Stagnation is not stability - The Best from Greece
Posted on: 24/Jul/2012
By Nikos Konstandaras
In the past few years everything is moving very quickly, as if a dam has broken, freeing forces that sweep away all in their path. In Greece, every day we discover new, more difficult aspects of our crisis; the European Union is being shaken by debt crises and by the turmoil that these cause; Arab countries are rocked by revolutions whose outcomes are unclear. Everywhere we see turmoil. Everywhere people are looking for stability, so that they can begin to reconstruct their economies, so that their societies can find new balance.
The irony is that the increased turmoil is the result of long-term stagnation. Greece, the EU and the broader region are paying the price of their former immobility. The most dramatic instance of this dynamic is the collapse of secular Arab dictatorships and the rapid rise of formerly suppressed Islamists. These countries had no democratic tradition and they permitted no fruitful dialogue – which would have eased tensions and led toward the synthesis of ideas and symbiosis of different groups. As things stand, the only groups with the organizational strength and the stamina to win and to establish themselves are the Islamists, with all that this entails for citizens' freedoms and the future actions of their countries. The imposition of stagnation over many decades detonated the region.
In Greece, we were brought to the dead-end by our society's blissful delusion that we had found the machines which printed money and had no need to compete with anyone for whatever we wanted. The same stagnation bred a political system that does not know how to inspire the people so that they can make sacrifices today for a better tomorrow. The politicians cannot communicate with each other for the country's salvation: they learned their trade when things were simple, and now that the going is heavy they are lost. They wait for solutions to rain down from heaven. In effect, they remain stagnant...
The EU's leaders made a similar mistake: they created a common currency and then did not do enough to support it with significant steps toward economic and political union. Seeing that the euro worked, they avoided the conflicts and the trade-offs which Europe's closer union would entail. When the first signs of the Greek crisis appeared, the EU's officials avoided the unpleasantness, choosing to believe the Greeks' promises instead of taking measures to avoid the crisis. When it was too late to prevent it, again they chose to hope for a positive result and to punish the Greeks rather than taking the decisive but painful measures that would have fortified the eurozone.
The crisis found the leaders of collective Europe unprepared. They left the economies of the more heavily indebted member-states to the marauding markets, they opened the door to the International Monetary Fund, as if the problem was Greece's alone. Mighty Europe, in other words, transformed itself into its weakest link and allowed foreign institutions to impose solutions on it – solutions which failed. This policy is not in Europe's interests, but it appears to be in Germany's. According to Citigroup Inc.'s chief international economist, Nathan Sheets, who was quoted by Bloomberg last Tuesday, with today's euro Germany has a currency that is about 20 percent weaker than would have been the case if it still had the mark. Sheet “calculates that the lower currency lifts Germany's nominal trade surplus by about 4 percent of GDP, or 100 billion euros”. Bloomberg noted that this is “more than 10 times the 8.7 billion euros the country is contributing this year to the rescue fund being set up”.
As long as the other Europeans and the EU mechanisms do not move to balance the differences between member-states, the greatest danger that the union faces is from volatile reactions to this situation and not from the cost of balancing forces between countries and fortifying the single economy. The longer the solution is delayed, the greater the final cost. The only way to end the instability in Greece and Europe is by the European leaders declaring their unequivocal intention to defend the euro and by their agreeing immediately on the parameters of the single economy. This may provoke conflict at the political level, until the differences are ironed out, but it is certain that continued stagnation will lead to economic, political and social collapse.
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