The Eurozone will remain mired in crisis unless it faces up to the facts

John Hulsman
Protesters in Greece carry a "write off the debt now" banner (Source: Getty)
During my years in the trenches in Washington, my staff christened one of my favourite analytical canaries in the coalmine the “we are where we are moment”. That is, you can determine whether a crisis is actually being dealt with simply by looking at the rhetoric of the opposing forces involved. If they hadn’t moved past the blame game of who was ultimately responsible for the initial disaster, it was more than a fair bet that absolutely no one had a clue as to how to deal with the fallout. A useful staff corollary stated that the bigger the calamity, the harder it was to get to the “we are where we are” moment.

By this yardstick, we ought to all be worried sick by the present – and seemingly never-ending – euro crisis. The Greeks continue to (just) be able to keep the economic plates in the air – the present one involving paying the IMF back €450m on 9 April. Beneath the waves, a Kafka-esque pattern has emerged, with Greece’s governing Syriza party endlessly stalling, promising half-hearted reforms that are never fleshed out, all the while vaguely threatening/blackmailing the rest of Europe with the geopolitical and macroeconomic consequences that will ensue if they are cut adrift. Then the Greeks do just enough to muddle through, while piously promising to do more in the future. And on we go to the next mini-crisis.

Nowhere in all this is there anyone in either the Greek or European camps really trying to get ahead of this sullen posturing and actually solve the crisis. No, it is far easier (and emotionally more satisfying) to excoriate either the heartless Germans or the spendthrift Greeks than to grasp the nettle.

So as a sympathetic outsider, let me speak frankly to Athens, the Troika, and Berlin: you are all overwhelmingly to blame for this disaster. Greece made up its numbers to join the single currency; gormless euro-federalists knew this and didn’t care. Greece’s bailouts have merely removed German and French banks from a very large hook, and have certainly not been designed with the object of saving the Greek people from calamity as a primary goal. Greek governments have never collected taxes in a meaningful way, and have been corrupt, nepotistic, and incompetent for all the years I have been alive. A plague on all your houses; this is a crisis of your own making that you all richly deserve.

But we are where we are. Some broad policy principles bravely applied might still help save the day. The creditors really need to lose their censorious tone, as they are every bit as much to blame for this mess as far-from-innocent Athens. A debt restructuring is inevitable; no country in recorded history has ever paid back anything like the debt (177 per cent of GDP) that Greece currently labours under. The sooner the creditors admit this – and the more substantial the write-down – the more likely it is that Greece can return to something approaching normality.

For Syriza’s part, Prime Minister Tsipras must stop with the dancing bear show; no one is buying his act. Everyone knows he is merely stalling, hoping circumstances save him from being forced to choose between reality and the economic illiterates on the left wing of his umbrella movement. Appalling the Germans by calling for war reparations might buy you a week, flirting with an economically ruined President Putin of Russia might scandalise others and buy you a few more days (talk about wanting to join the Titanic in mid-voyage), but none of that really averts anyone’s gaze from the simple fact that you are – in the best traditions of the past Greek governments you claim to despise – simply stalling, rather than enacting meaningful reform.

Let me be clear as to what I mean here. Full-scale privatisations are needed, to raise revenues and to lift the low productivity that is such a feature of Greek government ownership. Syriza is entirely right to want to root out the culture of corruption that has so held this beautiful country back; get on with it. Finally, further pension reform is a must; people don’t get to retire while they are middle aged anymore. The proportion of 55-64 year olds who work in Greece was a scandalous 36 per cent in 2013; this compares with 63 per cent in Germany.

We are where we are. Now the only question is whether facts can finally be stared in the face, and this crisis mastered before it masters Europe.

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