The increasing amount of political disagreements and confrontations in Europe may seem the result of a tough “end-game” in a “chess game” between Greece and the troika of international lenders.
However, European leader start gradually revealing the real truth behind the 6-month-long talks, which ended up with nothing. According to the famous American economist Joseph Stiglitz, the answer is unlikely to seem pleasant since it is all about political power and democracy rather than economy and money.
Apparently, the economic plan imposed on Greece by the troika (the IMF, the Euro Commission and the ECB) 5 years ago was truly disastrous and led to a 25% drop in the national GDP of Greece, Mr. Stiglitz says. Indeed, it is hard to recollect any similar depression in the post-WWII history that led to such disastrous consequences. Just think about it: the unemployment rate among the Greek youth is over 60%.
It is also interesting to note that the troika refused to take any responsibility for what has been happening in Greece over the last few months. They also refused to admit how terrible their prediction and plans were. Still, the most surprising thing about the situation is that European leaders hasn’t learned any lesson from it. The troika keeps on urging Greece to reach the primary budget surplus equal to 3,5% of the national GDP by 2018.
While the troika keeps on insisting on such such ambitious goals, most financial and economic experts from around the globe have already rated them as harmful and even dangerous since any attempt to pursue them may eventually result in an even bigger economic decline. Even if the Greek debt is written off completely, the country will still remain in depression if the referendum ends up with a decision to practice austerity and perform the reforms required by the lenders.
The most terrible thing is that the previous tranches of financial aid actually didn’t reach Greece. Most of the money was used to settle accounts with private lenders, including French and German banks. As a result, Greece got only a tiny share of the funds but paid a really big price for preventing its financial and banking systems from collapsing.
While the IMF and other official lenders want the debt to be covered, they do not actually need the money they demand. Most likely, if Greece settles accounts with the lenders, the funds will be reused as new loans for Greece. The thing is that it is not about money, it is about deadlines to make Greece surrender and obey. That is why they require unbearable austerity steps in exchange for new loans. If it isn’t true then why do European leaders resist the referendum? Why do they refuse to delay the deadline for a couple of days? Isn’t the EU based on democracy?
The bottom line is that it is difficult to say which alternative is going to be a better one for Greece. Both of them bear considerable risks in the future.
