Will it change much of anything?
When a country’s public debts reach a critical level – mainly because of consecutive budget deficits – to avoid default, either new financial support must be found or the authorities must try to make a deal with the original lenders for a new credit line at a longer term and/or lower interest rates. This is what Greece is trying to do now.
However, even if a new loan is found, lenders obviously ask for some measures (which are called fiscal reforms) to ensure that the new loan is used properly and that there is a timely repayment. The government of the debtor country must first give guaranties to the lenders that they will implement the reforms before making a deal with the parliamentary opposition on the proposed measures. Last, it must convince the people that they need to live a more modest lifestyle to salvage their future.
These are the difficulties which the Greek government is facing today. When the last democratically elected government could not accomplish that mission, a new administration that largely consists of civil servants took on the responsibility. It seems that this government was successful in making a deal with the opposition in order to ensure the austerity measures were approved by the Parliament.
Fierce street protests in Greece openly indicate the difficulties of convincing people to sacrifice their usual life for the sake of their own future. It is not reasonable to blame them for their anger by saying that they are responsible for their country’s economic troubles for living beyond their financial limits. The responsibility for all national troubles obviously belongs to the governments. As a result, those governments must take on the real responsibility of convincing people of the need to adopt bitter remedies to save the economy. Pinning the blame on past governments is fruitless; the common people cannot understand the serious mistakes made in the past, and they do not want to listen to things about them. They want to listen to good news about the near, not distant future, which is now impossible, unfortunately.
The Greek government has already cut public sector salaries and pensions, increased some taxes, announced a privatization program and promised reforms that include overhauling the pension system, et cetera. Naturally, lenders wanted to see some serious progress in those areas and asked for more reforms in exchange for additional financial support. This attitude might be justified because of Greece’s bad record in the past; however, it must also be accepted that because of the people’s resistance, it will not be easy to implement all these measures and reforms together in a very short time period. In addition, a new discussion began about tax evasion and corruption problems which might lessen the full influence of those measures and reforms.
Unfortunately, Greece is not the only country in the eurozone facing serious economic problems. This creates a pessimistic approach among some European economists and politicians that even if a deal is reached at last, it will not save Greece; and again, even if that deal is successful, the Greek bailout will not change much of anything, as other countries are waiting in line. They might be right. With simple mathematics, it seems that normalizing macroeconomic balances in all troubled European countries will take many decades. Moody’s already cut the credit ratings of six European countries last Monday and also threatens to downgrade the United Kingdom and France.
Do Europeans believe that the leaders of the eurozone sincerely want to save Greece from bankruptcy or that the volume of aid is sufficient and that the imposed conditions are realistic? More importantly, do common people on the street care about the future of troubled countries in their region even if it is explained several times to them that their future also hinges on the fate of those countries?
The leaders of the EU are recommending more work, fewer holidays and a later retirement age only for the people of the troubled countries. This remark might be good for domestic politics in an election year in Germany and France but not in Greece, which will also have an election in April. Short-term sacrifices might be tolerated, but not prolonged ones in a democratic society. Even if there is a written commitment given by the next government to implement the terms of the deal, there is no guaranty of it.
Recently, some old-fashioned advice began circulating again among some European intellectuals that the best solution for Greece was to quit the euro or that the salvation of the eurozone could be found in making the zone smaller and so on. It’s easy to say, but impossible to implement – let alone difficult. To carry out this advice means the dissolution not only of the eurozone but of the European Union itself.