Destiny of Greece will be decided by it’s attitude towards reforms

Another part of Greek drama has it’s clear beginning and the end, because it is surrounded by two important dates. First is January 25., the day of victory of the radical leftist party Syriza in Greek parliamentary election. Second date is Fubruary 28., when the current rescue program terminates in which Greece has the acces to finances in exchange with austerity measures, so unpopular in Greece.

Similarly, in this part of greek drama two themes play key role: debt and reforms. We will lower the debt respectively we will achieve significant debt relief. We will revoke reforms of the previous government. These are the two key promises given by Syriza which brought Syziza’s clear victory in parliamentary election. Therefore January 25. was so important, because it took questions of debt and reforms into the different light. Of the same importance is also the date 28. February. After this date Greece will be out of money and it will not get to the new financing if there is no particular agreement with other states of Eurozone in which will be contained solution of debt and the destiny of Greece‘s reforms.

Right now, the most discussed question is the question considering debt. Nominants of Syriza haven’t even sat down yet in their key chairs in the new greek government and new prime minister together with finance minister already made their first compromise and step back from their pre-electoral promises. They refrained form talking about the debt write-off, started talking about restructuralization of debt and went on european tour to find out from creditors, which particular forms of restructuralizatio could be acceptable. In this context came up proposals such as connection of paymants of debt to the GDP growth or introduction of the so called „eternal bonds“ by which Greece would pay off only interest but not the principal. Finance ministers of the Eurozone are this week sweating over the technical details of these propositions. But even these traditional ideas do not change a thing about the basic fact we need to remind us all the time. The debt of Greece which is now 175 percent of GDP is impossible to pay off in it‘s full height. Whatever will the future agreements be, their essence will always be what amount of debt will be creditors willing to lose respectively what amount of debt will Greece be able under the cover of restructuralization de facto to write off. That it is not boring Greeks are trying to improve their postition in negotiations b historical excurses to the Second World War teasing Germans by opening the question of war reparations.

Equally turbulent is the development in the most important area which is the attitude of Greeks towards reforms. Also here Syriza declares something else than before election. They gained voters support by massive critique of the austerity measures of the previous government and by the promise, that in case of victory they will recall previous government reforms. Today the prime minister says that 70 percent of reforms will be maintained and only 30 percent of reforms will be revoked. Important thing is though what hides under that 30 percent of reforms. Is it really fulfillment of part of pre-election promises? If yes, the inevitable breakdown of public finances indicates just their brief account: return of the minimal wage to the pre-crisis level, i.e. from current 580 EUR to 751 EUR a month, pension increase, free housing, electricity, food and health insurance for the “victims” of the austerity measures of the previous government.

Tony Blair in the commentary for Financial Times got exactly the point: “the main problem with Greek government doesn’t lie in the debt payments, but in their resistance towards reforms.” Let us only add that in Greece they perceive reforms as an international complot against Greece and not as cruel, but inevitable tax for very long period of time of wasting money by Greek politicians. If it stays this way, the next parts of this Greek drama will inevitably lead to catharsis and old Greek history will start to write down the new, post-euro chapter of history.

Ján Oravec

Translated by: Juraj Medvec

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