Can Greece Be Saved?
WASHINGTON – The latest round of negotiations aimed at solving the Greek crisis (Yes, 6 years later we are still at it!) reminds me of what where described as the heroic but also grotesque efforts by the Spanish doctors who really, really wanted to prolong the life of semi-dead dictator Francisco Franco, back in November 1975.
Well, guess what, heroic medical efforts notwithstanding, Franco was an old man. And he finally died.
In the case of Greece, the issue is not old age. It is about the crushing effects of a stupendous amount of debt (the Greek national debt is now $ 347 billion, 177% of GDP) that cannot possibly be paid back by a very weak country, poorly managed by a populist, ultra-left government.
There must be a solution
And yet, just like the Spanish doctors, the European central Bank (ECB), the International Monetary Fund (IMF) and the European Union (EU) Commission representatives keep on negotiating with Greece, as if by trying harder some magic solution will be found.
The only (fake) “solution” is a political deal masquerading as serious debt restructuring. As Athens’ creditors believe that a Greek bankruptcy would cause too much unwanted and possibly unmanageable confusion, may be a panic in international financial markets, I bet that they shall invent a last minute “agreement” that will solve nothing. It will however provide political breathing room by kicking the proverbial can a bit farther down the road.
No progress since 2009
The facts are known. Greece was on the verge of bankruptcy at the end of 2009 when the new government announced that its predecessor had essentially cooked the books this way falsifying the actual debt figures.
Believe it or not, there has been no real progress since then. There have been numerous bailouts. But the fact is that more bailouts simply mean more debt. In the meantime, there has been and there is no serious plan aimed at reviving a comatose Greek economy, while the Greeks still have a hard time trying to adjust to the harsh reality of the end of subsidies for everyone, tolerated tax evasion, and soliciting briberies as a common practice to increase one’s income.
Just like Francisco Franco in 1975, Greece is near death. But, just like the Spanish doctors, most of the players still insist that there must be a way to ensure that Greece will stay in the Eurozone, that its economy will be somehow powered up, and that an orderly program that will guarantee the repayment of all the outstanding debt will be agreed upon and adhered to.
The Spanish doctors were eventually defeated by the limits of human biology. The negotiators trying once more to save Greece will continue until they will realize that this farce cannot go on.
However, based on the record so far, we are still a long way from this moment of truth.