Syriza has been bending to the demands of the troika, until now. With the June 30th day passed and no agreements met, Greece may be on it’s way to exiting the EU (something Syriza doesn’t want to do). This would have a large impact on the EU as well as destabilizing effect on the world economy. But Greece has been left with few alternatives, especially with the IMF (International Monetary Fund) and the ECB (European Central Bank) standing sternly with the continued enforcement of austerity.
Greece has been put in an unfair situation since the beginning of the recession. Since the enactment of the austerity, the country has suffered worse unemployment (hovering around 60% for youth unemployment) and poverty than the US did during the Great Depression.
Greece was accepted into the EU with a deficit. Once accepted into the EU, outside investors exploited the landscape along with local investors who saw the opportunity for growth in their country with reckless investments. When signs of the crash began to appear, they fled, exploding the deficit further.
The election of PASOK party’s Prime minister George Papandreou, the socialist leader who betrayed his constituents and party, served the first hand of austerity to the public. And now seven years later, Greece has only accumulated more debt, no growth, and continued massive unemployment, with little to no opportunity for the citizenship that had no control over the debt that has engulfed their country.
Germany and the European Central Bank wanted to their investors and banks to get paid back for their losses that took place during the recession and the IMF was there to ensure such a thing would happen.
When the crisis hit, Greece wasn’t the only country hurting. The EU was unstable and to many it looked like it was about to collapse. One way to keep countries like Germany, and other European Financial institutions profitable was to squeeze the money out of debtor countries like Greece, Spain and Ireland (with the assistance of the IMF). But the IMF was aware of what damage these measure could inflict on countries like Greece.
Back in 2010 when the IMF contemplated debt restructure in favor of EMU (Economic and Monetary Union which makes up the eurozone) and European Financial Institutions, Arvind Virmani, India’s member of the IMF, said “Even if, arguably, the programme is successfully implemented, it could trigger a deflationary spiral of falling prices, falling employment and falling fiscal revenues that could eventually undermine the programme itself." And this is what happened.
Now several years of continued crippling debt, along with report after report revealing the unnecessary and brutal implications of enforcing austerity on countries has, there is no real growth or change to show. But it has never been about helping Greece and its people. The economic institutions were there to help the banks and investors get their money, not a country of people who were caught in between a deregulated and a shady market.
Yet, this is the key point of what is happening throughout the world. Corrupt economic models are running the show offering little to no alteration other than continuing upon its own demands. Syriza is allowing the public to vote on a referendum on whether to continue with the current terms and continue austerity or push for another direction. And if Greece falls out of the EU, they will go through some more turmoil. Investors and the EU will leave Greece. Greece’s markets will collapse, but without the EU, they will have the capacity to reprint money and start funding projects, jobs and rebuild their broken economy.
Either way, Greece has a difficult few months or years of moving forward, but the option should be up to the people in allowing them to build the type of future they want. The IMF could alter this grexit. Taking a note from Keynes, they could enforce the eurozone and creditors to use their surpluses to make long term investment in Greece, allowing Greece to produce and grow their export market, building up their economy and use their newfound surplus to pay off its debt. This model was used with Britain when they struggled to make a dent in their debt after World War II.
The other option could be debt forgiveness. This was an action that was ironically handed down to Germany after World War II who owed creditors Greece and Spain (two countries, along with Ireland, paralyzed by austerity). While the arguments that Germany’s debt than is different to Greece’s debt today, it’s the action itself that allowed Germany to rebuild itself and begin to live again; unlike Greece.
Regardless of the what Syriza decides to do as they await for the referendum, people should stand with Greece. What happens next can present an expectation of what to come for other countries being restricted by the IMF, EU and similar economic policies that are enforced throughout the world.
For those who think Greece is acting unfairly for trying to get out of the harsh terms of their bailout ignore that even the institution who implemented the policy was well aware of the damage that’s being done to the Greek citizens. As Ashoka Mody, former chief of the IMF’s bailout in Ireland said, “Everything that we have learned over the last five years is that it is stunningly bad economics to enforce austerity on a country when it is in a deflationary cycle...Syriza should recruit the IMF’s research department to be their spokesman because they are saying almost exactly the same thing as Syriza on the economics of this. The entire strategy of the creditors is wrong and the longer this goes on, the more it's going to cost them.”
Years after the recession, no acts have been implemented to deter the policies that continue to be pushed forward with the creditors, economists, and politicians, as the continue the reign of of risky financial investment. As public outcry begins to boil over into the streets and country after country is looking for new economic models, the governments will have to listen to their citizens or continue their betrayal of working for corporations and bankers instead of its people.