Wednesday, 24 June 2015

A reality dream or austerity nightmare?

In a recent dream I asked Winnie [Winston Churchill] why at Yalta he pulled Greece out of the Soviet Block and placed it in the West. The answer then was clear. In today’s reality of feathering one’s own nest in the relevant comfort of hidden obscurity, it takes a determined effort to push away troublesome questions such as is the international community interested only in Greek real estate, it’s islands and natural wealth or is Europe hell bent on bringing Greece to its knees?

At such times it is useful to recall that ‘treating facts with imagination is one thing, but to imagine them is another’. It is also useful to recall that as the complexity of any problem space grows [here read Greek debt and humanitarian disaster], so does the probability that the outcome of a decision taken, may prove counterintuitive and sometimes destructive.

Expert pronouncements coming from economists on the need for an economic agreement and from public health on the demise of population wellbeing are equally alarming. The humanitarian crisis no doubt is sliding fast from the political agenda while a GREXIT or an “accidental” exit from the euro-zone rise as distinct possibilities.

If the current government is pressured to side step its own red lines not only would it be antidemocratic it would be deceivingly counterintuitive. Failure to reach a reasonable agreement with its creditors may act as a stimulus to a large and long lasting transient instability. Acting together, the sequel may make the Defkalion flood to seem like a spillover from a coffee cup. Can the gods remain silent knowing that a child born today will have a lower life expectancy than its parents while tomorrow it may be worse than in the developed world? In a battle with the Titans the outcome of negotiation should result in equal status, appropriate development and social progress. By compensating Greece for wartime damages, Germany could bring normalcy back to Europe.

An agreement dictated by an economically oriented Europe certainly will have adverse effects on population health. “Take it or leave it” is a toxic concoction that will cause further social inequality. Expecting the weaker side to make more concessions than Europe is also a prescription for continuing disaster. An agreement that is equivalent to an accentuated extension of the Memorandum with additional austerity is no solution. Bailout funds that help defray liabilities incurred should not be an option. It is a carrot with most of the carotene never reaching its target.

Greece must strengthen its weak systems and institutions and prepare the nation to respond to emerging disasters including a sudden onset one like the big bang postulated by economists as well as dealing with the ongoing creeping health disaster. It must promote meritocracy, enable the hierarchy to work and ensure that knowledgeable voices are heard. A scientific culture must be developed, populism constrained and division avoided. Balance in Greece can be restored if both negotiating parties focus on an agenda that emphasizes a more social Europe and a better regulated Greece. 13 distinguished economists and all Greek, argue that the Government should sign a modest deal with Europe and without required structural changes, here and now. Otherwise, the nation will take the path to chaos through bankruptcy and the Drachma’s return. I would add that if the “13” can incorporate humanitarian disaster relief into their proposal then it could be the basis for an intermediate agreement.

Two things seem certain; the size of the Greek debt is unsustainable and Europe without Greece is unimaginable. If this is understood and accepted within the principle of solidarity then debt restructuring must contain the elements of a substantial trim, a reasonable time line and better thought out elements for real-time preparedness to emerging disasters.

My reading is that the Greek people want an agreement that will improve their daily life and confer fiscal stability on Greece, within a united Europe. Not just any agreement will do! To paraphrase Churchill, let us brace ourselves for what might be the grimmest hour in the hope that it will turn out to be the finest.

Professor Dr. Jeffrey Levett
22/6/2015 Belgrade

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