‘May you live in interesting times’ supposedly goes the old Chinese curse.
Well, things are about to get much more interesting in Europe after elections in Greece over the weekend. Syriza – a left wing party made up of Maoists, Marxists, socialists and Greens (no, apparently they’re not one and the same) topped the polls but didn’t obtain a majority.
Showing great dexterity, Syriza quickly entered into a coalition with the right wing ANEL party. ANEL has absolutely nothing in common with Syriza except a virulent dislike of the €245bn debt imposed on Greece by the troika – the European Central Bank, European Commission and International Monetary Fund (IMF) – as a result of the 2010 and 2012 bailouts.
Syriza’s ultimate goal is a 50% haircut on Greece’s debts much like Germany achieved in the early 1950s after World War II.
The troika is standing firm, at least for the moment: ‘There are rules, there are agreements. New elections change nothing’ said Wolfgang Schauble, Germany’s finance minister, in response to Syriza’s rise.
Yet with Greece struggling to find the cash to make the €3.4bn payment due to the IMF in February and March, something clearly has to give.
I can understand the frustration and anger of Greeks at the higher taxes, dismal economic growth and 25% unemployment that has accompanied the various bailouts of their country. The harrowing fall in the standard of living that will result if Greece gives up the euro and returns to the drachma would also clearly be unpleasant.
Yet Greece’s plight is ultimately the result of appalling economic management by its leaders in recent decades and the surrender of much of its sovereignty by joining the euro. I share Germany’s view that badly managed countries should take their medicine and reform their ways rather than being constantly bailed out and never having to resolve their problems.
So, while there isn’t an ideal solution, the troika should stand firm. And with Syriza doing the same, the only sensible outcome now is for Greece to withdraw from the euro.