“Greeks are paying for their politicians…”

The situation with the Greek debt crisis has been on the front pages of the world mass media for a while. Last week it seemed that the Greek government and the creditors reached a compromise decision. Greece’s international creditors and partners in Eurozone offered to postpone the bailout deadline for Greece in exchange for an agreement of the Greek government to hold a number of reforms and cut some budgetary payments.

However, late on June 26 Greek Prime Minister Alexis Tsipras unexpectedly announced a referendum to be held on July 5 on whether the bailout agreement offered by the creditors should be accepted. In his address late on Monday on the governmental television channel he expressed his confidence that the voting against these austerity measures will enable Greece to negotiate better conditions of regulating the debt crisis.

It will be reminded that the term of paying out the 1.55 billion euros of loans given to Athens ended on June 30. Correspondingly, if Greece does not pay it out, it will mean default which will throw the country in the same category as such countries as Zimbabwe.

Although Tsipras called the conditions of the international creditors “humiliating,” the European Commission yesterday made the last attempt to save Greece from the default. If on June 30Greek Prime Minister Alexis Tsipras accepts the proposal, and meets the conditions of the creditors and Brussels, this could prepare a path for new negotiations within the framework of the European Group, as Brussels officials who preferred to remain unknown assert, reportedly by dpa. According to the information provided by this agency, Tsipras should call the population to vote ‘yes’ on July 5 for the terms offered by the creditors and international financial institutions in order to make these negotiations possible.

Apparently, Athens does not want anything and sticks to bellicose rhetoric. Proof of this is the threat of Greek Minister of Finances Yanis Varoufakis to sue the European Union in case his country is forced out of the currency union.

The Day requested international experts to comment on the situation with Greece facing default and conclusions Ukraine should make in this concern.

Edward LUCAS, senior vice-president of the Center of Analysis of the European Policy, London:

“Greeks are paying for their politicians’ greed, incompetence and recklessness. But most of all this is a sign of Europe’s failure - first in constructing a currency union based on wishful thinking, and then failing to deal with the consequences.”

Roland FREUDENSTEIN, Deputy Director and Head of Research of the Martens Centre, Brussels:

“There are now fundamental differences between the Greek government and all its partners in the Eurozone, as well as the IMF and the European Commission. Tsipras thinks he can get a better deal than the (already generous) one presented last Friday. He also thinks that a ‘no’ vote in the Greek referendum on 5 July, about this offer, will strengthen his position in new negotiations. Many of his partners (among them Chancellor Merkel and President Hollande) have said that a ‘no’ vote in the referendum will mean an exit of Greece from the Eurozone. I don’t think there can be new negotiations in that case. But the interesting question is what happens in case of a ‘yes’ vote. Tsipras has hinted he would resign then. There might or might not be snap elections in Greece, with a result impossible to foresee. On the other hand, Greece’s partners will then most likely be willing to resume negotiations, and there might be a 3rd bailout - the question is, with which Greek government. The country is now deeply polarized between the ‘yes’ and the ‘no’ camps. Impossible to predict anything.

“A Greek exit from the Euro would be a tremendous economic risk for Greece - the country would go through its deepest upheaval in a century, with spreading poverty, rising crime and political instability. The Eurozone itself might be at risk because international speculators might start betting against other weak Eurozone economies - Spain, Belgium, Italy, etc. But these risks are probably manageable thanks to the new stability mechanisms introduced in the past four years. But the biggest risk might be geopolitical: An instable Greece in a volatile region (Turkey, Middle East, ISIS, etc.) and Russia keen on weakening and splitting the EU. There might be a rapprochement (though not a bailout) between Russia and Greece, putting into peril the sanctions front and the unity of the whole West. So it would be preferable to keep Greece in the Eurozone - but not at any price. Tsipras’ blackmail is unacceptable and would weaken the Eurozone from within. So there are only bad options, it seems - unless something radically changes within Greece itself.

What lessons should Ukraine learn from the Greek economic crisis?

