – keep reducing its sovereign credit rating, continually pushing interest rates on bonds to unsustainable highs. On the one hand, they exploit Greece’s desperate need to borrow. On the other, they are anticipating that they will actually receive the interest that they are demanding. The more the European Union vacillates, the higher the cost of Greek debt climbs. So perhaps it is time that the EU, as a whole, made clear that there is a limit to the interest that any member state will have to pay. It could, for example, put a cap on the premium over benchmark German bonds that investors will get, while a country that has found itself needing such drastic intervention would be obliged to pay the extra rate (that investors would have received) into a special EU account that would be used precisely to fund its own bailout or those of others. At the same time, the problem country would have to accept structural changes that would be aimed at making its economy viable. In this way, a member state could be rescued without rewarding its profligacy nor allowing it to become a burden on others. As there are still no such procedures, Greece has to make clear that it will take care of its problem on its own. It must introduce structural changes that will show its detractors that the economy is being placed on a viable footing. This demands radical changes to public administration and the social security system – both of which have to change for the better in terms of their cost and the services they supply, because until now their expenses have ballooned while their services have declined proportionately. Furthermore, aside from tourism, shipping and construction, Greece has to work out what it can offer its partners in the EU in order to attract investments and custom. There is no denying that Greece is expensive. Some of those expenses are justified (houses, for example, are still «handmade,» leading to high labor costs), others are not (as in corruption, red tape and the mismanagement of the 40 percent of wages that go to taxes and social security payments). Laws must be simplified and enforced without exception. Greece cannot become a net exporter, it simply does not have the size to achieve this. That is why it has to specialize in what it can do. For example, high-standard English-language universities could attract students from the whole region, as new high-tech health services could attract patients. Right now our universities and hospitals are exorbitantly expensive failures. If the crisis could force us to get them – and everything else – working at last, it will have turned curse to godsend. The choice is ours.
