The Greek general election earlier this month saw a change
in the government of Prime Minster Antonis Samaras and the left wing Syriza
gaining 149 seats out of the 300 in the parliament. The win of Alezis Tsipras
led Syriza s deemed by many as a changing point in European politics. It seems
to answer the question why the left has failed to reemerge despite the growing
economic tensions in the EU. The question at hand is what will be the outlook
of the new anti-Austerity Greece be.
Election result
The Syriza needs two more seats in the parliament to form an
absolute majority but it has formed coalition with Right wing Independent
Greeks. The coalition might seem unlikely as the two parties have entirely
different ideologies but it is very clear that both partners agree on what
matters most in the Greek agenda: Anti- Austerity measures.
What is Austerity?
For those of us who might find the term unfamiliar it refers
to the government policies to reduce the budget deficit at times of financial
crisis.
A state of reduced
spending and increased frugality in the financial sector. Austerity measures
generally refer to the measures taken by governments to reduce expenditures in
an attempt to shrink their growing budget deficits.
The Grexit?
Will the Greeks leave the Euro? Will the EU let it leave?
The International World is waiting with all eyes on the Greece-EU discussions.
The Euro crisis began in Greece 5 years back and the
economist finds it fitting that it is where the denouement is played out. All
parties involved including Prime Minister Tsipras have declared that they won’t
leave the Euro, but the Grexit seems to be at hand.
Right now the main question is will others follow the
Greeks? The Spanish, the Portuguese, the Italians are also looking for their
way out of austerity. If they too follow the Grexit the Euro might be no more.
2 out of 3 for Greece
The Economist shows that the current government got 2 out of
3 big things right. But the one big thing they got wrong might be there
undoing.
1. Europe’s Austerity has been excessive:
The Germans have led the EU for the last
few years and Chancellor Merkel has been the main figure behind EU’s actions.
However it is now becoming clear that the Austerity in Europe is excessive. The
policies are now troubling the EU. The economies are failing and deflation has
ushered in throughout the euro zone
2. Debt Unpayable:
The Greek owe 60% of its debt to the Euro
Zone and finds a debt of 175% of the national GDP over the past six years despite
tax raises and spending cuts. One cannot be optimistic in this outlook and thus
to be realistic the debt is unpayable.
3. Abandon reforms at home
The Syriza got this wrong or so the economist
believes. The plans to rehire 12000 public sector employees, abandon privatization
and raising the minimum wage might just not work for the Greeks
Is the Grexit on the table?
On realistic grounds it seems to be on the table. Mrs.
Merkel has declared that there will be no debt cuts and yet still urges the
Greeks not to leave the Euro. Mr. Tspiras has shown his confidence in the
ability to reach an agreement with the creditors over repayment.
However the new finance minister Varoufakis has refused to
work with the “Troika” of global institutes which comprise of the European Commission,
The World Bank and the IMF.
On a positive note the EU Economic and
Financial Affairs Commissioner has said to the BBC that "We believe that the place of Greece is in the Euro Zone, the Euro nedds Greece and that Greece needs and wants to be in the Euro Zone."
Greek
economy in numbers
Average wage is €600
(£450: $690) a month
Unemployment is at
25%, with youth unemployment almost 50%
Economy has shrunk by 25% since the start of the eurozone crisis
Economy has shrunk by 25% since the start of the eurozone crisis
Country's debt is 175%
of GDP
Borrowed €240bn
(£188bn) from the EU, the ECB and the IMF
(BBC)
Why make the sudden noise?
Of course the Greek debt crisis and the Euro financial
crisis has been on the table for the last half a decade but the collapse of the
right wing Greek government and the rise of the far-left populists Sysriza seems
to have threatened the Euro Zone’s higher powers.
This is the reason why Greece started to make headlines yet
again. One can feel as if the outcome of the Greek policies that may threaten
the existing powers’ advancement is the only concern of them. The bailout in 2012
also came with much debate only as the Germans did not want the blame on
itself. But right now it might be clear that the concern is not on the
struggling Greeks but their own personal national economies.