After the vote by the Greek parliament (see remaining newsletter) and ahead of the Eurogroup meeting on Wednesday, here are some further commons on the Greek crisis.
Military expenditure. Military expenditure has already been reduced in Greece and will be reduced even further this year. It no longer accounts for double (as a percentage of GDP) of the military expenditure of other member states but remains one of the highest. It does not seem that Greeks object to this, given the history of their country and several invasions. I have been able to read some comments in Greece - “We are one of the EU's borders in a turbulent world. During the Libyan war, Greek military bases were used and Greece has a bigger geopolitical role than one might imagine. Europe has to bear its share of responsibility. Greeks are proud of their army” - and some see the demand for cuts of €400 billion in two years in the negotiations with the troika (EU, IMF and ECB) as one of the main obstacles to reaching agreement this year.
European Commission has its back against the wall. Athens is demanding the building of a barbed wire fence to prevent illegal immigrants crossing over its border from Turkey, which it wants the Commission to part-finance. The Commission says not one euro of European aid will be used for such a wall and if Greece goes ahead with it, it will have to pay for it itself. The European budget has €90 million earmarked to help the country deal with illegal immigrants this year and the building of this 10.3 km wall (which has already begun) will be completed in September. The Greek government says that Greece must not be put under such huge pressure and it is the main route for illegal immigrants into the EU. Several member states have called for it to be built to halt the flow of illegal immigrants, mainly from Afghanistan, Pakistan and North Africa (Turkey is just a transit country), who then travel on to other EU countries.
The Commission says it is prepared to help Greece carry out medium and long-term reforms to manage its borders in a modern manner, but only in the remote future. The cost of €5.5 million is paltry compared with the billions being discussed elsewhere.
Guy Verhofstadt says country has to be reformed. After travelling to Athens to see the situation for himself, the head of the liberal group at the European Parliament, Guy Verhoftstadt, was very harsh: “The Greek people are trapped by the incompetence and electioneering of their political leaders who tacitly supported, for years, a system of clientelism and favouritism where rather than introducing new taxes, it would have been better to get rid of state monopolies and red tape. Privatise the banks; liberalise many highly regulated sectors and refound the tax system. The Eurogroup must insist on structural reform of the Greek economy because the over-large public sector prevents entrepreneurship and growth. (…) Although the agreement is crucial if Greece is to avoid imminent default, the IMF is still demanding austerity, not understanding that the main problem in Greece is the excessive size of the public sector.”
On behalf of the liberal group, Verhoftstadt told the chair of the Eurogroup what measures he had set out for structural reform to be implemented, criticising the high cost of politics and the public sector (there are 49 ministers in the government); the Greek parliament has too many cars and other institutions, political parties get too much state funding; diplomats are paid too much, as are judges and other civil servants.
One could point out to Verhofstadt that the Greeks demonstrating in the streets do not get any of the perks received by civil servants.
Too late? Among the arguments made by Greek stakeholders, there is the following: “The great mistake was the fact we didn't arrange a write-down two years ago. Money was given to an insolvent state, forcing it to into recession that further reduced its income. This doesn't make sense.” It was during those two years that the debt exploded.
(FR/transl.fl)