#TheHindu #Editorial The Greek let-down

The latest phase of the protracted game of chicken between Greece and its creditors ended in a whimper for the country as Prime Minister Alexis Tsipras’s government agreed to a continuation of the austerity programme in return for debt relief concessions. The government’s actions should be termed as a letdown. It sought a referendum on the conditions posed by the Troika — comprising the European Central Bank, the European Commission and the International Monetary Fund — that yielded an overwhelming “no” from the Greek people. Later under a new agreement, it accepted conditions over and above what the referendum set out to seek. But with the eurozone being pushed by its largest economy, Germany, to prepare for Grexit, Greece had barely any wiggle room: the pain of a Grexit was seen to be more daunting than status quo for the economically crippled nation. There have been rumblings within the ruling Syriza against the latest agreement. But in the Greek Parliament the conditions accepted by the Syriza government have been ratified, and Greece will again try a round of austerity measures and privatisation to pay off its debt in the medium term. It is anybody’s guess if this would work; after all, five years of austerity has only exacerbated the problem for the economy.

That said, it must be asked what the goal of the agreement was: make an example out of Greece for other debtor-nations, or help its economy tide over its immediate and deep problems? Given the way the negotiations were held, and from the terms of the agreement, it could be said for sure that the latter was not on the agenda. In the past seven years the country’s GDP has shrunk by 30 per cent while unemployment has risen to over 25 per cent. If after years of austerity and two bailouts Greece still has to seek a third bailout package to service its debt, that itself shows its path is unsustainable. What Europe should have done was to write-off a major part of Greece’s debt and allow the country to lift public spending. This, in a classical Keynesian way, would have helped revive demand and thereby economic growth. But instead, Europe’s leaders decided to toe the line of big finance by punishing Greece and its people, creating divisions within Europe. The present action against Greece exposes the fault-lines in the European project, which originally aimed to integrate a continent economically and politically but failed to do so because of the insistence on a faulty and unbalanced monetary union. While the mighty in the eurozone might have won the battle over retaining austerity, the war to sustain the eurozone as it is, will continue.

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