Monday 6 July 2015

Go with the drachma

 Amazing scenes in Greece this morning, though perhaps the celebrations may be short-lived when it dawns on them that saying “No” to European bailout conditions may not actually help them to escape the even more grinding austerity which they very understandably wish to avoid. I’m glad to see that some commentators are now laying the blame as much on the Eurozone and the IMF as on the Greek government, as seems only fair. The comment by a Manchester University professor on the BBC this morning, that it represented “a catastrophic failure of strategy on both sides” seems a most apt description.

However, where now? I can’t help feeling that if the Eurozone leaders could swallow their pride and consult with British finance ministers (after all, we have managed to prosper within the EU but outside the Eurozone, without any particular desire or prospect of joining the euro in the foreseeable future), we might see some new ideas. Why should the Greeks not go back to the drachma, for example, thus giving them much more freedom of manoeuvre to manage their own financial affairs and more sense of national sovereignty, and yet stay in the European Union? They would still be heavily in debt, and bankruptcy is not an option one would wish on anyone (see Iceland for details), but at least they would no longer be locked in to European-imposed policies that clearly do not have the support of the Greek people, and which just as clearly are not working (a five years’ austerity programme really should have shown dividends by now if the policy was going to succeed, it seems to me). There would be something to aim for, and it is clear that Greek independence and desire for dignity is an important factor that perhaps the EU has failed to take into account.

But will the Eurozone let them go? Not willingly, it is clear. Failure for Greece would probably make it more likely that other countries currently on or fairly near the brink would also fall out of the zone, and that increases the risk that the euro itself would finally fail. What that would mean no one quite dares to think. Not to mention the fact that once free of their eurozone shackles the Greeks might cozy up to dangerous players such as Russia, whose restive unpredictability the EU fears perhaps above all else.

Interesting times, certainly! Whatever decision is taken by the Greeks, there are dangers both for them and for others. But that is always true, at all times and in all circumstances. I wish them well.