jueves, 9 de julio de 2015

jueves, julio 09, 2015

Europe should welcome Greece’s vote

Athens and the rest of the eurozone have a common interest in making Grexit as painless as posible

by: Gideon Rachman
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A woman holds a placard reading in Greek 'No' during a demonstration
Demonstrations: Despite No vote Greece’s creditors are likely to take a very hard line

Greece’s “No” vote was greeted with euphoria in Athens’s Syntagma Square: the fountains were bathed in red light, the flags waved, the crowds sang patriotic songs. Alexis Tsipras, the prime minister, had said the vote was about national pride and his message had struck home.

One young woman, a freelance journalist, confided: “I actually voted Yes. But part of me is glad Greece said No.

We are a small country, but we have a big history. This is about our dignity.”

Watching the celebrations, however, it was hard not to feel real foreboding. Without a quick new deal with the creditors, Greek banks could collapse within days, introducing the country to a whole new level of economic misery. Pride and dignity would swiftly disappear along with jobs and savings.

Mr Tsipras has told his fellow countrymen that he can get a better deal from Europe. But, if he really believes that, he is seriously misreading EU politics. In reality, Greece’s creditors are likely to take a very hard line. They are angry and fed up with Greece. More important, many also believe that the long-term survival of the European single currency depends on making it clear that countries must live by common rules, balance their budgets and pay their debts. If Greece needs to be punished to

The tragedy is that both the Greek government and their creditors are now misreading their own interests. The Greeks still insist that they want to stay inside the European single currency — despite the mounting evidence that it has been a disaster for their economy. The leaders of the eurozone feel that they must be tough with Greece, to discourage other potential rule-breakers.

In reality, both Greece and the rest of the eurozone should treat the Greek vote as an opportunity to rethink the malfunctioning euro project. They can find a common interest in making it as painless as possible for Greece to leave the euro — both to lessen the suffering of ordinary Greek people and to establish a model that other countries might be able to follow in the future. For Greece is not the only country struggling to cope with a currency union. The current crisis could be a chance to show there are ways out of the euro that could benefit all sides — those that leave the currency union and those that stay

For the moment, however, all that eurozone leaders can see is the dangers of making any moves that appear to “reward” Mr Tsipras. They know that there are many heavily-indebted countries in Europe and do not want to encourage the idea that countries can avoid the hard work of getting their national finances in order, in the hope that one day, a debt write-off might come to their rescue. Greece’s national debt as a share of its economy is currently 178 per cent — the largest in the EU. But Italy’s debt-to-output ratio is more than 130 per cent. Even France is closing in on 100 per cent, the figure that Greece was at when the markets first took fright in 2009.

There is a similar fear of the political consequences of allowing an anti-austerity party to triumph in Greece. Countries such as Ireland, Portugal, Spain and Italy have all made painful cuts in an effort to restore their public finances. The governments of all four countries have Syriza-style, populist parties breathing down their necks. The last thing they want is for Syriza to be seen to succeed. Indeed, the grim truth is that they actually have a vested interest in seeing Greece suffer — as a warning to their own voters, not to take the route of left-wing populism.

In other EU countries, such as Finland, Germany or the Netherlands, it is right-wingers — who opposed the original bailouts for Greece and warned that the money would never be repaid — that stand to gain, if Syriza is seen to triumph. Here too, the political incentives all point towards European leaders taking a hard line.

To these factors must be added sheer irritation. Yanis Varoufakis, who as finance minister compared Greece’s creditors to terrorists, has now resigned. But even Mr Tsipras accused them of being conservative extremists, blackmailing Greece. Just as Greeks feel humiliated to be told they are deadbeats and debtors, so the Germans feel enraged to lend Greece money — only to be called Nazis in the Greek media.

The danger, however, is that anger and a fear of setting a bad example, is leading EU nations to take too narrow a view of the consequences of Greek failure. It may be that the EU is right to believe that financial contagion from a Grexit can be contained. But the political costs would be very high. A Greece that slips into economic chaos could easily turn into a failed state within the EU. That, in turn, would further discredit the European project — at a time when it is under pressure from all sides.

If European leaders were thinking clearly, they should see that rather than punishing Greece, it is now in the EU’s interests to do its level best to make sure that Greece can leave the euro, but stay inside the EU with a minimum of pain. If that means giving Greece debt relief as part of the exit package, so be it. Debt relief, in return for Grexit, could make political as well as economic sense.

Even so, restoring the drachma in Greece without provoking an even more intense economic crisis will be very difficult. But, if it could be done, the EU may finally have a model for liberating other European nations from a malfunctioning euro.

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