English version: http://www.euractiv.com/section/euro-finance/opinion/the-greek-crisis-european-madness/
French version: https://www.euractiv.fr/section/justice-affaires-interieures/opinion/crise-grecque-la-deraison-europeenne/
By Guillaume Balas (France, MEP, Parti socialiste, Progressive Alliance of Socialists and Democrats in the European Parliament), Sergio Cofferati (Italy, MEP, Sinistra Italiana – Progressive Alliance of Socialists and Democrats in the European Parliament), Eva Joly (France, MEP, Europe Ecologie les Verts, Greens/European Free Alliance), Curzio Maltese (Italy, MEP, European United Left – Nordic Green Left), Emmanuel Maurel (France, MEP, Socialist Party, Progressive Alliance of Socialists and Democrats in the European Parliament), Dimitrios Papadimoulis (Greece, MEP, Syriza, European United Left – Nordic Green Left), Ernest Urtasun (Spain, MEP, Iniciativa per Catalunya Verds, Greens/European Free Alliance) and Isabelle Thomas, (France, MEP, Parti socialiste, Progressive Alliance of Socialists and Democrats in the European Parliament)
“Last week, Greece had to deal with new austerity measures and a Eurostat study invalidated the IMF’s doomsday scenario. A number of MEPs now call upon European leaders to rethink the issue of debt and review the reforms being imposed on Greece.
Since last summer, the government of Alexis Tsipras has been implementing the program of the last memorandum, while initiating the required reforms: reconstruction of viable public services, reform of the pension system, and the fight against corruption, evasion and poverty.
In April, the Greek prime minister had to deal with new austerity measures imposed by the creditors in case the objective of the primary surplus is not reached in 2018. While a Eurostat study published on 21 April invalidated the International Monetary Fund’s (IMF) pessimistic scenarios, the absurd strategy of the creditors is repeating itself. This strategy consists of mechanically replicating mistakes of the past without facing real issues and paving the way for more sustainable solutions to the crisis.
The final evaluation of reforms and the conclusion of the first review of the programme have been constantly postponed for months due to disagreements amongst creditors, mainly between the EU institutions on one side and the IMF on the other. The two main conflicting points are the primary surplus target and the necessary adoption and implementation of reforms to reach this target.
The IMF disagrees with the primary surplus target agreed for the last memorandum and is constantly dissatisfied with the reforms implemented by the Greek government, but simultaneously claims a debt relief. At the same time, some eurozone creditors have a strategic interest in the IMF remaining in the financial assistance program but refuse conversely the debt relief.
This mingling of various interests leads to a deadlock situation where the IMF, obsessed with its fiscal dogma, used the Washington spring meeting to finally convince others European creditors to share its views. Recent WikiLeaks revelations brought to light opaque discussions regarding the handling of the crisis, which could raise certain questions regarding policies. Indeed, convinced that Greece will not be able to meet its financial obligations in July, the head of the European Department of the IMF, Paul Thomsen, sees the country’s bankruptcy as the only way to impose IMF views.
Politically and technically unable to conclude on the need of debt relief and the fiscal gap that has to be filled, as well as of the relevant necessary reforms, the creditors solidified their position based on the IMF’s participation and more austerity measures. New demands for tax increases, additional budget cuts and lower pensions will set the stage for an umpteenth financial drip. 11
These additional measures are absurd and unnecessary. Indeed, despite the refugee challenge and capital controls imposed last summer, a report published by Eurostat last week confirms that the primary surplus target for 2015 reach 0.7% of GDP (excluding debt service), well above the original target set by the program of 0.25% of GDP.
After intense negotiations, at this stage the differences between the creditors and Greece are small. However, these differences can be exceeded if a mutual political will exists. Therefore, it is feasible and necessary that an agreement be reached and the review of the programme be concluded successfully in the coming days.
While implementing more than 100 measures validated by the Eurogroup since September, and fully respecting the terms of the last agreement concluded in July, Alexis Tsipras is dealing with the risk of a negative ultimatum, as desired by some creditors such as the IMF and Wolfgang Schäuble.
Affected by a generalised schizophrenia, creditors pursue the disintegration of the Union by the strategy of proof.
Through international mechanisms created ad hoc by intergovernmental treaties, financial drip placed Greece, a sovereign member state of the EU, under economic supervision. Ignoring human, social and economic realities, the supposed remedy imposed on the Greek patient appears to be fatal bleeding.
It’s no small paradox that the same people who were asking for a quick implementation of the memorandum are now playing for time and delaying. It signals an odd political strategy, aiming, without any doubt, at destabilising the government coalition and the parliamentary majority.
The creditors had two goals since July, 2015: imposing the austerity measures of the memorandum and getting Tsipras out. They achieved the first one and they are obviously still pursuing the second one.
Eurozone creditors are also members of a Union that we still hope is going to be political. There is an urgent need for clarification: will they silently stand for such a strategy endlessly or will they take their responsibility to reach a sustainable political solution to the crisis?
Greece must be eligible for cancellation, restructuring and reprofiling of its debt (restructuring of maturities and repayment rates). There is a consensus today among leading economists regarding the unsustainability of the debt.
We therefore call on European leaders to quickly conclude the review of the reforms and address the issue of debt to enable Greece to pursue qualitative reforms, enhance growth and sound economic development and rebuild its social structure and services. Secondly, we are convinced of the necessity to exit a purely intergovernmental solution for the management of the crisis and examine ways to strengthen community methods.
The management of the crisis already confirmed the renunciation of the democratic legitimacy of the Troika, as expressed also in adopted EP reports, an institutional arrangement combining creditors of all kinds: states, monetary and financial institutions. Eurozone leaders, as elected and accountable political figures, and members of the European Union, cannot afford to stand by this unclear position.
In the end, positions or “non-positions” taken on the Greek issue are clearly political. If we continue to ignore this reality, Europe will remain an aggregate of data, individuals and conflicting interests engaged solely on the impasse of austerity. This conscious choice will be then the responsibility of each Eurozone leader.”