NEW GREEK RECOVERY SCHEME

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Α. THE COURSE TO THE GREEK CRISIS →

1. A brief summary of the Greek state and economy in the period prior to the political changeover2

The causes of the current Greek crisis are usually traced back to the political changeover period. The reality however, is different. Phenomena in contemporary Greece just like the unprofitable and heavily indebted government, the unproductive and parasitic retail-based economy, the overstuffed public sector, the unmeritocratic and inefficient public administration, the ―client-oriented‖ practices of the Greek political parties and the uncontrolled partisanship, are long lasting problems that are common amongst different time periods in Greece‘s modern history. Considering all that, it is easy to explain why the country has declared bankruptcy and has been put under close supervision repeatedly in its long history. Between 1827 and 1932 Greece declared sovereign default four times (1827, 1850, 1897, 1932). The international economic control that was imposed on the country in 1897 ended in 1978, 81 years later! In any case, after the Greek Civil War and up to the 1980’s, the country‘s public debt was not a major problem.

2. The political changeover period

The representatives of the political system, only rarely, managed to deviate from the traditional protective role of the government, or as A. Papandreou put it, of government paternalism. In fact, their reliance on the state became much stronger after 1974. The legalization of the Communist Party of Greece was accompanied by the adoption of a substantial part of its ideological concoctions by a number of political parties, including some of those in the opposite end of the political spectrum.

B. THE ONSET OF THE CRISIS →

1. From the crisis of the U.S. Banks to the Greek Debt Crisis.

The global financial crisis that broke out in 2008 in the United States caught most European and North American countries off guard. In Greece however, it acted as a ―catalyst‖. It sped up the long-looming collapse of Greece‘s economic model and, all of a sudden, brought the country face-to-face with its chronic deficiencies and weaknesses of its administrative and political system.

2. The measures and the strategy of the MoU (May 2010).

The MoU that was agreed between Greece, the European Commission, the European Central Bank and the International Monetary Fund and was authorized by the relevant law, voted by the Greek Parliament as a sui generis legislation in May 2010, was based on two facts. The first one was, that unless new direct loans were ensured, any overdue debt would remain outstanding and the country would be forced to declare unilateral stop of payments i.e. to officially go bankrupt.

3. Successes and failures in planning and implementing the program.

Up until October 2010, the objectives of the MoU were met with only slight deviations from the original plan. The deficit eventually shrank by about five or more points of the GDP (six and a half at the end of 2011)!!! However, public expenditure cuts were much deeper than originally planned, and were mainly achieved by imposing horizontal cuts on wages, salaries and pensions. The top structural changes of 2010 involved the social security system, the labour relations and the reorganization of the local government.

4. The Medium Term Fiscal Strategy Framework, the “Second MoU” Agreement, and the new Loan Agreement.

The official confession, that the MoU measures were not adequate to resolve the Greek debt problem, was made during the summer Summit of the Eurozone countries. With the agreement of July 21, 2011, an additional loan of 109 billion euros was granted to Greece, while the Greek bonds in private hands were exchanged with new ones, whose nominal value was reduced by 21%. With this restructuring, which was called voluntary in order to avoid activation of CDS (Credit Default Swaps), the EU admitted for the first time, that the Greek debt could hardly be serviced.

C. ESCAPING THE CRISIS. VIEWS ON A NEW GREEK RECOVERY SCHEME →

1. After the EU decision of October 26 and the relevant agreements. A first assessment.

Just a few years after the outburst of the crisis, the Greek debt management has rendered the country economically broken. The experience of the last couple of years has taught us that the crisis is not just economic. It involves equally or mainly the country’s political system, public administration and organized social groups. After all, the crisis has to do with our collective values, our lifestyle and our self- understanding. In this sense, the country is experiencing a full-blown crisis, and only if we realize that we will be able to overcome it.

2. What must be done…

What follows is not part of a government program proposal. Therefore, a number of government actions undertaken by various government sectors are not covered. Regarding what should be done as soon as possible the text of the views only focuses on the main issues where the state meets the economy. Greece stands before the making of historic decisions. We, as Greeks, are asked to fight three very significant battles. The first one is to restore the prestige of the country abroad whilst keeping the European perspective open at all expense.

3. Greeks and their place in the United Europe.

We are Greeks and we are part of the United Europe. We are a nation that has a long history, aspirations for the future, is conscious of its individuality, is aware of its offer to others and its culture. However, at the same time, we are part of a global environment that is constantly changing. A universal network, whose even the most distant points are increasingly depending on each other through the economy, the information, the ecology and the common public lifestyle.

4. A new economy for Greece.

For decades, the Greek economy experienced rapid growth. But it was superficial; it was just a numerical growth of the GDP but with no real development of its productive resources. This trend must be reversed in a coordinated and systematic way.

5. The reorganization of the Welfare State.

The extreme fiscal crisis, among others, has brought the welfare state in Greece to the limits of a total collapse highlighting the weaknesses of the past decades. In recent years a great amount of effort has been put in its rescue through saving valuable resources and fighting overspending. However, the limited regular budget was unable to contribute to that hence leaving no other option open than that of refinancing the system from the existing resources by using them in a better way.

EPILOGUE →

Greece needs the development and application of a national plan, right here and right now, in order to exit from the crisis and to place the foundations for prosperity and credibility. No matter how many memorandums we sign, if Greece does not put all its effort in fighting its own battle against the recession, or in other words the battle for development it is not going to exit from the crisis, not the euro crisis, but its own individual one. If we do not reverse the course of recession, the Greek state will continuously seek to raise money by the payment of taxes, by public sector layoffs, by wages and pensions cuts, by the minimization of the welfare state etc.

NEW GREEK RECOVERY SCHEME