Menu

'A knowledge of simple maths required'. Op-ed by Greek journalist Giorgos Harvalias

First off, let's make something clear. There is no 'drachma lobby'. Not in Greece, at least. This is a cheap invention by a part of the systemic opposition, in its effort to prove that big domestic interests are supposedly conspiring to return the country to its national currency.

Only, something of the sort does exist, unless the conspiracy is being silently woven by marginal parties and public figures that do not express even one tenth of the electoral range.

The truth is therefore different. Powerful elements in the country fervently wish to preserve the monetary status quo of the last 15 years. As one body, Greece's business oligarchy and the financial institutions that represent it are whole-heartedly in favour of staying in the euro 'at all costs', even at the expense of social cohesion. The same is true of the overwhelming majority of the major media that influence public opinion.

For the current leftist government also, remaining in the eurozone is the dominant view. Otherwise, its leader would not have put his signature to an onerous and highly recessionary package of austerity measures amounting to 8 billion euros. With one crucial difference: contrary to the deterministic dogma for the euro at all costs, Mr. Tsipras' viewpoint links the economic sustainability of our painful stay in the European currency with a resolution of the debt problem.

Understanding the Tsipras approach does not demand great knowledge. Nor does it require complex arguments in order to become commonly understood. Simple primary-school mathematics point to its correctness. Because when the debt of the country is determined worldwide in correlation with its GDP and the last is being constantly decimated by memorandum policies, it becomes clear that there is no cure.

There is no doubt that the institutions' proposals for loan assistance, in all their versions, intensify the recession spiral, are extremely anti-growth and sink living standards further, thus intensifying the debt problem. The IMF itself has admitted this, after the fact, which in its unfavourable but nevertheless predominant scenario predicts the evolution of Greece's at 142.2 pct of GDP in 2022, or 25 percentage points above last year's forecasts! For this reason, it proposes further lending to Greece with a third memorandum, forgetting its prior position for immediate debt relief.

There is no serious economist on the planet today that claims that the Greek debt is sustainable. Some dare and whisper this at home, ostrich-style, and some shout it abroad, because they do not want to give (the current government at least) such help. Truth be told, this is exactly where the negotiations stumbled. Not on the 'nuts and bolts' of the tax-collection ideas.

We should not delude ourselves. Accepting additional loan agreements without a bold debt settlement will convert Greece into a zombie-state of the eurozone, a cheap, 'competitive' spa where central European tourists will wash their feet and locals will be searching through rubbish.

The problem is that the current government, which has a better graps of the mathematics than the previous ones, is not in a position to guarantee an alternative solution with safer conditions of survival than the humiliating stay in the euro. More dignified, perhaps. But certainly not easier.

Leave a comment

Make sure you enter the (*) required information where indicated. HTML code is not allowed.

back to top