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The Greek political nirvana

July 14, 2012

Published in ‘New Europe,’ 15-21 July 2012, page 5

The Greek political nirvanaIn early May 1945’s bombarded and devastated Berlin, in the middle of rubble and human distress, generals and marshals quarreled over who would be the new leader, and who would deliver the city to the allies. It would appear so that in critical situations, it is a standard pattern of behavior to see personal fights over meaningless ego-driven issues.

A most recent example is last week’s quarrel between top politicians over who will participate in the committee that will (supposedly) re-negotiate the bailout agreement with EU partners, in economically devastated and morally exhausted Greece. The head of the socialist party (PASOK) triggered a crisis meeting with the prime minister and the leader of the left-wing party supporting the coalition government (DIMAR), in order to challenge the minister of finance’s stance at Ecofin, and demand his personal involvement in the upcoming negotiations – if any…

Meanwhile, the average Greek people live a totally different reality from that of their leaders. Private sector economy is slowly dying, with shops and small companies closing one after another, pushing unemployment to an official 23 percent, but close to 30 percent when taking into account self-employed people. Liquidity has dried up in the markets, as both the central and local governments have long since stopped making payments to their suppliers, although these same suppliers are required to regularly pay VAT and other taxes, without any possibility of offsetting claims and obligations.

2012 tax receipts have plunged, in spite (or because) of extravagant tax increases, or new tax requirements, such as the so-called ‘objective’ (in fact, arbitrary) criteria based on one’s house footage or car engine power, that lead to significant tax payments by everyone, irrespective of their having any income at all. The result? Just four days before the deadline for submitting tax returns, 2 million people hadn’t done so, sending a strong ‘I don’t pay’ message, for practical reasons rather than a matter of anarchist ideology, this time.

August’s fiscal gap might be overcome with some help from the EU partners, but the September gap seems insurmountable, if Greece has not achieved any of the bailout memorandum-imposed obligations. And Greece is still unable to prove some progress either in structural reforms, or in privatizations. Regarding privatizations, there has been a lot of talking by politicians,  but not a single action since 2009. Even if one were to start right now, it would take several months if not years to materialize. Just think how long it would take to get clearance by the High Administrative Court, in the highly probable case of the latter being seized by an opponent to privatizations (a typical six to nine months for taking a decision plus another four months for “clear-writing” it).

As for structural reforms, take the example of the new minister of justice (and a former chancellor of the Athens Bar Association), who was quite clear on the matter: “all this discussion about liberalizing the lawyer’s profession is due to a misrepresentation of facts”, in other words: “[fellow lawyers] rest assured that I will do my best to delay liberalization.”

In this bleak context, one would expect the new Greek government to announce a set of revolutionary measures, in order to reverse public sentiment and convince markets of its will to succeed. Instead, we get the usual political ‘small talk’, and the resulting waste of time. If no major change happens within the next few weeks, Greece will be running head first onto the rocks with unpredictable consequences for its people and the stability of the whole Eurozone. The stakes are so high that, at last, someone has to wake up Greek politicians from their traditional siesta.


From → Views & Opinions

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