Pushing Greece to the brink of economic ruin, 40-year-old leftist Prime Minister Alexis Tsipras has stepped too far off the ledge to come back. When Greeks vote on a referendum July 5 to either support or reject more Eurozone austerity, Tsipras and his 54-year-old Finance Minister Yanis Varoufakis will be out of their jobs. Overplaying their hands, whipping up phony nationalism blaming German Chancellor Angela Merkel for Greece’s economic woes, Tsipras and Varoufakis will end their political careers. Whatever Greece’s economic problems, they started way before joining the Eurozone common currency Jan. 1, 2001. Joining the euro didn’t stop Greece’s economic problems but it ended Greece’s endless inflation, where the drachma was routinely devalued in foreign currency exchanges. Joining the Eurozone brought long-overdue currency stability to Greece.
Piling up mountains to debt for resisting Eurozone’s budget and pension reforms, Greece’s debt problems crescendoed in 2010 and 2012, prompting two Eurozone bailouts totaling 240 billion euros. Defaulting on a 1.6 billion euro loan to the International Monetary Fund June 30, 59-year-old IMF Executive Director Christine Lagarde hoped to get her money back, acknowledging that Greece needed about $60 billion more debt relief over the next three years. Lagarde hopes to get her 1.6 billion euros back when Eurogroup finance ministers, led by Jeroen Dijsselbloem, meet July 6 to decide Greece’s fate in the Eurozone. Tsipras and Varoufakis have burnt all their bridges and now must pay the price before a deal can be struck to save Greece. When Greeks vote July 5, they’ll vote “yes,” not only to stay in the Eurozone but, more importantly, to oust Tsipras’s leftist government.
Before Greece joined the Eurozone, its economic woes stem from years of hefty socialist benefits paid to state employees and pensioners, essentially financed by years of printing drachmas, causing rampant inflation and currency devaluations. Joining the Eurozone in 2001, Greece promised to reform excessive government spending that drove the economy into massive debt. Without printing its own currency, Greece tried to reform but ultimately couldn’t meet the tough Eurozone standards calling for only a 3% debt-to-Gross Domestic product ratio. Since debating Greece’s economic woes and eventual bailouts, more solvents member of the Eurozone, especially Germany and France, became more critical of Greece’s fiscal mismanagement. Germany’s Finance Minister Wolfgang Schaeuble watched his star rise criticizing Greece’s demands to have Germany underwrite Greece’s sovereign debt.
When the Eurozone was born Jan. 1, 1999, primarily birthed in Berlin, Paris and Brussels, the architects of the common currency knew that more industrialized members would have to carry the less prosperous states. Brussels, home to the European Union, knew that a common currency carried risks, but one-size didn’t really fit all, especially when it came to less export-based economies like Greece. Instead of blaming Germany for taking away Greece’s “dignity,” Tsipras and Varoufakis should show gratitude to the Eurozone and EU for providing Greece economic stability enjoyed over the last 10 years. Greece’s economic problems predate joining the Eurozone and will continue once Tsipras and Varoufakis go into the dustbin on history. Greece needs leaders that have the humility to admit Greece’s economic weakness and look to the EU and Eurozone for constructive guidance.
Whatever the IMF’s motives, Lagarde knows that Greece will always present problems for the Eurozone, at least in terms of meeting strict economic rules for member-states. Tsipras and Varoufackis blamed the wrong parties for Greece’s longstanding economic woes. Pointing fingers at Merkel, the European Central Bank or Brussels is exactly the wrong approach. Greece deserves new leaders that have the maturity and wisdom to work with more than generous members of the Eurozone to help fix Greece’s economic problems. While there’s nothing wrong with asking for debt relief, there’s something very wrong blaming Germany for Greece’s economic woes. Printing drachma is the last thing to fix Greece’s struggling economy. When Greeks go the polls Sunday, they’ll recall the punishing inflation and endless currency devaluations before joining the Eurozone.
If Tsipras and Varoufakis were true Greek patriots, they’d resign before the July 5 referendum and let responsible leaders work with the EU, Eurozone and ECB to do what’s needed to save Greece’s failing economy. No one in Europe should have to deal with Greece’s hostile leftists preferring to spew hateful propaganda over getting down to the real business of helping struggling Greek citizens. Yesterday’s Associated Press iconic image caught of an elderly Greek man crying in frustration sitting on his backside signals a resounding “yes” vote by Greeks on July 5. Tsipras and Varoufakis have been exposed for steering Greece in exactly the wrong direction. “I expect that we will have an agreement on Monday. And it will be independent of whether a majority vote ‘yes’ or ‘no’ in the referendum,” said Varoufakis, showing the kind of arrogant cynicism that spells an end to his leftist government.
