Article published by José Alberto León Alonso in El Día on 07/19/15.
Throughout the month of July we have watched the penultimate chapters of the Greek soap opera. The signed agreement exudes distrust on all four sides and can be broken into a thousand pieces at each of the innumerable milestones that mark it. The Greeks have given their first yes to the agreement, but they will have to give many more (increase VAT, reduce pensions, fire officials, privatize everything that can be privatized), and at any moment the temptation to rebel can attack them again, returning the ball to the starting point. On the European side, the breaking points are not minor. To begin with, this new bailout must be approved by at least six European parliaments, and the circus put on by the Greek leaders this week will not make it easy at all. We must not forget that the public opinions of at least ten European countries are opposed to giving more money to the Greeks, and their sovereignty is no less than that of Greece, since they are left to decide on their own.
Syriza has turned a struggling country into a ruined state. He arrived in a Greece that grew 0.8% in 2014 and was expected to grow around 3% in 2015, and in just six months he has managed to cause the banks to close and the country to sink into a recession that will not be less than 5% of GDP. Tsipras has worsened the situation in which he received Greece by breaking off negotiations, leaving the country out of the financial rescue program and forcing the ECB to suspend aid to its banks. The resulting corralito has depressed the Greek economy. It is a new scenario that implies lower public revenues and greater needs for bank recapitalization. The final agreement with Europe has ended up being even tougher for this reason. Syriza is responsible for brutally worsening what it pretended to protect: the welfare state and the disadvantaged. That's what populism has. He sells the usual magic solution – spending without restraint – and wherever his recipes are applied (Venezuela, Argentina and now Greece) the result is always the same. The misery, the playpen and the lines to get supplies.
Greece, like many Latin American countries, is a dysfunctional democracy that is slowly heading towards becoming a failed state. Kalyvas, in his book Modern Greece: what everyone needs to know, shows how the country evolved, after the democratization of 1973, towards a regime similar to Latin American populism that, while bringing political and social freedom, undermined the already fragile institutions of the Greek State. Greece is a banana republic in Europe. PASOK used its influence to weave a clientelistic network rooted in state and local administration. Thus, the Greek State is entangled in a gigantic network of particular interests that obtain tax or regulatory exemptions without any justification. If you compare the proposals that Greece has brought to the Eurogroup with those it angrily rejected in the recent referendum, the only difference is the Greek Government's insistence that Greek shipowners do not pay taxes.
Lewis, in his book Boomerang: Travels to the New European Third World, insisted that the least European and most Third World country he visited was Greece, which celebrated its incorporation into the euro and its access to unlimited bank credit from the north by living well beyond its means. They maintained the habit of “mordida” or small bribery to access public services, and widespread tax fraud. Meanwhile, the salaries of the Greek public sector doubled and its average retirement age remained at 57 years, when in the rest of Europe it is over 65. Thus we arrive at a State that barely collects but spends wildly to keep its political clientele happy. As long as someone lends or gives away the difference between expenses and income, the wheel keeps turning. But today the party is over.
The European partners seem to be right in believing that the Greeks will hardly fulfill their commitments if it is not under the threat of being on the brink of the precipice. Pay the corresponding taxes, end the privileges of some groups, repay their loans, an efficient labor market... civil society and the Greek electorate will not demand these reforms. If previous agreements ended up being politically unsustainable in Greece, with reforms that were never approved, this one will surely end the same way. At this point, and given that there does not seem to be a clear path out of this hole (Greece does not approve reforms, and Europe no longer trusts Greece), I fear that the most sensible thing would be a controlled exit from the euro, with a re-entry later, with the drachma devalued and reforms already made. The rest will be to continue throwing money in the trash. They will never give it back nor will it mean that one day they will be able to live on their own.
Many countries, those that contribute the most money to Europe, are fed up with this situation. Greece is the same bankrupt and foreign-dependent country as ever, and the rest of Europe is equally or more fed up with having to bail them out. The only thing the Greeks have not lost is pride. For this reason, they opted for a resounding “no” to the austerity measures imposed by Europe in the last referendum, measures that the Greek government itself would accept practically in their entirety four days later. For their own good (and that of all Europeans) they should voluntarily withdraw from what has become for them the tyranny of the euro and seek their own destiny on their own. Outside the euro they could devalue their currency and obtain more resources in the only thing in which they are competitive: tourism. And, by the way, put an end to bribery and tax fraud. Continuing this endless tug-of-war between Greece and Europe benefits no one. It is impossible to be worse than now.
U!
