ebbf member Ralph Blundell from Portugal talks about a multilayered problem.
The first is that recent Greek governments have shown a terrible track record of doing what they say they will do, and this has created a reputation for untrustworthiness. So much so whilst this is first and foremost a financial issue, trust is proving a stumbling block at the moment.
This lack of trust is mutual, as back in 2010 the then Greek government had asked its creditors to restructure its unsustainable debt. At that time the IMF, the ECB and other creditors replied that was not necessary. Unsurprisingly both the Greek people and Government feel betrayed by the very people who are now posing as their saviours.
The crisis is not just of the Greek’s making, it is about all parties taking responsibility. It was crystal clear that the countries debt was unsustainable yet creditors kept lending. Just like the largely predictable 2008 financial crisis no one decided to take any responsibility. In both cases those who could have acted responsibly …… chose not to for short term gains.
The lack of clear and principled leadership in addressing the issue, and unwillingness to “grab the bull by the horns” have made the problem worse.
Thirdly the Greek system has a poor reputation for economic and corporate governance.
For example tax evasion is common at all levels. Not only does this reduce revenues, it allows wealth to be concentrated amongst a smaller and smaller group of people. Greece is not an especially poor when compared to other European countries like Latvia, Romania or my own home of Portugal, but many Greeks live in real poverty.
Lastly the creditors demands are based on financial models that are fundamentally broken. The goal is not collective prosperity and growth for a nation, but the bolstering of personal and corporate interests. Privatising airports, for example, is a way for investors to own and profit from public companies.
There is a lack of civic leadership to unite the Greek nation and the community of European countries. We need leaders to set out the right thing to do, addressing Greece’s financial woes and creating broader prosperity.
So trust, taking responsibility and feeling a sense of responsibility, governance and a broader shared prosperity are a some of the issues that sparked this crisis and that should be central to any new economic system.