Greece and The Euro

Over the next few weeks the news will be full of the unfolding Greek tragedy, and if current trends are anything to go by most criticism will be firmly directed either at the Greek people – for borrowing so much money in the first place; or the Syriza government of Alexis Tsipras and his finance minister Yanis Varoufakis – for their reckless handling of the crisis. However the situation is far too complex to paint in such black-and-white terms, and there are so many vested interests at play no-one directly involved can be trusted to give an honest interpretation. One thing is sure though, the Greek government are challenging the very foundations on which the EU, the Euro, and our entire Free Market Capitalist system has been built, and for that they should be applauded.

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Greece’s Prime Minister, Alexis Tsipras, is the first EU leader to challenge the current neo-liberal orthodoxy. Picture © FrangiscoDer

There are undoubtedly many deep structural and cultural problems in the Greek economy: and endemic tax-avoidance, financial profligacy, an unsustainably low pension age, and a bloated public sector all need addressing. However the central part of the current crisis is in fact just a more extreme version of what the UK is currently going through – a corrupt elite controlled and manipulated the financial system for their own gain, and when the system came crashing down, ordinary people were expected to pay the bill through policies of Austerity.  The only difference is that Greece’s government debt is higher than ours (180% of GDP vs 82%) and so the Austerity measures being imposed are that much more severe. So, whereas in this country ordinary people are, so far, taking it on the chin, in Greece they’ve finally had enough. And of course, on top of that, Greece’s membership of the Euro complicates matters even more.

So what is to be done? Well, Greece has two choices. It can either do what its creditors would like – carry on enduring intense pain almost indefinitely (and don’t forget their current economic situation is already worse than America’s was during the Great Depression); or default on its debts, probably leave the Euro (and maybe even the EU), endure even worse pain and  chaos for a year or two before finally getting itself back on some sort of even keel.

But this is where those vested interests come into play. If Greece was a completely independent country it could choose its own path out of this mess (and plenty of other countries have defaulted on their debts or engaged in money printing in response to an economic crisis). However as a member of the EU and the Euro, it is beholden to a whole load of external financial and political interests. And those interests care little for the suffering of the Greek people, only their own financial gain or political ideology. Its creditors want their money back, and will do anything to force the Greek government to pay, even if the Greek people have to live in complete penury for generations. Meanwhile the proponents of the European project are so wedded to the idea of ‘ever closer union’ that they cannot countenance the idea of Greece leaving the Euro. And this is the crux of the matter. Almost everyone is agreed that Greece should never have joined the Euro in the first place (and the Greek government of the time certainly has to bear a heavy responsibility for that).  One way to deal with the problem therefore, would be to plan for some sort of structured exit from the Eurozone. Unfortunately the mandarins in Brussels are so wedded to the concept of the European project that they cannot even consider such a thing, as it would go against everything they stand for. They, unfortunately, would rather see Greece crash out in a mess, for which they can blame the Greek government; than admit maybe they got it wrong in the first place and perhaps the idea of the Euro isn’t so great after all. And that is what will probably happen – the current crisis will escalate, the banking system will collapse, and Greece will descend into a prolonged period of even greater pain – all so that the Eurocrats in Brussels can say ‘wasn’t our fault – it was those damned Greeks who ruined it.’

Time will tell whether Alexis Tsipras and Yanis Varoufakis are clever game-players or well-meaning amateurs, and to what extent they have planned and prepared for the events that are now unfolding. One thing is certain though, the Greek people, for all their faults, are no more to blame for the current crisis, than the British people were to blame for the financial crash we went through in 2008. Corrupt governments, failing democracy, vested corporate interests, blind faith in a broken system, and an out-of-control financial sector have led us all to where we are today.


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