All efforts
for nothing. Despite the ESM funds from the EU and the IMF, Greece is facing
its imminent fiscal collapse. Even the latest parliamentary elections last
month did not have any effect at all on the overall economic and financial
situation, the country is drowning more and more in its own debts, the IMF and
individual EU member states (e.g. Germany) even refuse to provide more rescue
funds to Greece.
Time and
patience are running out, and it is highly questionable if Greece will be
granted more time. And even if Greece gets more time for reconciliation of its long-term
austerity plan, it will require additional funds up to 50 billion Euros.
Naturally, most governments in the Euro-Zone are no longer willing to grant
these extra funds, also because single member states like the Netherlands and Finland
only agreed on the ESM under the condition that the IMF is being entirely involved
in the funding process. Now, with the IMF rejecting additional aids, also the
ESM will no longer apply to Greece.
So, will it
be an end with a big bang then?
Greece’s bankruptcy
will certainly not be the end of the Euro crisis, but the beginning of the next
stage, with the crises in Spain, Portugal, Cyprus and Italy to spin into the
next critical level. With Spain being the next crucial candidate with a rapidly
deteriorating economic downturn, and Spanish conservative government under
Prime Minister Mariano Rajoy implementing a painful austerity programme, Greece’s
imminent collapse will cause a Europe wide domino effect for the other crisis
candidates to be dragged into the same path, and the last remaining Euro states
which are not in crisis yet (such as Germany) to be pushed into a recession as
well.
It would be
the end of a long and painful odyssey, with Europe depending on the political
outcome of the last Greek elections, and blocking all necessary policy making
agendas on the national and European stage. And it seems to be that no one is
longer scared to death in the view of an imminent Greek bankruptcy. According to
German Minister for Economic Affairs, Philipp Rösler, a bankruptcy “has already
lost all of its horror”.
But maybe
this is a cynic plan of the European decision makers. As soon as the ESM is
ready to be deployed by September 2012, there will be no need to rescue Greece
anymore: a complete U-turn of the German government’s Greece policy.
On the
other hand, it was clear that Greece won’t achieve the austerity goals anyway,
and it was strongly assumed that all granted funds so far was just part of a strategy
to buy some more time, to prolong the decease process. The achievements of this
strategy were nearly nought, with a GDP downturn of nearly 20 per cent and an
unemployment rate of 25 per cent, but the debts are still there. Our decision
makers are facing the failure of their own desperate attempts to avoid
bankruptcy and the spread of the crisis. Now, it seems that they cannot longer
be bothered and even consider a break-up of Greece out of the Euro-Zone.
Even if
Greece received funds until 2014 or even 2016, their effect would be useless as
long as the recession goes on. Presumably, this recession is turning into a
depression. But no matter if Greece receives more funds or not, it will be a
monetary and fiscal adventure, something the German government under Chancellor
Angela Merkel wanted to avoid in the first place.
The losers
of this mess will be the Greek people. No one can predict which effects a
bankruptcy will have on their lives, their jobs, and their economic situation. And
no one can predict which consequences it will have on Europe and its EU’s
member states. A dangerous attitude is already occurring: no one cares about
the consequences anymore. And if no one cares about the fate of Greece, then
people will stop to care about Europe.
A fatal
attitude indeed. And we’re the ones who will pay for this behaviour.
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