Greek economic war remains in the balance

New measures will only fuel the Greek protests against injustice. Photo Credit: Piazza del popolo

New measures will only fuel the Greek protests against injustice. Photo Credit: Piazza del popolo

We all know great details of the wars occurring in Libya and the Middle East at the moment, however it seems that exposure of a war much closer to home gets only sporadic attention from the national media.  

Greece’s economic war is still a very delicate situation.  The term ‘economic war’ was coined by the Greek Prime Minister himself recently, a fitting description given the battles Greece is up against.  The ramifications of this battle are, to our European partners at least, a more pressing concern than any other current conflict. 

The world understands that Greece is bankrupt – the country received its first European bailout roughly one year ago, and has been teetering on the edge of collapse ever since.  The Greek Prime Minister, George Papandreou, is stuck with a country that cannot default on its loans, due to the effect it would have on the Euro zone, and a Greek population widely against the required austerity measures to get the country back on track. 

In scenes vastly similar to a Tripoli or Damascas, most of the Greek population have continued with their vehement demonstrations against the Government – angry clashes featuring tear gas and scarlet flares peppering the discontent at a failing economy. 

The people are angriest with the impression that they seem to be bearing the burden of the measures, at a time when there are few job opportunities.  Perceptions of injustice will do little to improve confidence and demand in the economy from the aging domestic population.  

The government has tried, with limited effect, to prevent such a great burden.  The country earlier this year put state assets up for sale to generate some much needed funds.  Last week a new Financial Minister was installed to provide a new stance to the crisis.  It is vital however, that the Greek parliament can pass through a new set of tougher austerity measures to be able to receive the next round of European bailout funds.  Without them, the national crisis will engulf all of Europe.

Germany and France, whilst seemingly trying to assist Greece, are primarily fighting to protect the large amount of sovereign funds ploughed into the crippled country.  These two nations bore the full brunt of the bailouts, with their commercial banks also heavily involved in Greek transactions.  The German government have correctly argued that private investors should attempt to extend the pay off period of the Greek loans, but if achieved will only be a minor victory.  

A Greek default would start a default domino effect, with Portugal and Ireland next in line in front of a weak Spanish economy with spiraling bond interest rates.  

Have the many international humanitarian crises distacted from a more crippling war?  Some would argue the role external bodies have played in the Greek crisis already has been too great.  Others are suggesting that only an outside intermediary will take the most painful necessary steps to win the war. 

Measures such as the selling of national assets won’t be successful until greater outside assistance is given to generate sufficient demand for them.  Like any war, it is difficult to attain when to make such difficult decisions, but the doubt surrounding them needs to be removed for the dangerous conflict to be urgently resolved.

One comment

  1. Most UK media coverage of the Greek economic situation appears to put particular emphasis on the reluctance of the general population to pay tax, and how this is, apparently, one of the main impediments to a successful recovery.

    In reality, uncollected taxes form only a small fraction of the money that the Government has, conveniently, ‘lost’. Corruption, and government inefficiency are the major culprits here, and have been for many years.

    So, generally speaking, the people are not against the implementation of austerity measures. Rather, they are against the implementation of such measures where unaccompanied by the necessary political reform that will ensure that their taxes are well spent.