Greece debt crisis: The start of a long and hard road for the Greek people

 When the cuts do take hold, there will be riots, and then there will be strikes

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The Independent Online

Can the crisis really all be over now? In the short term, the answer to that would seem to be yes, or “nai”, to use the word of the moment. The European Central Bank will make emergency funding available to the Greek banks, which will save them from certain collapse. That, in turn, will restore some confidence to the Greek economy.

This however, is merely a start on a long and hard road for the Greek people, some of whom have endured great hardship during this crisis (one wonders what the reaction of the British people might be to a cash machine limit of about £50 per day).  State-run enterprises will shed labour and unemployment will go up. Some will be privatised. Some taxes will rise, and there is likely to be a further squeeze on Greek public services. Every kind of market is due to be liberalised under the guidance of the IMF and EU.  Even if the rich paid their taxes and waste and corruption is eliminated did, such is the scale of the adjustments required that they will affect the lives of every Greek citizen, some dramatically.

Which is where the trouble may start. When the cuts do take hold, then there will be riots. There will be strikes. There may be a new political movement outflanking Syriza on the left. There will be elections in which a party can come to power which once again renounces Greece’s obligations.

Timing is all in this, and there should be no increase in austerity that simply plunges the Greek economy into a death spiral and would make the debt burden worse; but there does have to be structural change and it needs to start now. Greece’s problems are not actually financial and much as economic and industrial; it is a nation that is fundamentally uncompetitive, and which has found itself in a currency union with the strongest of the European economies, Germany. Unless Greece starts to export more and earn its living in the world, it will simply run up more debts – assuming it can find people to lend to it – and end up in the same pickle. That might also be true if it brought back the drachma and indulged in a bout of devaluation and inflation.

Much is made of this being an "undemocratic" process; yet the Greek people have a choice – the euro or reform. The essence of democracy is being able to make a choice, even if it is an unpalatable one. Now they have made their choice let’s hope they stick to it. If not, then Germany has voters, too, and they have choice as to whether they want to say “Ja” forever.

Economics is a Greek word in its origins, meaning “rules of the house”, appropriately enough. Now the Greeks have to stick to the euro’s rules.