Why is it unavoidable? How come Greece leaving the eurozone looks unavoidable? Because it is not able to apply the necessary discipline. Its behaviour has cost management of the euro very dear, but nothing much has changed. Greece has received the equivalent of €80,000 per family - but experts say the case “has been given and received so badly that it has made the crisis worse”. There have been a number of positive moves in the country recently, but the criteria for normal membership of the eurozone are still far off. As far as the eurozone authorities are concerned, meeting one's commitments is still the crucial precondition if a country wants to receive any further financial aid. Adjustments can be made to the timeline, but that would not suffice. The reports by the fact-finders from the European Commission and the IMF, the results of the 6 May 2012 elections and the raft of investigations in the country have all reached the same conclusion: Greece will not meet its commitments. Nothing has been decided formally, but the heads of the eurozone are preparing for Greece to leave the club, but not be permanently kicked out.
The far left in Greece wants “total renegotiations” with the EU. Before writing this column, I listened to an interview with a member of Syriza, the far left party that came second in the 6 May elections. Syriza MP Rena Dourou called for no less than a “radical change in European economic and monetary policy”. Dourou slammed the heavy bureaucracy that has been stifling Greece for the past 40 years under the PASOK and New Democracy parties and called for measures to “restore confidence among young entrepreneurs in the State, which has been undermined by corruption. If a young businessman knows he's going to have to pay backhanders all the time to get anything done, it totally changes the investment climate. … Currently, the Greek State is based on clientelism and economic corruption.” Her demands are not about the EU, but a call for an overhaul of how things are done in Greece itself, and therefore decisions that are in Greek hands. If the situation in Greece changes, then the EU will take note, but Dourou is just as plain when it comes to the EU: She rejects the “Memorandum” signed by Greece and its international lenders, laying down the conditions for continued EU funding. She said: “From the beginning, the Syriza party has been saying that Greece must scrap the Memorandum leading to catastrophe for Greek society and the Eurozone. … We demand total renegotiations.”
Asked whether the State should be slimmed back, she said: “I see chronic understaffing in hospitals and schools. At the same time, the Memorandum requires the scrapping of 150,000 jobs in the civil service. PASOK and New Democracy put people in jobs in offices, rather than meeting people's needs. This political favouritism has led to the ruin of public finance.” She said nothing about key issues like reducing the size of the civil service, creating a land registry, dealing with tax avoidance and the like.
In two weeks' time, it will be for the Greeks themselves to decide which political forces will rule the country, but as far as the managers of the eurozone are concerned, the key question is whether Greece will be able to respect the eurozone rules; they have to prevent the system imploding.
A protagonist's viewpoint. It's best to be cautious, particularly about leaked ideas that are so often just ideas without foundation leaked to test the air and that then vanish. I would rather quote a comment by Philippe Maystadt, who in ten years turned the EIB into a key instrument for the economic recovery plans and has just retired (and can therefore talk openly). Interviewed last week in Belgian newspaper Le Soir, he said that if Greece were to confirm its commitments, then it would be necessary to “change the budget correction timeline, which is too tight, and restructure reimbursement of the debt to give Greece longer to pay it back. … But people cannot let Greece renege on introducing reforms that have to be introduced, even if it weren't in the eurozone: the land registry, tax collection, unfair privileges. And pay must not be allowed to rise faster than productivity.”
Philippe Maystadt added that even if the Greeks vote against reform on 17 June, then “it would be a good idea for the EU to announce at the end of June a Growth Pact approved by the heads of state. The announcement alone would hugely limit the risk of contagion. I am certain of this, and I am not alone in this view.”
There have been various developments this week in connection with Greece that impact on the wider Europe. I will be returning to them. (FR/transl.fl)