The Greek Tragicomedy: a matter of life and debt
Just a few weeks ago, Greece looked to be on the verge of economic apocalypse, following what can best be described as an extraordinary combination of political brinkmanship and EU pigheadedness. For months there was speculation over whether Greece would be forced out of the Euro and until the eleventh-hour it seemed also certain that this would happen. However, just when it seemed all hope was lost, the political enigma that is Alexis Tsipras managed to strike a last-minute deal with his countries creditors.
So what does this latest deal entail? Unsurprisingly, the deal will involve further austerity measures such as reductions in public spending as well as the selloff of state assets such as the electricity network. Furthermore, VAT and the pension age are to be increased. Remarkably, Tspiras (with the help of opposition parties) managed to pass all of these measures in parliament, despite the defection of 40 of his own MPs. In exchange, the European Central Bank (ECB) has pledged some €900m worth of Emergency Liquidity Assistance (ELA) to help re-liquidate Greek banks, several of whom were reported to be on the edge of bankruptcy. In addition to this, the Eurozone has agreed to start negotiations on a loan package for Greece of between €82bn and €86bn which is to be spread across three years. However, it appears that Mr Tsipras has possibly ended up paying the ultimate price in that he has now resigned as Prime Minister, resulting in snap elections. Some have speculated about whether this is so he can return with a renewed mandate, others have condemned his actions, arguing that it jeopardises the deals that he worked so hard to secure. Only time will tell.
The Greek fiasco tells us a lot not just about the EU’s ability (or inability) to deal with economic crises, but also about the dangers of trying to stitch together 19 fundamentally different economies. This is plain to see when one compares the economic powerhouse that is Germany against the meagre economy of Greece. It seems laughable that these two economies could become part of the same currency union without one ending up compensating for the other, or one free-riding on the success of the other.
At the heart of the crisis is the question of whether the measures announced are to save Greece’s people from destitution or whether they are really about preventing a precedent from being set, whereby failing European economies are allowed to simply drift out of the Euro to the detriment of the eurozone’s reluctant hegemon Germany. Regardless of what the true reasons behind the bailout package may be Greece looks like it will survive to see another day. The Euro’s future, however, looks increasingly uncertain.
[Opinions expressed in this article are those of the author and do not necessarily reflect the official view of Reading University Conservative Association or any affiliated institution].