Greece absent from the discussion on reforms in financial policy

Greece absent from the discussion on reforms in financial policy

“The country, with a new air of confidence engages in all major international debates”, the prime minister repeatedly declared in and out of the country, with the government staff following in his footsteps.

They support this position by pointing out to the government having positions of its own and promoting them regarding the climate change and the shift towards the green economy, while also mentioning the refugee / migrant issue, which constitutes a European and international affair.

However, the country has been left out of the great debate that has commenced on a European Union level on the need to change the rigid fiscal policy in order to tackle the recession which is not simply getting closer, but rather it has already began to affect the EU countries, even those with strong economies such as Germany. It is indicative that Mario Draghi just before he steps down from his position as head of the European Bank, warns that the crisis will become worse if no financial relief measures are taken. Indeed, he warned the Netherlands, which comprise one of the fiercest deniers of fiscal loosening, that the cost of bailing out its banks could amount up to 12% of its budget.

Yet the question remains why the Greek government – whose intention was to be part of all major debates – is a priori absent from the most crucial debate in the European Union. The prime minister, during his touring of European capitals, left out of discussion the issue of primary surpluses, not even referring to the return of the European banks’ profits from Greek bonds. The prime minister unequivocally rejects the scenario of a political negotiation: “read the book by Miss Varvitsioti to get a glimpse of where the allegedly political negotiation has led in the past” he stated as a response to a question in Berlin. Overall, though, he thinks that the financial issue will be discussed on an appropriate level, that is on an institutional level and not during Eurogroup or worse before the European Council and on one-on-one conversations with leaders. “Greece is not a beggar”, the prime minister explains. This leads to the institutions, which comprise the EU’s lower-level technocrats refusing to fill the Greek fiscal gap for 2020 (they raise it to 1 billion euros and demand tax cuts) by using the refunds from the European banks’ profits from Greek bonds. This is how it becomes doubtful whether the extraordinary allowance the previous government handed out at the end of the year will now be given, whereas the 13th pension has been moved to the 2020 Christmas period.

Overall, though, while even Draghi and much more the ready-to-step-down Moscovici are pushing for a revision of the Financial Stability Pact, the Greek government is not simply absent, but is rather moving in the exact opposite direction, avoids talking about recession in the EU, and instead declares that with the current ‘financial straitjacket’ it can turn out to be the ‘pleasant developmental surprise’. Thus it tries to send the message that it is not necessary to revise the Pact in order for Europe to avoid recession or enter into a trajectory of growth. Maybe this is how the new government will prove to be the best student in an outdated lesson that the Germans and the Dutch insist on. /ibna