Commitments not respected. I feel that I'm very much on my own in continuing to write that over the next few months Greece should leave the eurozone. The tendency seems to be to believe, or to pretend to believe, that it is capable of adhering to the eurozone rules. It is true that in their official declarations, the Community institutions are bound to trust Greece, whilst adding that it needs to stick to its commitments. However, everything we hear from reliable sources shows that Greece is not in a position to respect the conditions to which it has committed in order to stay in the euro. None of the scheduled reforms has been carried out and those decided upon are not working; indeed, the latest analyses show that the situation is getting worse. No single aspect of the recovery programme agreed with the EU has been put into place; tax revenue in the first five months of the year has been considerably below the forecasts.
The latest indicative plan submitted to Brussels late last week caused a great deal of confusion. Greece would appear to be asking to delay the austerity measures considerably, to put off the cuts of €11.7 billion in public expenditure, to postpone by two years (2016 instead of 2014) the timetable agreed to reinforce the budgetary objectives. In practice, the austerity measures would be delayed or scrapped. A Greek internal document states: no increase in taxes, no extra cuts in salaries and pensions, a freeze on redundancies in the public sector, reducing VAT for restaurants and agricultural produce. The European Commission has declined to go any further than to state that it must first of all assess what has been done, before it takes position on the future.
We'll see after the summit. How can we prevent this situation from jeopardising the results of the European Council of Thursday and Friday? By radically postponing the Greek dossier until later. The troika (EU, IMF, ECB), which should have been in Athens on Monday and Tuesday of this week, has put off its trip until early July. Prime Minister Antonis Samaras and Finance Minister Vassilis Rapanos will not be attending the summit for unrelated health reasons.
Demagogy does no good. Given the situation described, the EU in general and the countries of the euro in particular must help Greece in every way possible; but the method which consists of keeping Greece in the eurozone, whatever it takes, is rhetorical, ineffectual and ruinous for the single currency. The members of the European Parliament who see themselves as generous and a bit avant-garde because they are shouting from the rooftops that Greece must remain in the eurozone at all costs are, in my opinion, merely practising demagogy. This attitude would have the result of: bankrupting the eurozone by worsening the contagion to other countries; giving in once again to financial speculation and those who operate this (led by the City of London); radically increasing the risks of the European Council of 28-29 June breaking down. On top of this would be other effects which I would describe as psychological: what would be the reaction of Portugal or Ireland, which are currently paying off the similar funding they have received? It is true that Greece could still secure a number of improvements to the current memorandum, as regards interest rates or the rescheduling of its debt; but concessions of this kind would in no way help it to keep the commitments it has made.
A positive for Greece. The real knot to be untangled lies in preparations for the Greek default and its return to the drachma: it will take a few months. The operation is complicated, which is behind the attitude of the president of the Eurogroup, Mr Juncker, who continues to deny the possibility that Greece will leave the euro. As it happens, the preparatory work is underway everywhere and all interested parties acknowledge this.
Unlike what this raging demagogy would have you believe, the Greek exit from the eurozone would be positive for Greece in itself. It would of course remain in the EU (I reiterate this every time because others continue to peddle the shameless lie that Greece is to be ushered out of the Union) and on this score, it would enjoy considerable European support, earmarked for interesting projects which already exist or are being prepared. What's more, the new Greece could free itself from the corrupt and ineffective parts of its political classes, finally fight tax fraud and tax evasion and start to make better use of its resources (natural and otherwise). The new Greece would be far more efficient and make much better use of its assets.
The first result would be that the European Council would not be poisoned by this rotten dossier and would be able to achieve some of the results it is looking for; this column will come back to that tomorrow.
(FR/transl.fl)