As I have previously posted it is by no means obvious what the Greeks were really being asked to vote about in yesterday’s referendum. But whilst the meaning of the question is shrouded in mystery, the answer was a clear “no”.
The BBC says:
Greece’s Prime Minister Alexis Tsipras has said that the Greeks made a “brave choice” in voting to reject the terms of an international bailout.
Sir Humphrey Appleby used to use the word “brave” as a synonym for “stupid”, and this may well be the position that is now facing Greece. Prime Minister Alexis Tsipras and Finance Minister Yanis Varoufakis are evidently banking on the troika backing down, and deciding to give them lots more money, which extra money the Greeks will no more pay back than they will pay back their existing loans.
Well, we are in uncharted territory, and all sorts of things are possible. It is likely that there will be a worldwide feeling among many, particularly on the political left, that Greece deserves our sympathy and that they have been, as Mr Varoufakis says, the victims of “terrorism”. But just as likely, it seems to me, the Greeks will run out of money really quite soon, and long before the time (if any) when the very few institutions in the world with the power and the inclination to lend billions of dollars to someone who is not going to pay it back decide to bail Greece out. There will be some powerful voices that say that Greece is tasting its just deserts for scrounging off nations with more responsible fiscal policy.
And so we face the prospect for the next few decades that there will be a lot of weeping and wailing for Greece’s financial hardships, but the IMF is not going to throw good money after bad.
Now that Greece has rejected the nation of fiscal responsibility for itself, and assuming that the trioka is not going to bail it out, what can it do? There are a number of theoretical options, including:
- There are some extremely wealthy Greeks all around the world, and if they pooled their resources, they might be able to take their home nation out of this hole. But given their devotion to tax dodging, this seems extremely improbable.
- They could sell some stuff, like some islands, or the Acropolis. The Germans might quite like a resort or two, and I can see that the Japanese might quite like the income stream that would be represented by a tourist attraction like the Acropolis. But can you imagine the whingeing! The Greeks are still complaining about having sold the Elgin marbles all those years ago, and demanding their return notwithstanding Lord Elgin is the only one who looked after the things, and the marbles which were not sold have been completely ruined.
- Or they could stay very, very poor for a long, long time. Proud of themselves for standing up to the bankers, but very, very poor. It is a scenario that is not without precedent. After all, when Castro and his gang of socialists took over Cuba 50 years ago, he reduced the country from one of the wealthiest in the Caribbean to one of the poorest, and only now are we seeing the first green shoots of some sort of financial recovery in Cuba. It is what would have happened in Australia if Gough Whitlam had not been removed from power.
Is the tourism industry going to save Greece? Personally, I rather doubt it. For many years, Albania has had of a similar climate to, and not an entirely dissimilar culture from, Greece, but riddled by extreme poverty and hence extreme crime it would hardly have been an attractive holiday destination, even if its borders had been open. Whilst holidaying in Greece might well be very cheap for the next 50 years, it is likely to be unattractive and dangerous.
The UK Independence Party is, of course, loving all of this. Nigel Farage has tweeted:
“EU project is now dying. It’s fantastic to see the courage of the Greek people in the face of political and economic bullying from Brussels.”
That’s the bravery thing again! It is hard not to suspect that Mr Farage is not so much impressed by Greek courage, as rather cheered by this evident distress of the whole European unity experiment.
More quietly, I suspect that opponents of rampant socialism all round the world might be having a quiet smile to themselves. Views differ as to whether it is really a good thing for governments to borrow money for the comfort of the less well off in society. But attractive or not, the events in Greece are a powerful indicator that it is a policy that can end in tears.