The people of Greece have presented the European Union with the greatest political crisis in its history after voters decisively rejected years of further austerity and effectively challenged Brussels to throw a member state into the economic abyss.
The Syriza-led government in Athens celebrated what it called a victory of democracy over economic ‘terrorism’, as early results of a referendum showed that Greeks had overwhelmingly voted against the demands of the country’s hated creditors.
Such rhetoric has done little to endear Athens to the mainly German and French politicians it will now have to persuade to save the country’s economy [especially with] Germany’s Vice-Chancellor, Sigmar Gabriel, warn[ing] that Greece was heading for ‘bitter abandonment and hopelessness’ following the vote.
(London Independent, July 5, 2015)
Frankly, the outcome of this referendum (61-39 percent against EU bailout terms) is entirely consistent not only with the delusional demands of the Syriza government but also with the misguided expectations of far too many Greeks – as I foreshadowed in “Elections Show Greeks Want to Have Euro Cake and Eat It Too,” January 26, 2015.
Now we shall see to what extent Eurozone leaders have become spooked by their own propaganda (aka self-fulfilling prophecies) about a Greek contagion infecting other member countries. For only this would cause them to swallow their pride and defy common sense to cave in to Syriza’s demands.
No doubt the other European PIGS (namely Portugal, Italy … Spain) would like nothing more than to see Greeks have their cake and eat it too. After all, if the Eurozone bends over backwards to keep Greece, it’s reasonable to expect it to bend over doubly so to keep their respective countries too.
On the other hand, providers of the European trough (most notably Germany and France) must know that they’d be committing political suicide if they were to continue indulging the Greeks’ Zorba-like ways. After all, the $8 billion Greece is begging for now is just a drop in the bucket of the $200 billion the Eurozone has already dumped into this money pit masquerading as a country.
Let people be, boss; don’t open their eyes. And supposing you did, what’d they see? Their misery! Leave their eyes closed, boss, and let them go on dreaming!
(Nikos Kazantzakis, ‘Zorba the Greek’)
Indeed, I see no way even a powerful “boss” like Angela Merkel could get away with allocating even one more euro of German taxpayer money than is already allocated in the deal the Greeks just rejected in such blithe and impudent fashion.
This is why Greece might have no choice but to either revert to its Zimbabwean-like currency, the drachma, or appeal to China’s economic vanity and super-power envy for help. The latter, of course, would have the additional benefit of terminally vexing its EU creditors.
In truth, though, nothing would flatter and validate China more than for Greece to come, hat in hand, to its new Asian Development Bank for a bailout. Not least because the billions it would take for China to bailout Greece would be peanuts compared to the international stature and influence China would earn by playing white knight in this crisis (checkmating EU and U.S. banking institutions).
Except that China should beware that Greece’s problems are more cultural and endemic than structural and economic: too many Greeks believe they are entitled to pensions and other welfare benefits but not responsible for paying any of the taxes necessary to fund those benefits.
Therefore, as the Europeans are now experiencing, any bailout on Greece’s terms can only prove a Sisyphean undertaking for lender and beggar alike. Which is why, instead of rising like a phoenix from “Angela’s ashes,” the best China can hope for is to appear like a deux ex machina to provide Greece temporary relief from its economic woes … until it comes back begging for more.
NOTE: It’s an indication of how delusional Greece is that it seems to think flirting with Russia will help win Europe back. Whereas, given the cash-flow problems Russia is already having (trying to please Crimea and “woo” Ukraine), everyone knows this is just for show. In fact last thing Russia needs or can afford these days is a big, fat mistress like Greece.
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* This commentary was originally published yesterday, Sunday, at 6:52 pm