The European Council on Foreign Relations

Should we feel sorry for Greece?

Date: 7th November 2011  |  Author: Nicholas Walton,

Categories: Euro Crisis,
Tags: eurocrisis, eurozone , eurozone, italy, papandreou, greece

The Greek people are undoubtedly going through a bad time - and it's going to get worse. But, as we are all now aware, what happens in this relatively small corner of the Eurozone has enormous and frightening consequences for the rest of us, in the Eurozone and beyond. Here's a "Should we or shouldn't we feel sorry for Greece?" piece that I contributed to for the BBC website, along with CER's Simon Tilford:

Nicholas Walton, ECFR: Now is not the time for sympathy for the Greeks

There's a popular new parlour game in Europe, where players complete the sentence: "Did you know that in Greece…?"

Here are some winning examples:

• The railway system would be cheaper if every passenger was taken to their destination by taxi
• Every MP has the right to an official car
• There are more Porsche owners than taxpayers declaring an income of over €50,000 (£43,000)

Some answers may stretch the truth, but the bottom line is that Greece has evidently squandered the benefits of being in the eurozone in a quite startling way.

Instead of using low interest rates and the efficiencies of the world's largest single market as a mechanism to drive economic modernisation, Greek politicians continued their game of buying support by splurging state largesse.

The Greek people played their part too.

At the same time, of course, the national game of tax avoidance continued at Olympic levels of performance, while the books - with notable outside help and connivance - were cooked.

The economic tide has now firmly receded, and it's obvious that the Greeks have been skinny dipping, with the result that this rather small corner of the mighty eurozone is now terrifying commanders-in-chief and potentates from Berlin, to Washington, to Beijing.

This small crack in the dream of a common European currency has the potential to become a Charybdis-like whirlpool, sucking in the whole world economy.

The Greeks, of course, are far from the only ones to blame. Others built a fatally flawed euro edifice, while others also broke rules or turned a blind eye while rules were broken.

The Greeks themselves - many of whom, too young to be tainted by blame, now face a devastatingly bleak future - will suffer mightily in years to come.

But in the depths of a crisis the priority is not to blame or to feel too much pity - the real priority is to get out of the crisis. Now is not the time to feel sorry for the Greeks.

Simon Tilford, CER: We should feel sympathy for the Greeks.

We should feel sorry for the Greeks, because they have been asked to do the impossible over the last two years. They have imposed public spending cuts that are greater than any developed economy has ever succeeded in carrying out.

To argue that they have been backsliding, or reneging on their obligations, or free-riding on the goodwill of other eurozone economies is inaccurate and quite unfair.

There is no doubt that Greece is one of the architects of its misfortune - successive Greek governments have mismanaged the country's public finances. But no country can put its public finances on a sustainable footing if its economy is in free fall, and these unprecedented cuts in public spending have pushed the economy into a deep slump.

And now, despite the fact that the strategy over the last two years has failed, and has proved completely counter-productive, Greece is being asked to impose further very very deep cuts in public spending. And if the Greeks fail to meet their budget targets (as they inevitably will, irrespective of how hard they try meet them), they will then be stripped of sovereignty over important aspects of economic policy.

It's a terrible position to put a country into. It's very risky and, I would say, runs counter to what the European Union is supposed to stand for.

I don't have much sympathy for the Greek elite. They took the country into the currency union against the advice of most economists. They joined for the wrong reasons - a determination to have a seat at the top table rather than a careful analysis of the country's economic interests. But they were hardly alone in making this mistake.

The Greek people do deserve our sympathy, however. They face unprecedented economic hardship, with no light at the end of the tunnel.

If Britain were in the eurozone it would not doubt be having to slash public spending by massively more than it is currently doing. Would there, in a such a situation, be no cause for sympathy with us?

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