The ongoing discussions between Greece and its creditors look - on the surface - to be a battle between a new government who wants to obtain as many of its election promises as possible and other Euro area countries trying to save their taxpayers from losing any of the money lent to Greece. The discussions are complicated further because Greece is shortly running out of money and will not be able to meet loan repayments next week.
Add to this that it is also a battle about obtaining dignity, preserving a country’s right to decide on its future and a serious test to the Euro project, one could easily conclude that there are topics enough to be agreed upon leaving little room for what this should all be about – to restore Greece to a country that financially has a future.
From the year Greece joined the Euro and until the financial crisis in 2008
This was before the financial crisis. Two years later the problems of Greece were highlighted and by then the figures above had deteriorated significantly more.
Today Greece has 75% more public debt than in 2010 and 20% less income to carry the debt burden.
To put conditions for Greeks back to what they were 3, 5 or even 7 years ago which many of Syriza’s election promises are all about and to preserve the bailout loan and its conditions as creditors’ interest is all about – might be something they can agree about over the coming seven days. They would both be a blueprint for failure.
What Greece needs is to go through such strong structural reforms than any of the macro developments seen up to 2008 will not be repeated again. To enable them to do so, they need to have their public debt cut in half. Anything less than this and Greeks are doomed to be poor forever.
Add to this that it is also a battle about obtaining dignity, preserving a country’s right to decide on its future and a serious test to the Euro project, one could easily conclude that there are topics enough to be agreed upon leaving little room for what this should all be about – to restore Greece to a country that financially has a future.
From the year Greece joined the Euro and until the financial crisis in 2008
- Greece GDP growth shrunk gradually from 3% per annum to zero.
- Debt to GDP ratio rose from 100% to 110%
- Annual Public Deficits to GDP ratio increased from 4% to 10%
- Annual Current Account Deficits rose from 5% to 7%
- Unemployment was 2% higher than Euro area average
- Price increases were 1.5% higher than for the Euro area
This was before the financial crisis. Two years later the problems of Greece were highlighted and by then the figures above had deteriorated significantly more.
Today Greece has 75% more public debt than in 2010 and 20% less income to carry the debt burden.
To put conditions for Greeks back to what they were 3, 5 or even 7 years ago which many of Syriza’s election promises are all about and to preserve the bailout loan and its conditions as creditors’ interest is all about – might be something they can agree about over the coming seven days. They would both be a blueprint for failure.
What Greece needs is to go through such strong structural reforms than any of the macro developments seen up to 2008 will not be repeated again. To enable them to do so, they need to have their public debt cut in half. Anything less than this and Greeks are doomed to be poor forever.
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