Sunday, January 25, 2015

Can ΣΥΡΙΖΑ follow Plato and see the light - with EU help of course!

Some of our much loved Right Wing Eurosceptics like Charles Moore are already rubbing their hands at ΣΥΡΙΖΑ success in the Greek elections. They think chaos will ensue leading to the departure of the Greeks from the Eurozone, possibly the total collapse of the single currency and even of the European Union itself! They shouldn't. There is a case to be made that the EU, the Euro and certainly Greece will emerge stronger from this challenge. Here's why.

Greece entered the single currency ill-prepared , at the wrong Drachma/Euro exchange rate and without having made the necessary economic reforms. But don't reach for your megaphone and cry "Stupid Boy". In 2000/2001 the European economies were booming, as was Greece. The idea that boom and bust had been beaten was common. So although there was, as we have seen, little room for manoeuvre when bust did happen (and some !) few were predicting such an event. 

No EU member economy was untouched by the Global Financial Crisis but most did have the reserves to weather the hurricane - just about. Greece, and to a slightly lesser extent Spain, Portugal and Italy suffered the most. These Southern European countries shared defects that were covered up when all was well (as did Ireland)  but were hugely damaging when thing started to fall apart. For years now the EU and the European Central Bank (ECB) have been trying to return things to a manageable normal. That this has happened shows not the weakness of a United Europe but its strength. Without the unifying Euro Greece could have suffered a catastrophic collapse of the Drachma which for dollar denominated imports (Energy especially) could have been fatal to its democracy and to public order. 

The recent new Quantitative Easing (QE) announced by the ECB shows not only that the Bank is very much still on the case but that it has mechanisms at its disposal to help further the economic recovery. It is taking a long time, and it's a bit of a roller-coaster but it is happening - and Greece will be a beneficiary. In France M. Hollande had to realise that spending your way out of an economic downturn frankly wouldn't work. His new economic policy, developed substantially in a European context, had to happen. The same still applies to Greece.

Greece is the world's 43rd largest economy, coincidentally almost the same size as Ireland.The Irish   solution, give or take a twist or two, has to be the Greek solution as well. Restructuring of the economy. Removal of artificial bubbles like the property price inflation. A restoration of a current account balance - in time. And the removal of unaffordable State commitments. Well, you may say and Charles Moore and co will hope, ΣΥΡΙΖΑ isn't going to accept all that! Don't you believe it!

Greece in the Euro means that there is a shared responsibility across the Eurozone to help Greece's recovery. So far political uncertainty and the rather facile view that "Austerity is the Villain" has led to turmoil across the nation. The Greek people have spoken and given ΣΥΡΙΖΑ the mandate to sort things out. The EU will acknowledge the need to respect the democratic choice the Greeks have made and will bend over backwards to make economic renewal in Greece work. ΣΥΡΙΖΑ were not elected to preside over chaos and they will swiftly realise that to work with European partners rather than doing a runner will be the way forward. They won't be the first revolutiaries to get pragmatic. And Angela Merkel and co. will be pragmatic as well. The QE can provide the stimulus and careful finessing can ensure that Greece is a major beneficiary. 

Plato said "One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors." ΣΥΡΙΖΑ have chosen to partipate and will want to demonstrate swiftly that they are far from inferior to their failed predecessors but much more able. Let's hope that they will be wise because they have something to say - not fools because they have to say something! Now is the time to see! Can the men (and women) of Greece not be afraid of the light? 


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