Helping Greece Forward

Election periods in Greece have always been synonymous with subjective ideologies feeding visionary theorizing about the conduct of national affairs. Especially among younger people, this no longer seems to be the case. Such rhetoric is remarkably in retreat from the moment the latest (snap) general election was called for Sunday, September 20. Since then more in evidence is common sense sprinkled with a touch of boredom.

Even the youthful, and otherwise fiery, ex-Prime Minister of Greece is busy these days de-ideologizing his "hard-left" party -- also purged recently of its more extremist elements. Largely in response to successive opinion polls by established Greek research companies consistently showing Syriza's previous lead over the main opposition "centre-right" New Democracy party falling appreciably. The latter apparently having first heeded the electorate's clear message in the air that political fortunes could greatly improve by practicing consensus politics instead. And so the two main parties are currently expected to end up neck-and-neck in a photo-finish next Sunday -- the lackluster televised debate of political leaders earlier this week notwithstanding.

So far as it goes, this is all good news. But still it doesn't go far enough. Because to serve at this critical juncture the country's best interests -- putting, that is to say, back on track the Greek economy -- can only prove possible if two necessary and sufficient conditions are fully met. First, that a functional national unity (coalition) government be swiftly formed after the election. And, second, that the long years of mistrust, antagonism and uncertainty between Greece and its eurozone creditors (EC, ECB, IMF) dissipate equally fast.

How? By reaching a legitimately conciliatory debt-relief agreement as a clear priority here to guarantee both a realistic and robust pursuit of pivotal structural reforms. Due to become assessed beginning in October -- but still languishing on the drawing board -- and meant to enhance the country's ability to supply goods and services with greater productivity. And consequently leading to sustained growth with improved competitiveness.

In the past six years, it is worth recalling, two austerity bailout programs were imposed on Greece by the trio of its lenders (EC, ECB, IMF) before a third one was tortuously finalized late this August. Anomalous in principle, all three have pointedly failed to recognize the imperative need to scale-down the bulging €350+ billion sovereign debt of Greece -- aside from the IMF's occasional musings on the subject. Restructuring, however, the Greek debt, given the considerable damage already caused to Greece from Europe's six-year policy, widely denounced as a failed austerity experiment, is as much a fundamental pre-condition. If, in fact, Greece is to successfully implement the additional painful reforms everyone expects in the wake of the forthcoming national elections -- regardless of their outcome.

The way things now stand, Europe's impending "support" for Greece beginning in October merely means tolerating the same genre of defiant yet deeper cuts in public expenditure than before. Made worse by compulsive increases in direct and indirect taxation and further arbitrary cuts envisaged across the board of salaries and pensions -- while capital controls remain indefinitely in operation. This will no doubt accelerate an already collapsing aggregate effective demand in the Greek economy. A growing insufficiency of which has been pushing the country into merciless recession with exponential rises in unemployment, homelessness and poverty.

In short, financial, economic and social damage Greece has endured for years under Europe's so-called support of "blind austerity" remains ignored. Thus displaying an unprofessional aversion to the fundamental principle in contemporary economics that government spending is a valid tool to fight economic slumps. Hence, too, today's persisting clear break with Europe's prosperous past, which poses an even greater threat to progress.

Any austerity plan forced upon Greece will not be successful if it does not also include a complementary option manifestly available. Providing hope to ordinary people in the country whose distress after years of "austerity regardless" policies must at last be taken into account. Bearing in mind, too, that it is pure fantasy further persisting to shrink the Greek economy out of depression.

_______________ Nicos E. Devletoglou, Emeritus Professor of Economics, University of Athens, is author of the books Academia in Anarchy: An Economic Diagnosis (Basic Books) written jointly with Nobel Prize Laureate in Economics James Buchanan; and Consumer Behaviour: An Experiment in Analytical Economics (Harper and Row).