by Athan. Ch. Papandropoulos
"2015
may prove to be quite prematurely a "black year" for Greece. Five
years of sacrifices and efforts will be literally lost, while they were supposed tobegin to pay back this year".
This is what
a leading member of the group of financial forecasts of The Economist notes,
predicting at the same time that a non-continuation of the economic policy of the
Greek coalition government will only lead the debt-ridden country to new adventures.
In addition, the British journalist attributes serious responsibilities to the
electoral system of the country as well, stressing out that it allows one third
of the people to govern absentia real majority.
Difficult days for Greece also
predict both the rating agency Fitch and the Peterson Institute for
International Economics.
Both of them underline that the country’s main problem
is not so much the level of its debt, but the inability to make the necessary
structural reforms to its economy, which will make the debt viable.
On the
basis of this conclusion, the lenders will accept neither "haircuts" nor
serious deviations from the program which is being implemented by the country,
because the result will be of a zero-sum.
"Greece
will never be able to get into a profound and sustainable growth phase if its
production structures are not redirected toward internationally saleable
products," stresses Robert Murphy, consultant at Fitch, who has been monitoring
the Greek economy developments from the beginning of the crisis.
The Greek
economy still faces major hindrances and cannot escape from a lending and
foreign aid based consumer model.
In this
context, the analyst of Peterson Institute, Jacob Kirkergaard, says at his
recent study that, given the structural functioning of the Greek economy, a SYRIZA
government will have a serious problem to renegotiate the Greek public debt.
In
its report on the Greek perspective, he states that country's lenders will not
make concessions on the debt issue, but instead will focus on small-scale
extension for two main reasons.Moreover according
to sources, the program implemented by Greece, which expires at the end of February,
is likely to be extended.
Generally,
however, according to the Peterson Institute, currently the Eurozone is feeling
much less threatened by a Greek crisis, compared to 2012.
Today, the Eurozone
has created stronger crisis management institutions, like the European
Stability Mechanism (ESM) the bond repurchase program of the European Central
Bank (ECB), the banking union, etc.
In addition, the prospect the ECB to launch
a round of bond buying - which of course will not include the Greek government bonds
- will further enhance the stability of the Eurozone.
"So, there is no
need to fear of a Greek economic crisis spill-over further within the Eurozone,
even though it gets worse," says the analyst.
The other
reason for the Institute’s pessimistic attitude has to do with political
criteria. It argues that the parliamentary elections scheduled in countries
such as Poland and Finland in March will mean that these countries will not
accept a further provision of greater financial support to Greece.
Moreover,
the governments of Spain and Portugal, which also face election challenges by
populists in late 2015, will have incentive to oppose to further concessions towards
a SYRIZA government.
Thus it
becomes obvious that, for Greece, the exit from the credit crunch passes
through the extension of the “memorandum corridor”.
There is not any issue
regarding a "haircut" something that has been clarified also by the
German Minister of Finance.
All these
lead to the conclusion that the Greek banking system will come difficult times,
as the ECB may no longer accept Greek bonds as guarantee assets.
This will lead
to zero liquidity and to bad days for businesses. At this
point, Peterson Institute stresses out that a possible government under SYRIZA
will try to sustain a program which will avoid both the economic crisis, which would
be caused by an open conflict with the creditors, and a government crisis caused
by a possible withdrawal of far left groups from the party.
However, according
to the report, such a balancing perspective has little chance of success, and
as a result the country would be dragged again in elections in spring or
summer.
Meanwhile, the country’s economic situation will significantly deteriorate
and any fiscal improvements achieved by the previous government will be
dissipated.
"Perspectives
for 2015 for Greece are not favorable," the report concludes. "A
dramatic deterioration of the current situation cannot be ruled out.
The worst
thing about the situation is that it is the result of wrong conceptions and assumptions
of the Greek political leaders. Whatever political analysts may say, Greece is
the last country to be exempted from the austerity policy.
Greece remains a
small bankrupt country, which needs external help and geographically is located
in a "rough" neighborhood.
To the extent that there is no risk of transmitting
the crisis, Greece has no bargaining power and any attempt to blackmail its
partners in the Eurozone, will result in a defeat.
Greece will also lose its economic
stabilization achieved coming through serious difficulties, and the
"hawks" in the Eurozone will be given the right to use it as an
example of what is happening to a country which violates the European
agreements".
The Peterson Institute does not mention
as a possibility, the Cyprus-like scenario which would turn the Greek economy
too many years back.
The question is if these arguments can be understood by the Greek voters, a
point that should not be disregarded.
By: N. Peter Kramer
