Austerity Measures: Greece Missing the Point

The World

Greek Political LeadersThe Greek elections of the 6th of May did not produce a government, new elections have been scheduled for the 17th of June.  Polls offer mixed feelings, on the positive side the extreme right wing party has seen its percentage dwindle down to 4.5% with further losses likely to take place.  Moreover, ND and SYRIZA have seen a boost of their percentage of voting preference.  Smaller political parties are forming coalitions in an attempt to boost their share.  Political brewing is underway, this is good news.  What is worrying however is the discourse of the political debate and discussions taking place in Greece, which revolve largely around the austerity measures; not solutions to the get the country out of its current state.  


The austerity measures are harsh; however the absolute refusal of their implementation, that some parties seem to offer, and the focus of the discussion around them misses the point for three reasons.  First, the measures have been selectively and wrongly applied by the Greek government, targeting middle and low social classes and the private sector.  For example reduction of pensions from 500 euros to 300 or radical increases of taxes have increased social inequality and offered little to government coffers.  Second, measures included in the austerity package actually make sense.  For example, slashing the massive military budget of Greece which is the equivalent of 5% of GDP and 20% of the government budget.  A full refusal of the package would include measures such as this one. Third, the focus of the debate on the austerity measures is counter-productive, and avoids talking about the elephant in the room.  Even following a massive haircut of Greek loans the country is still sinking in its debt.  Talks of development policy as a popular counter argument to austerity (imported from Mr. Hollande's campaign) have seen no concrete action or policy proposals despite more than 12 billion euros available through EU programmes.  Overall, there is refusal to discuss how to solve the high costs of the public sector borne by the taxpayer, the problems the private sector is facing and how to actually get out of the crisis.

Under this frame of discussion the worst scenario for Greece is not an (unlikely) exit from the euro.  This would only be the result of something much worst: a country that refuses grow-up; to introspect and examine what it did wrong and led it to its current position.  The Greek public and its political parties can spend time and energy blaming others such as the IMF, the Commission, Germany, the austerity package and Angela Merkel for their current problems.  But at the end of the day Greece has put itself in this position by not keeping its house clean; running high deficits, uncompetitive labour costs (more quantity than quality) and negative savings.  Moreover it can and ought to make use of this opportunity to act as a “grown-up” state and accept responsibility for its faults.   

Other countries in similar trouble have acted much more responsibly.  Spain and Italy for example are currently re-fuelling their own debt with high interests in order to maintain not only their sovereignty but also their legitimacy.  Moreover, because Spain is acting responsibly there was little EU rattle about its government plan to extend the time of implementing austerity measures in order to ease social and economic pain. 

Greece could take a lesson from these countries.  The irresponsible debate currently taking place is fuelling extreme positions that range from anti-immigration to turning private companies public to hiring more public servants.  The debate has been taken to the streets: immigrants are beaten around urban corners, citizens are refusing to pay for transport/ or taxes.  Political parties and the public can and ought to start being serious about this. Greeks should do the responsible thing and ask themselves what went wrong and how to fix it.  Perhaps Ms. Merkel (and Mr. Papandreou) was right: a referendum is due, the question however should be “Do we want to grow-up” YES/ NO?

 Picture from: Mediacentre

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