Tuesday, June 19, 2012 Last Update: 3:10 PM ET
By Amb. Patrick N. Theros
If you cannot figure out what is going on in
Greece, Europe, and beyond, you are not alone. As far away as Doha, Qatar, a blue-ribbon panel
featured at the UCLA-sponsored Doha Forum argued for hours on the likelihood that on June 17,
Greeks will vote in a government dedicated to agreeing to or rejecting the troika-imposed “Memorandum of
Agreement” that might or might not enable Greece to pay its debts.
The panel also argued at length on the
possibility or probability or certainty of Greece’s expulsion from the Eurozone or its voluntary
withdrawal or a default on its debt while staying with the euro. This led to a discussion on how the EU, or just
the Germans, will manage one of several possible courses of actions.
They concluded that the EU has immunized
Europe from the consequences of a Greek default accompanied by a Greek withdrawal (or not)
from the Eurozone, unless the markets respond to such a default or withdrawal by overwhelming Spain
and/or Italy and Ireland. This in turn seems to depend on whether the new French President, Francois
Hollande, gives in to German Chancellor Merkel’s insistence on absolute adherence to her demands that
Greece fulfill every last whit of the Memorandum and that Europe adhere absolutely to the German-imposed “stability
and austerity package” with or without a “growth package” of undefined parameters. On the
other hand, Merkel may respond to voters across Europe who find austerity unacceptable except for German
voters, who support them. At the end of the session the panel concluded that all of the above might
occur.
A detailed look at the discussion offered
greater clarification. Greek voters in May proved that they could clearly distinguish between the
mainstream politicians in New Democracy and PASOK – who were so discredited by corruption that
voting for them induces nausea – and the unrealistic and demagogic politicians of the right and left
who have no idea how avoid adhering to the Memorandum but at least had not been close enough to the
reins of power to join in the corruption – except, of course for the leadership of the traditional Greek
communist party, KKE – whose leaders had enriched themselves as much as any centrist politicians.
The voters punished the mainstream and voted for the “clean” parties, but not enough to allow a majority government to come together. At that point, the new politicians proved that they were no different than the mainstream in their inability to set aside personal gain for the common good. Greece will hold new elections on June 17th that promise only to change the ratios between all the self-serving politicians. In the meantime, the parties selected a caretaker government that promised to do nothing – apparently not even defend the country in the event of a Turkish attack – except preside over elections.
Greek voters have come to understand that
adhering to the Memorandum guarantees a long and painful descent into poverty for the
country, and no chance of ever paying off its debts while rejecting the Memorandum and departing from the
euro (if they can) guarantees the same results but much faster.
Voters are further outraged that Germany‘s
terms for the bailout included a commitment by Greek politicians to stop all legal
action against the German companies that bribed the same politicians in the
first place and, further,
honor a previous contract to buy ammunition and spare parts for its tanks from
German manufacturers even if
they can buy them from American factories for half the price. This, of course, simplifies the choices facing
Greek voters.
As for the euro, most pundits predicted
Greece’s Eurozone partners would expel Greece from the club regardless of the consequence,
despite the fact that nothing in the rulebook permits the expulsion of a member. Theoretically, Greece
could voluntarily expel itself from the Eurozone if, that is, it had a government with the wits and
determination to shut down all bank, close the borders and impose draconian measures to prevent any currency
flight, but all before it announced it was heading for the exits and reintroducing the drachma.
With the deaths of John Metaxas and Basil II “Slayer
of Bulgars,” the number of Greek politicians with guts to do this has declined dramatically.
Besides, it would violate EU treaties. That leaves Greece with another alternative: stay in the
euro and tell its creditors that it will absolutely not pay the next
installments on
its debt unless they renegotiate the loan terms. New York did something similar
in 1975 led by Governor
Hugh Carey and a team that pulled forced all the players – unions, banks,
legislators, debt holders,
community groups – to make sacrifices. Diogenes couldn’t find an honest man in
Athens; can we find
one nowadays?
Finally, it appears that with the electoral
defeat of French President Sarkozy and his replacement
by the Socialist Hollande,
the EU and the troika have stopped worrying about Greece and are putting all
their energy into fighting
over grand ideas for the long-term, while threatening Greece with various forms
of mayhem should it not
hold to the Memorandum, even if the Memorandum guarantees that the austerity measures that will guarantee
default.
Merkel’s current austerity program has pushed
another 10 European countries into recession while the Conservatives’ austerity program
has done the same for the United Kingdom, despite the fact that it still has its own currency. American
Tea Party politicians are licking their chops at the possibility of doing the same to the United States if they
can parlay a European crisis into an economic setback for President Obama and achieve an electoral
victory in November.
All of the above ought to clarify the subject
and offer clear guidance on how to manage your investment portfolio.
The Hon. Ambassador Theros is
president of the U.S.-Qatar Business Council. He served in the U.S. Foreign Service for 36 years,
mostly in the Middle East, and was American Ambassador to Qatar from 1995 to 1998. He also directed the State Department’s
Counter-Terrorism Office, and holds numerous U.S. Government decorations.
