Greece
has unwillingly invested 180% of its current GDP in the Euro project.
It can't afford to walk away with only the damage of the failed EMU.
Before
forming an opinion on whither it's better for Greece and the Eurozone
to part ways, one should examine the facts, starting from the basics.
Greece should not have entered the Eurozone in the first place. It
should not have applied for membership (let alone by using the
Goldman Sachs swap trick) and the Eurozone should not have accepted.
Both sides were aware of the fact that the Greek economy was only
nominally converging with the EU median level, but chose to ignore
reality, for purely political reasons.
The
Greek has always been a “deficit economy”, like the rest of the
periphery. The exchange rate of the Greek Drachma was revealing: In
1978 it took 20 Drachmas to buy one German Mark, in 1988 it stood at
70 Drachmas and in 1998 at 170 per one Mark. Trade and current
account imbalances where counterbalanced by the exchange rates. This
sort of “security valve” was eliminated with the establishment of
the euro, when states forfeited monetary sovereignty but no authority
has undertaken the relevant responsibility.
The
Eurozone has evidently failed to achieve the aims of the Economic and
Monetary Union it was intended to serve (as defined in the Maastrich
Treaty): “... harmonious and balanced development of
economic activities, sustainable and non-inflationary growth
respecting the environment, a high degree of convergence of economic
performance, a high level of employment and of social protection, the
raising of the standard of living and quality of life, and economic
and social cohesion and solidarity among Member States.”
The Euro was supposed to be just a medium towards these aims, not
the goal. Thirteen years after joining the Euro, the non-core
countries like Greece, Italy, Spain, Portugal etc. are undeniably
further apart from the core countries than they were before. This
can't be explained by the “lazy, cheating Greeks who live beyond
their means” stereotype.
The
problem with the euro is that it is not a real common currency, but
an inflexible fixed exchange rate regime, since it lacks a common
economic, fiscal and social policy that would absorb the differences
of the various economic realities. The Eurozone is missing what the
Federal Republic of Germany uses in order to balance the different
realities of (for example) Bayern and Bremen. This must be addressed,
either with or without Greece in the club, in order to avoid more
divergence, division and conflict down the road.
Letting
aside the inherent failings of the Greek reality, it would be unwise
to ignore what is now at stake for Athens. Greece has been forced to
undergo a “salvation program” that saved mostly the French and
German banks, destroyed the Greek economy, impoverished the society
and ballooned its national debt. But seen from a different point of
view, Greece has invested a good part of the 180% of its current GDP
(namely its national debt) in the “Euro project”. If it were to
let go now, and seek a solution to its problems alone, with a new
national currency, it would essentially be forfeiting its investment
and keeping only the damage inflicted from the failure of the EMU.
The
Greek government might or might not succeed in securing a deal that
would solve the problem of its country and perhaps start the process
that the Eurozone needs to become a viable union. If it succeeds, the
average Greeks will still face a long period of economic hardship,
but with the prospect of a better future, in a better environment. If
not, Greece has no other viable option but to cut it's losses and go
back to surviving as the poor, small country it was for two centuries
at the south eastern border of Europe. If it can't be a part of the
solution, it can at least stop being a part of the problem.
* First published in German translation by Hubertus Volmer, at http://www.n-tv.de/wirtschaft/
Vote NO and prosper
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