Greece did something remarkable yesterday; something that has either the potential to be a fundamental shift in the way that small countries are dealt with by the EU or something that proves to the killing blow for Greek aspiration within Europe. What way the wind shall blow is anyone’s guess.
The result of the bailout referendum was emphatic. Polls released at the close of voting suggested No ahead within the margin of error, but the final result of 61-39 against the bailout showed that the Greek people are strongly in favour of something different. Prime Minister Alexis Tsipras and his SYRIZA party have proven themselves again as a true voice of the people, and their anti-austerity ideology is one that is resonating very strongly in a country that has suffered desperately in the aftermath of 2008’s global financial crisis.
Greece is billions of Euros in debt overall, €317 billion to be exact, and for an economy of its size it is a debt that is almost impossible for it to repay. Different bailouts in 2010 and 2012 from the ‘troika’ of the EU, European Central Bank and IMF have failed to sort out the crisis, as the majority of these bailout loans have gone towards paying down existing debt rather than negotiating an economic change within the country. It’s the equivalent of getting a payday loan to pay off debts, swapping one creditor for another. This means that despite five separate austerity packages being passed between 2009 and now, Greece is still in financial disarray – and there is almost no conceivable way out.
The politics of austerity have failed Greece, so no wonder they have chosen to strike out against them. Stories of old men in suits rummaging in bins for food and emergency services going door to door for cash to keep themselves running show just how bad things have gotten. This cradle of civilisation has returned to the Dark Ages, and can we conceivably allow the people of Greece to suffer such indignity for the fault of successive bad governments and bad bankers? SYRIZA has given Greece something new to hope for, and a belief in themselves that they can be fix the financial problems that could plague the country for generations to come.
Greece is looking for a way in which they can be relieved of the burden of their debts slightly, paying off what they can whilst restarting their failed economy. It would be impossible for them to pay anything unless their economy began growing again, which it has done since the end of last year after six years of recession. Greece needs to rebuild, and while the shadows of the past hang over them there’s no way of doing that.
Germany is the country pushing the hardest line on Greece, as the largest creditor because of its involvement in the EU, ECB and also its’ domestic banks’ investments in Greece. It’s worth remembering that Germany itself was the beneficiary of wide-scale debt relief, even from Greece no less, in the wake of World War II as the reparations it owed were waived in the interests of building a new market with the country.
Greece is a player in the European project, a market for countries to sell their goods to. A country of 10 million people and one still, despite economic ruin, with the 44th largest GDP per capita in the world (ahead of the likes of Poland, Argentina and even Russia) – the theories of capitalism that are driving the modern Europe should be mindful that losing this market is a wasted opportunity. The reason the G8 forgave African debt ten years ago, after the Make Poverty History campaign, was for that exact reason. A goodwill gesture towards a country on our shores might prove to do the same thing.
It’s true though that Europe can’t simply keep writing a blank cheque for Greece and expect things to be okay. An IMF report showed that it badly needs to restructure its’ debt and countries like Italy and Spain, both with their own financial problems, are suffering because of their lending to Greece. The likes of Cyprus, Iceland, Portugal and Ireland have all suffered as well but managed to rebuild while Greece has squandered its opportunities so far. The country might be an important component to Europe, but when it has been so toxic and is being so belligerent in resisting demands of it, are they really worth keeping?
Surveys across Europe now show that popular support exists for excluding Greece from the Euro, an option that would leave them floundering. If Greece were forced to return to the drachma it would spell disaster for them, as the currency would be nigh-on worthless and the billions of Euros existing in the country would be moved abroad overnight – leaving the daunting debt they face seem ever steeper.
Europe and Greece are now at loggerheads as to what is the best path to take. Nobody wants Greece to leave the Euro, but the cost to the other 18 members of the Eurozone might now have tipped the balance in favour of that option. Austerity hasn’t worked, but Europe seems unable to show the compassion and fiscal patience to allow Greece the slack it needs to recover.
Regardless of your opinion on what happens next for Greece, its people took a bold choice yesterday in favour of a destiny of their own choosing. However it seems that even though it was a sign of courage from an underdog in a fight it could well prove to be more of a last stand.