Greece is in the headlines of the global media with lots of stories, commentary, analysis and interviews. Almost all of the reporting talks about the heavy burden that the country faces in the wake of the debt crisis that seems to be eluding a solution.
The International Monetary Fund, one of the creditors to the country, openly said last week - despite the insistence of other creditors not to - that the solution of the Greek debt problem would require at least another US $70 billion credit, in addition to a substantial debt restructuring program, to put the country on a sustainable growth path so that it can pay its current total debt of more than US $220 billion.
So while there is lots of both praise and anger towards the Greek people for having rejected the terms for a bail out program in last Sunday’s referendum, there is little talk of how Greece came to this point. And that history is necessary to realize why another financial assistance program to that country must be carefully monitored and supervised and why the talk of the Greek leaders about their country being enslaved by Europe is just hollow words.
Greeks brought that crisis unto themselves with their irresponsible approach to financial management and by lying both to themselves and to the world.
Way back in 2002, when Greece, alongside with other European Union nations, adopted the single currency Euro, it did so without preparing their finances properly for the transition. Their public debt was way beyond the limits set by the criteria established by the Copenhagen declaration adopted by the EU leaders. But they had (who else?) investment bankers Goldman Sachs to cook their books in such a way that their finances were shown as in perfect shape to join the Eurozone.
At the time, the primary goal for the Greek government and the Greek companies was to be able to use credits from European banks with very low interest rates, thanks to the strength of the single currency; and obtain credits, they did, in large amounts and mainly from French and German banks.
Well it can be said that credit is the main tool for an economy to grow, and it may be right. But Greeks lacked another important input required for growth: work ethic.
The credits secured from European banks did not go into investment, but to wasteful spending.
I happened to be in Albania, Greece’s western neighbour, when the first signs of the crisis started to emerge and there was much more information available in the region about the causes of the problems.
The news focusing on the wasteful use of cheap Euro credits that was widely reported included public sector workers’ wages being increased to levels above the average Eurozone rates without any productivity increase and additional bonuses and premiums for managers of state-owned enterprises.
At one point, it was reported that a desperate Athens municipality had to hire helicopters to photograph certain neighbourhoods of the city from the air in order to have a correct count of the residences with swimming pools, in an effort to be able to collect proper property taxes from the owners of those residences.
In short, what has been happening in Greece is something of their own making and while they are playing the victim, they are not being totally honest.
That doesn’t mean that middle and low-income families have not been suffering as a result of this crisis, but before blaming European leaders for their misery, Greek people should know where to point the fingers.
How or whether the crisis is to be resolved is still unknown. The amount of money involved is huge and it could trigger another global financial crisis if bankruptcy of Greece leads to a contagion. And if it does, they will be the party responsible for another financial meltdown.
A sad situation for a country, which claims to be the birthplace of democracy.