'Grexit' Must Die, Now and Forever!
It is in Brussels where the final act of the latest Greek drama will be played out. If, that is, Greece manages to secure a continuation of its loan memorandum that it hopes will contain certain added conditions in order for its electorate, who voted overwhelmingly for its termination, to save face.
What the Prime Minister, Alexis Tsipras, along with his Finance Minister, Yanis Varoufakis, must make clear to the Greek people is, that, with a few pluses and minuses, Greece is obliged to ask for this extension, in order for the country to have access to funding for its banks beyond February 28 when the current agreement is set to expire.
It should be understood that the government does have the option to make fiscal adjustments to the present memorandum and to introduce measures that are different from those agreed to by the previous Samaras-Venizelos coalition. In the meantime, however, it must mobilize the State's mechanisms in order to collect taxes owing and fill a new funding gap that has emerged as many citizens have withheld payment, expecting the new administration to carry out its pledges to scrap various levies such as the property tax known as "ENFIA". The administration must also act to return overdue value added taxes that it owes many individuals and corporations and must look to cut the wages and privileges of the 300 members of the Greek Parliament and their numerous clerks, a step that the previous administration, sadly, failed to take.
Also, Greece should aggressively proceed with the privatizations that have been launched and not muse about arbitrarily suspending them as it must show a desire to welcome private initiatives. The governing Syriza, a pro-European but radically leftist party, will have to prove to the international environment of investors that the country is friendly to private investment and that it intends to embrace all initiatives by avoiding the imposition of new taxes that may chase them away.
Today, the administration appears set to request a 4-to-6 month extension of its aforementioned loan agreement as it must secure a source of funding for the countries banks beyond the end of the month. A potential new arrangement that Syriza seeks, and has promised to deliver, will require much study as well as its ratification by all the other 18 Parliaments of the Eurogroup, a laborious and time-consuming process.
Once an extension has been agreed upon, both the Finance Minister and the Prime Minister will need their staffs to immediately get to work on the new proposals that must be submitted to their lenders. The aim of any new contract they submit should be to focus on unlocking the current gridlock and giving impetus to growth in the battered country.
Greece should forget about playing hardball with their European partners and the IMF, wasting precious time and jeopardizing its standing with the financial markets. It should, rather, look to quickly close the "Grexit" window by showing a sincere willingness to co-operate with its allies.
Any new plan must allow Greece to lower its primary surplus, enabling it to implement the funds where they are sorely needed, and must include a fair and stable tax system that will offer justice, not vengeful punishment, and that will enable the private sector to operate under clearly defined parameters in order to promote job creation.
Also, any new agreement should provide for debt relief, either by means of a "haircut" or through a restructuring of the terms of repayment. The country's debt has reached 175 percent of its GDP and is blatantly unsustainable. It has become a clear obstacle to Greece's development and its lenders must show leniency in this respect. As such, the government will have something to offer its people who have suffered through five long years of inhumane austerity measures whose sole aim was fiscal consolidation.
Syriza must request a concrete plan to move the case of Greece beyond mere budgetary stability but one that will include a developmental phase that will promote job creation and give its devastated citizens hope for tomorrow.
The new era of Greece in the European Union will have to bring equality, stability and fairness in its relationship with its partners. The country has spent far too much capital to remain inside the Eurozone and owes it to itself, and its citizens, to conclude a program that will provide an appropriate balance of budgetary stability and development.
It is the duty of Greece and Europe to be in close co-operation during this process and to put a stop to continued mumblings about Greece's future within the Union that are negatively impacting the fragile Greek economy and the Western economy as a whole. It is imperative to put an end to the fear of "Grexit", now and forever!