 “Reform, reform, reform! The process is too slow in Ukraine. No ownership, no communication of necessity of reform to people. Better coordination between coalition partners, branches of government, government and parliament.

“No leading politician makes reforms his own personal project. They don’t connect their fate to particular reforms. That’s called ownership, in a political context. It’s lacking in Ukraine.”

Giorgos PAVLOPOULOS, Online International News Editor, Naftemporiki /naftemporiki.gr - P.ATHANASIADES & CO S.A., Athens: 

“The rhetoric used by the bloc of SYRIZA (Radical - Populist Left) and the Independent Greeks - ANEL (Populist Right) to win the elections in January was not one of a critical approach to the bailout deals. It had an essence of a clear anti-EU - anti-Western sentiment, similar to the one of the Latin American regimes of the Venezuela type.

“It was rhetoric of ‘anti-colonial’ nature, presenting the EU-leading powers such as Germany as colonialists who want to subjugate Greece and buy it out by using the bailout deals.

“This was in contradiction with the simple fact that the Greek economy had a huge deficit and lack of competitiveness which could have led it to absolute default in 2010 without the bailout programs. But the majority of the voters still think that all these programs were tricks by the creditors so as to cut wages and pensions and punish the Greek people.

“It’s true that the so-called pro-EU parties leading the Greek governments (PASOK, ND) attacked the living standards of the people by implementing the austerity measures, putting the blame on the creditors. But the thing is they failed to implement the part of the bailout deals that could give a boost to the Greek economy, to foreign investment and to growth. Given that, it’s true that in the eyes of the Greek people the bailout deals are equivalent to a harsh punishment without end, which in fact is only half-truth.

“Tsipras uses the referendum as a weapon to show the creditors that he is confident enough to come into collision with them, regardless of the consequences. He thinks it’s a win-win option: if he sees he has no alternative, he will take the offer of Juncker and present it as a victory of his negotiation tactics. Then he can propose a ‘yes’ vote to the referendum, which he will get, because most people fear an exit from the euro. If he sees that Europe stands firm against him, he will fight for a ‘no’ vote and he will move forward, saying he has the approval of the Greek people to make the dangerous clash with the creditors and even return to a national currency (drachma).

“It is definitely not true that the Greek people don’t work as hard as the people of the European North, it’s just that the productivity of labor in Greece is too low because of a backward and stagnated economy, which is not friendly to investment and to innovation, having also a state machine full of corruption and bureaucracy.”

Thanos DOKOS, Director-General, Hellenic Foundation for European & Foreign Policy (ELIAMEP):

– Mr. Tsipras decided to have a referendum because he realized that the agreement under discussion with the European institutions would cause strong reactions inside his own party and would probably not get sufficient support by SYRIZA and ANEL MPs to go through Parliament (although it would have been supported by most opposition MPs and would get the necessary majority at the end). His first priority was to avoid splitting his party and also to stay in power. Apparently he also believes that a "no" vote in the referendum would strengthen his government's negotiating position and would allow him to get a better agreement. Most European officials and analysts believe he is wrong on that estimate.

There may have been serious mistakes committed by the SYRIZA government (and previous Greek governments) but there is no shortage of mistakes on the lenders' side. Insisting on the same blind, recessionary austerity measures that have by almost general consensus failed over the five years (bringing unemployment of 25% and youth unemployment to 50%) raises some questions on the intentions or the judgement of senior officials from important EU countries. And to be more specific, insisting on measures that will affect the competitiveness of Greece's only healthy "industries", tourism and shipping, is difficult to understand.

Obviously some European officials would like to make an example out of SYRIZA in order to deter other leftist parties and future governments in other European countries.

Indeed, Greece has been living beyond its means for a number of years and reform efforts have been met with limited success as the combination of deep austerity, recession and sweeping reforms proved to be rather explosive. it is not accurate however that Greeks are working less than Northern Europeans. Quite the opposite, as according to officials Eurostat statistics Greeks work more hours per year than any other Europeans. The problem here is lower productivity because of structural problems.