I send you greetings from Athens, where
it is a sunny day, but our whole existence is
dark. Allow me to say that every day here in
Greece, more than 1,000 people lose their jobs,
about 3-5 people every day commit suicide
because of the economic situation; unemployment
is rising fast, at levels of 25-30%;
enterprises cannot cope with their debts; and
millions of people are falling into absolute
poverty.
Never, never, {never} in the last 100
years or even more, excluding periods of war,
have we seen such a disaster.
A simple question arises: Why did we enter
the Eurozone, if not to improve the Greek
economy? Yet the opposite happened. Never in
the postwar period, living with our own
currency, the drachma, did we see a disaster
like what we are facing now.
Our entrance to the Eurozone in 2002,
together with (I have to admit it) the
government's mismanagement of the last 15
years, reduced our economy to ashes. This is
because of the government, not the Greek
people. Allow me to say that the Greek people
work, according to international statistics,
{more} than people in other European countries;
but I must accept that labor productivity in
the public sector is very low.
But there is a deeper problem than this,
which is a systemic problem. In my view, it is
the Eurozone, its loose existence without a
strong central management, that is hitting the
peripheral economies, like Greece. More and
more strict measures are imposed upon my
country, despite the failure of the initial
austerity policies taken after the crisis of
2008-09.
The country is facing an endless
depression that creates more depression, leads
to huge unemployment, widespread poverty, and
kills hopes for a better future. The economy
follows a recessionary vortex which leads to
further contraction in domestic consumption,
reduces the tax base, and extinguishes
development possibilities. Imported products
from our competitors, who trade internationally
with soft currencies, remain cheaper or much
cheaper than our own.
The main focus of the regional Greek
economy on tourism and agriculture requires a
labor-intensive production process. Labor costs
cannot be compressed below a certain level, so
total production costs will be lower than or
equal to that of our competitors. To speak
simply: A room in a Greek hotel costs about
double that of countries with soft currencies,
such as Turkey, Egypt, Bulgaria, Romania, or
Hungary. Greek olives, oranges, lemons,
peaches, and cherries, falling from our trees
and rotting, are supplanted by cheaper imports
from faraway Argentina, Morocco, Egypt, etc.
Is it ``the economy, stupid''? Of course
not. The ``clever'' Dutch, and not only they,
import agricultural products from outside the
Eurozone, baptize them as ``European,'' and
re-export them to the ``stupid Greeks.'' The
cost of fertilizers produced by oligopoly
companies in north Europe is more than double
that of Greek fertilizers, with relevant
consequences for production costs.
Imported Greek armaments from the West, in
the last ten years, cost about EU90 billion--a
sum almost equivalent to our original deficit.
Turkey, a candidate for entering the European
Union, continues to direct threats against the
territorial integrity of Greece and Cyprus, and
obliges us to spend the largest portion of GNP
internationally on armaments, after the U.S.A.
The same country bombards us with 200,000
illegal immigrants yearly, while our children
are fleeing abroad, with tragic consequences
for our economic and national existence.
Who Wants the Euro?
The ``suit'' of the euro is tailored to
the measurements of the northern European
countries that produce capital-intensive
products of oligopoly, of high technology and
innovation. The cost of these products can be
compressed significantly, and profit margins
are very high. So, the strong euro permits
Germany and our other northern allies, to
accumulate high foreign-exchange surpluses, and
speculate on the huge difference in spreads.
Exploring the impact of the Eurozone upon
several countries, we made an impressive
finding. The developmental course of the GIPSI
(Greece, Italy, Portugal, Spain, Ireland)
continued well, before they joined the euro in
1999-2002, but dropped a little later. The same
is more or less true for other Eurozone
countries, and especially for Cyprus, Slovenia,
Slovakia, Estonia, and Belgium. Instead,
countries outside the Eurozone, such as
Britain, Denmark, Sweden, the Czech Republic,
Bulgaria, Hungary, Poland, and Romania,
maintained a steady growth trend, with a
partial decline with the advent of the crisis
of 2009.
Countries outside the EU, such as Norway,
Serbia, and Turkey, are withstanding the
crisis, as are Russia and others. Argentina,
after disconnecting its currency from the hard
dollar, developed exponentially, not to mention
the impressive economic rise of China, mainly
due to the soft yuan.
Let's be realistic. Our partners insist on
keeping Greece inside the Eurozone, because
they are afraid of the dangerous domino effect
of the ``Grexit.'' But maintaining our economy
in a state of economic paralysis does not allow
hopes for recovery. Our poor competitiveness,
our shrinking domestic production and
consumption at present, are leading to a
vicious cycle of debt defaults and the need for
more and more new loans. Over the longer term,
this is burdensome to all, even to our lenders.
It is true that the exit from the euro will
initially be painful for a country like Greece;
but now we are also experiencing pain, but
without hope for tomorrow.
What We Should Do
As things stand today, a clear solution is
a controlled bankruptcy, by cutting about 50%
of total debt, with a grace period of two years
to start repayment of the remaining 50%, and by
extending the repayment period. And above all,
exit from the euro, but, of course, without an
exit from the European Union. The new drachma
may be deflated initially by 50%, and then, a
reasonable rate linked with a basket of
currencies which will contain the euro, the
dollar, and other soft currencies of our
competitor countries. Another solution could be
the creation of a second euro of the peripheral
European countries.
In any case, the tragic rise of
unemployment and suicides, the widespread
closure of enterprises, the extreme cuts of
salaries and pensions, the layoffs of civil
servants at the age of 50-55 when they might
not find a job in the private sector, the push
of millions of people toward absolute poverty,
apart from being inhumane, are obviously bad
for the economy and politically unacceptable.
They lead to a large drop of domestic demand,
as well as to broad social uprising, with
tragic economic, political, and social
consequences.
No doubt, there is an urgent need for
modernizing public administration, social
insurance, and health care, and combating
corruption, impunity, bureaucracy, and reducing
tax evasion. As an active development policy,
there is also a need to support healthy
industrial and manufacturing units, and promote
strategic sectors of the economy to alternative
energy; exploiting oil, gas, and mineral
resources; promoting quality and marine
tourism; competitive and/or alternative
agricultural crops, aquaculture, food industry
and fertilizers; defense products,
shipbuilding, pharmaceutical, transportation,
financial services, new technologies, research,
and innovation.
But for all that, the country should be
ruled by a sense of fairness with efficiency,
competence, and honesty by the best political
human force, and not by the worst. And this is
a point where our European friends can provide
their useful advice and help.