Saturday 22 July 2017

Borrower and lender, addict and dealer, do battle over money that simply doesn't exist any more

A pensioner waits outside a branch of the National Bank to receive part of his pension in Athens yesterday
A pensioner waits outside a branch of the National Bank to receive part of his pension in Athens yesterday

Declan Ganley

The German position on Greece could reasonably be summarised thus: "The Greeks borrowed billions from us, and now they don't want to pay it back. That is unacceptable." They are quite right - no good borrower seeks to default on their debts.

The piece of the puzzle that the Germans (and to be fair, others in Europe) always seem keen to ignore is that their own banks (and later, their governments) were not responsible lenders.

Handing billions over to a Greek state that was using the money to fund pensions for citizens who were retiring at 57, and to cover vast holes in its tax collection system because of widespread evasion, was hardly likely to end in any other way, was it?

It is easy, now that the storm has come, to point the finger solely at the feckless Greeks, to demand that they reform their character and hand over the billions they borrowed.

It is harder, it seems, to accept that a good portion of the blame for this current mess lies with the smart-guy bankers in Frankfurt who decided that lending to a country with rampant tax evasion and exorbitant public spending was a good idea in the first place.

Greece became addicted to debt, spending, and waste, and now like a drug dealer blaming an addict for his crimes, those who fuelled the catastrophe would have us believe they are blameless.

What we are left with, then, is the spectacle of lender and borrower facing off in a battle over money that simply no longer exists. The money that was lent to Greece has been lost.

There are but two solutions - either we cripple the Greek people for generations in an attempt to recover it, or we try to rebuild and make sure this does not happen again. At the moment, the European Union is rigidly sticking to the former course, and the resulting Greek rebellion is hardly surprising.

Very few civilised peoples would accept the humiliation that Brussels is attempting to foist upon the Greeks. Brussels might want to blame Syriza, but Brussels must realise that Syriza is a creature conceived, nurtured, and birthed in Brussels and Frankfurt. They have created their own enemy.

Syriza is a reactionary movement. It is wedded to the idea of undoing change - of going back to the way things were before. But the "before" is what caused the problem in the first place.

If Europe must accept that it should share the blame for what happened in Greece, then the Greeks must also come to terms with the fact that the days of a debt-funded, bloated state are over for good.

If the Greek people are to regain their standards of living, they must find a new way to do it - a way that Syriza opposes with all its strength.

This is the true tragedy of the Greek people - the only way out of their crisis is opposed by their own government, and the governments of Europe alike.

What is this way out? Well, the biggest component is debt relief. I wrote in this newspaper in 2011 that if Europe was not truly radical, and did not federalise debt across the union, it would stumble from crisis to crisis.

That is exactly what has happened.

The time is now, therefore, to finally accept that Europe needs to pool all member-state debts into a common obligation, for common repayment.

A single currency, and a single debt market. Until this is in place, the Euro will be at risk, and this crisis will recede and surge like the tides, but never completely leave us.

We are in the same situation now as the United States after its war of independence, and the solution applied by Alexander Hamilton then must be applied to Europe now.

The second component is genuine economic reform. The "anti-austerity" crowd think that privatisation is a dirty word, but can offer no good reason why the Greek government needs to own and operate ports, or hotels.

If their solution, as a Syriza minister said during the week, is to "make the rich pay", then they will soon find that they have run out of rich people to compel.

What Greece should do, in fact, is introduce a tax amnesty. A clean slate, and a clean start. Then, it should look to Hong Kong, and other countries, and introduce a flat tax.

If the Euro is to be a help and not a hindrance to Greece, it must make itself the most pro-enterprise, pro-investment, and pro-employment country in the Eurozone.

A Greece freed (partially) of her debts, and freed of the self-imposed shackles of the state, would become an economic powerhouse.

Alas, it appears that there are many more acts in the current tragicomedy to play out before sense has a chance to be seen.

But make no mistake, while Europe continues to avoid addressing its debts collectively, and refuses to face the role it played in turning Greece into a debt-addict, the situation of the Greek people will only get worse and worse.

What Europe, and Greece need now is precisely what both have lacked throughout this continuing crisis - leadership.

Irish Independent

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