петък, 3 юли 2015 г.

The Greek smile - who will smile last?

The Greek Archaic Smile Statue (c. 650–480 bc)
We are watching the final scene of the modern Greek drama. It is one that follows a pretty standard dramaturgical line. Yet few will smile at the end of the performance.

The Greek or Archaic smile appears on the faces of statues dating from the 6th-7th century B.C. One interpretation that archeologists and historians have given to it is that the smile reflected a state of ideal health and well-being of the subject.

The present crisis gives some room for reflection on its long-term effect and fall-out. Depending on how you measure things, there are quite good reasons to argue that, contrary to conventional wisdom—and in the long run--the Greeks stand to gain most from the default of the Greek state.  Even as their living standards fall somewhat, they will remain in the Eurozone, enjoying welfare levels well above those of their neighbours—and certainly above self-sustainable levels.

If you measure success in the Greek-troika stand off by the extent of the resultant debt haircuthundreds of millions of dollars will have to be written off the balance sheets of major banks in the EUthen Greece wins and the creditors lose.

The process is a multi-level and multi-dimensional one: change will not happen overnight and certainly will imply debt restructuring in return for reforms, and at least a minimum guaranteed capacity to generate revenues and repay loans. This loss in the value of credits assets could make some banks in the EU go belly up, which would cry out for a rescue package for them as well.

But in the long term, the Greek voters—especially once they get rid of Syrizaare not likely to be asked to make a huge sacrifice or see their living standard plunge. Regardless of which way Sunday’s referendum goes, Tsipras will have to resign: no one trusts him anymore and this loss of trust is irreparable. 

The Greek economy and banks badly a quick arrangement with the creditors and fresh money supply. 

Syriza can provide neither. Therefore it has become redundant for this time forth.

In the next scene of the drama—the post-Tsipras scene—the Greek elite can get back to mainstream politics, possibly forming a Grand coalition. This will be possible now that “Project Syriza has accomplished its task—that of striking the best deal possible for Greece with Europe, one that traditional Greek parties could not deliver. What Tsipras today is able to claim as an accomplishment is way beyond what the Greek political establishment could have achieved within a standard bargaining process.

Neither Nea Demokratia nor PASOK would have been able to rattle Europe so effectively. To the point, that is, where Juncker is ready to offer lavish debt cuts and support programs in return for the Greeks getting rid of the reckless Tsipras and Varoufakis. 

By then Project Syriza will have accomplished its mission—to buy time and achieve best deal.

So it is the Greek elite that will smile last. The expendable Tsipras and Varoufakis will go. The Eternal Ones will remain. 

Others in Europe would smile too. Taxpayers won't.

But the end of the Greek drama could trigger much deeper processes within the European Union and the Eurozone. 

Unless we get down to real reforms, no one will be left smiling in the end.

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