Despair

Spinning facts and showing off poker faces should be the game of the day. However, it seems that key actors are losing their nerves and turn to sheer populism. PM Tsirpas speaks now of ‘criminal responsibility’ of the IMF for the dramatic economic situation in Greece. German Vice-Chancellor and head of the Social Democratic Party (!), Sigmar Gabriel, uses the yellow paper Bild Zeitung to make clear that ‘ we will not ask German workers and their families to pay for the overextended election promises of a partially communist government”. Timothy Garton Ash, always good for some nice phrases, makes the point:”…even if you have not a drop of sympathy in your heart for the Greeks…so long as you have a brian in your head and care at all about the future of Europe, you will understand why we must save Greece”. Martin Wolf in the Financial Times alerts all those who argue that a GREXIT would be good for Greece and the Eurozone:” It might be a relief to divorce a difficult partner. But the partner will still exist, even after the monetray marriage is over. Greece will remain strategically located and even inside the EU. Neither the Greeks nor their partners should imagine a clean break. The relationship will continue. It will just be poisonous”.

Things could be so easy if only evidence would reign and guide decisions. Since 2010, Greece reduced drastically its fiscal balance and also the number of state eomployees. According to OECD data, public spending per person was reduced annually by 3.3% between 2009 and 2013, and this continued until very recently. It is also well-known but not at all accepted by the Institutions that the haircut from 2012 did not benefit Greece but by and large went to the creditor banks that were rewarded for their bad credit practices. Olivier Blanchard, soon-outgoing chief economist of the IMF, made it clear that the European Institutions have to agree on substantial additional financing as well as to agree to a debt relief in a way that guarantees debt sustainability. The proposals of the Greek government wopuld be a good starting point for such a program. Such a step needs political courage on the side of the credits, and it needs tyrust in the abikliot and willingness of the Greek government to come forward with meaningful domestic reforms. Some of the proposals to generate additional state receipts like gambling taxes and the like, are not up to the challenge. I wonder why the Greek government does not come up with a realistic and far-reaching offer. One area would be the pension scheme. Rather then cutting further pensions, a plan would be to merge the currently 133-odd pension schemes. Such a merger would create synergies. It also would lead to the dismissal of workers, though. Latter is unavoidable, anyway medium-term as the current system is not sustainable at all – inside or outside the Eurozone.

Do both sides have the political courage to overcome the stalemate? Time will show, and time is running.