Business World

Tuesday 27 September 2016

Lessons that the Greeks could learn from a trip to Dublin

Jeremy Warner in London

Published 25/04/2015 | 02:30

Greek finance minister Yanis Varoufakis
Greek finance minister Yanis Varoufakis

What do you do with a problem like Greece? My own modest proposal - suggested only partly tongue-in-cheek - is that Alexis Tsipras, the Greek premier, and his celebrity finance minister, Yanis Varoufakis, should be frogmarched onto a Ryanair flight to Dublin for a textbook lesson on how to get a grip, move on, and turn around a small, crisis-hit economy - a feat that Ireland has managed in double quick time, but Greece is still a million miles from achieving.

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Unfortunately for Greece, the blood, sweat and tears of Ireland's no-nonsense approach to the crisis is almost wholly at odds with the whingeing, hard-Left agenda its new leaders advocate for their own, shattered economy.

A little while back, I vowed to colleagues that I wouldn't again write about the Greek debt crisis until it had reached some kind of a resolution - default, bankruptcy, re-introduction of the drachma, or whatever. The story had become like a version of Peloponnesian War, an ancient struggle for supremacy between Athens and Sparta that for much of its near 30-year duration was in a state of deadlock.

Seemingly, every day would bring a fresh denouement, and yet of course the final curtain never fell. Each watershed moment would give way to the next, with lasting solutions still as far away as ever. For both sides in the standoff, it has become known as "extend and pretend" - never do today what can be put off until tomorrow. Crisis fatigue has come to afflict everyone other than committed anoraks and the beleaguered Greeks. "Does anyone care about Greece any longer?" one City financier asks me. "It's just a distracting irrelevance, an open sore that has to be constantly picked but no longer represents a serious threat to the rest of Europe."

I doubt that's entirely true, but everyone knows what he means. The Greek debt crisis has become... why, yes, tedious; there is virtually nothing new that can be said about it. So why do I find myself so quickly breaking my vow of silence?

It is to make the following point - often lost in the present, and entirely understandable outpouring of sympathy for the poor Greeks: whether in or outside the euro, Greece will never become the modern, prosperous economy it aspires to be while ruled by its present sense of grievance, victimhood and entitlement.

It is true that Greece was treated shamefully in the first European bailout of 2010, when banks and other private sector creditors were saved from the consequences of their own stupidity by lending the Greek government the money to pay them back. An unsustainable debt burden was thereby perpetuated, rather than eased as would occur in any normal insolvency.

However, exactly the same approach was applied to Ireland, which has an equally legitimate grievance over the way the bailouts favoured private creditors over ordinary citizens. Yet the Irish simply knuckled down and got on with it. This sense of realism stands in marked contrast to Greece, which chooses to believe that it is the victim of some gross injustice.

Comparisons between Greece and Ireland may not be entirely fair. In lots of respects, the two crises were quite different, and arguably, Greece's was much more extreme. The Irish recovery has also been greatly assisted by proximity to Britain's relatively buoyant consumer markets, as well as the economy's attractiveness to American and other forms of foreign direct investment.

What's more, Ireland's credentials as a modern, developed economy have never been in doubt, while in terms of its business environment Greece still seems to bear many of the hallmarks of a Third World country - stifling levels of corruption and tax evasion, closed professions, and monopolistic abuse by favoured oligarchs.

The economy still struggles with the basics - law of contract, tender and fiduciary duty.

Yet there is another difference which is harder to define. Call it one of mindset. While Greece blames bankers and demands handouts, Ireland phlegmatically accepts the crash as divine punishment for years of living high on the hog. The Irish were poor once, suddenly they were rich, and then they were poor again. Stuff happens. Deal with it. Regrettably, Greece seems disinclined to.

None of this is to belittle the scale of the fiscal adjustment undertaken by Greece, or the degree of reform it has managed to push through. Nor is it to dispute the extreme socio-economic costs of what's happened. Since 2009, the economy has shrunk by a quarter. Almost 35pc of the population is classified by Eurostat as being at risk of poverty or social exclusion.

Yet it will all be for nothing if Greece's Syriza-led government continues on its present, petulant path.

The answer to Greece's problems lies not in negotiating concessions from the hated "troika", or even in relieving the debt burden, which nobody expects to be repaid anyway and therefore amounts to little more than an accounting mirage. Rather it depends on self-help. Unlike Greece, Ireland has faced up to its problems, and is now reaping the rewards.

(© Daily Telegraph London)

Telegraph.co.uk

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