LETTER FROM GREECE:Greece's problems are deepening rapidly and as the German chancellor awaits the troika report, the Greeks are considering the options, writes RICHARD PINE
“IRELAND IS not Greece,” TD Tommy Broughan said recently. Unfortunately he is wrong, because, despite the different reasons for the two countries’ financial crises, Ireland and Greece are converging dramatically in the so-called “hardball” game with German chancellor Angela Merkel.
Greece’s problems are deepening rapidly, as the apparently inescapable choice must be made between an additional €60 billion bailout (making €170 billion in all) or a debt restructuring which would have colossal knock-on effects for the euro zone as a whole.
For the man in the street, two words sum up the dilemma: utter confusion. No one denies the causes of Greece’s economic collapse and social breakdown: poor administration, lack of planning expertise and an overstaffed public service. The confusion is caused by the fact that no one really understands how the terms of the bailout can have been imposed on a sovereign state, or how the troika of European Central Bank, International Monetary Fund and European Union investigators carry out their task.
Even more perplexing is the way that prime minister George Papandreou, after an impressive start in the negotiations, has perceptibly lost political clout as Dr Merkel unilaterally adopts the high ground.
Tension between the troika and Greek officials has been worsening, but up to now neither Papandreou nor finance minister Papaconstantinou have been able to stand up to them.
When Merkel announced that, when she receives the latest report from the troika, “only then can I decide what needs to be done”, Greeks collectively gasped in disbelief: “who does she think she is?” Now, according to the latest conspiracy theory, it seems the EU has one boss. This is rattling the Greek nerve.
Internationally, commentators are floating the idea that Greece might abandon the euro and return to the drachma, not merely as a way of escaping its indebtedness but as a means of reasserting sovereignty. If the country is bankrupt – and here is another painful parallel between Greece and Ireland – then let it be bankrupt on its own terms.
Reintroducing the drachma would effectively mean Greece turning its back on its creditors, which in moral terms could hardly lower its international profile any further, but it would immediately signal a halt to recession and an increase in exports, of which tourism is the most significant.
Merkel seems to favour a second bailout as the lesser of two evils. But it also seems that, after the troika reports next month, she will seek even harsher penalties than have already been imposed. Greeks believe that in this case Papandreou has little alternative but to pull the plug, as Papaconstantinou threatened to do at a “secret” meeting in Luxembourg on May 6th – a meeting which its convenor, Jean-Claude Juncker, initially denied had taken place.
If, as expected, the troika’s report is unfavourable, the next bailout tranche of €12 billion might not be paid without new conditions being attached, which would effectively mean Greece would have to raise the white flag. One in three Greek households polled nationwide on May 8th wanted the country to walk away from the bailout and 45 per cent wanted to renegotiate the terms.
Resistance to change, even when change is acknowledged as inevitable, is widespread, not least on the subject of the sale of assets, which the troika insists in Greece’s case should raise €50 billion by 2015.
As in Ireland, this is fast becoming a non-runner, even though it is a concrete condition of the bailout payments.
For the simple-minded, Dickens’s Mr Micawber had the answer: income €1, expenditure 99 cent, result: happiness. Income €1, expenditure €1.01, result: misery. In simple economic terms, you cannot run a country into debt any more than you can in your own household (from which we derive the Greek word economikos) – unless, of course, you are encouraged to do so by your friendly bank manager.
Which is where the Greek confusion comes in again: how could we possibly have got into this mess, or more particularly, if there are superior international forces, how were we allowed to go so far? And who is likely to lend more money to a country which cannot pay its existing debts?
Greece’s international profile may deserve a zero rating, but its people do not. In the village where I live, there is no air of guilt or self-pity but a general sense of bewilderment as to what the consequences of all this high finance will actually be.
Most people with whom I speak have no problem with the idea of modernisation, which is one of Papandreou’s driving passions, and the changing face of the village is a sign that “progress” is already happening from within.
But there is a residual anxiety about a way of life that is based on survival, fear and resentment. As any Irish person will tell you, 400 or more years of subjection breed resistance to authority – a problem which runs throughout the Balkan states.
There may be huge social and economic differences between Ireland and Greece, but the Greek in the street is rapidly learning just how much he has in common with his Irish counterpart.