A long road lies ahead: Striking a deal on debt and offering a third bailout gets the EU off the hook, but Greeks will feel the pain for decades

 

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The Independent Online

After Grexit, “a-Greek-ment”. The Greek debt crisis, which has been dragging on for half a decade or more, has produced quite a few ugly neologisms, and some very silly puns. It has also threatened the very existence of the European single currency and, at various critical moments, to pull the economies of Spain, Italy, Portugal, and thus the entire EU, down with it.

It has given us a motorcycling, leather-clad sex symbol of a Greek Finance Minister, the first default on an IMF loan by an advanced economy, and a European Parliament chamber strangely festooned with placards reading Ochi (No).

It has made unlikely allies of Syriza and Ukip. It has given the whole of Europe a lesson in the economics of currency unions – and not a particularly encouraging one – that lack a corresponding fiscal and political union. The merits of internal vs external devaluation have been discussed in mainstream and peak-time media. Can the fun really 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. Syriza, the party of protest, turns out to have a more pragmatic side to it than perhaps even its own leaders realised. Even if Syriza splits, the Greek opposition parties should help the Tsipras government see the necessary laws through parliament.

With that done, or in realistic prospect, the European Central Bank will make emergency funding available to the Greek banks, which will save them from collapse. That, in turn, will restore some confidence to the Greek economy and help to restore much-needed investment. This, however, is merely a start on a long and uncomfortable road for the Greek people – some of whom have endured great hardship during this crisis. State-run enterprises will shed labour and unemployment will go up. Some will be privatised and some fall into the ownership of foreign entities, a phenomenon familiar in this country that will, understandably, create anxiety about sovereignty and control over the economic destiny of the Greek nation. Some taxes will rise, and there is likely to be a further squeeze on Greek public services.

It would be nice to think that the very rich in Greece will start to pay their due share of taxes, and stop domiciling themselves and their firms abroad, but that may be too much to hope for. Every kind of market is due to be liberalised under the guidance of the IMF and EU; the Greek trade unions will emerge from this weaker. Even if the rich pay their taxes and waste and corruption is eliminated, such is the scale of the adjustments required that they will affect the lives of every Greek citizen, some drastically.

Which is where the trouble may start. 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. In which case, Europe should conclude, that is Greece’s democratic choice; but the rest of Europe also has a democratic choice as to whether they lend Greece more money.

Germany has voters, too, and they have a choice as to whether they want to say Ja forever. We now know enough about the private thoughts of Angela Merkel to know that she views a Greek exit with equanimity, while her Finance Minister Wolfgang Schäuble would positively welcome it. Is Greece’s place in the eurozone secure? Ochi.

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