Tag Archives: Troika

Most of this post is an open letter from Greece’s Prime Minister Alexis Tsipras, published in Le Monde and on the Prime Minister’s official website. Some of it is self-serving and disingenuous; Tsipras is, after all, a politician, a socialist to boot. However, he makes one key point: prior austerity programs instituted at the behest of the Troika—the IMF, the ECB, and the European Commission—have been counterproductive, diminishing Greece’s ability to meet its debt obligations. Higher taxes and reduced social safety net spending have contracted the Greek economy, decreased incomes, increased inequality, unemployment (especially among the young), and public debt as a percentage of GDP. No doubt many of Greece’s problems are self-inflicted, but the Troika’s prescriptions have made them worse. The Wall Street Journal used to publish editorials regularly bemoaning misguided IMF witch doctorism, and the Journal’s editors were right. This point has been lost in the great Greek debate: more of the same won’t work. What will work? Some sort of further debt relief (music to Tsipras’s ears) coupled with the gradual introduction of a much more capitalistic economy, with lower taxes, less regulation, smaller government, less social spending, and less debt (not music to Tsipras’s ears, or the Troika’s, for that matter). Tsirpas’s letter, via Raúl Ilargi Meijer  at automaticearth.com:

This is a letter From Greek PM Alexis Tsipras in today’s Le Monde. I have little to add, his eloquence needs few comments at this moment. One thing is certain: the negotiations will never be the same. And neither will Europe.

Straight from the Prime Minister’s offical website: :
Alexis Tsipras: On 25th of last January, the Greek people made a courageous decision. They dared to challenge the one-way street of the Memorandum’s tough austerity, and to seek a new agreement. A new agreement that will keep the country in the Euro, with a viable economic program, without the mistakes of the past. The Greek people paid a high price for these mistakes; over the past five years the unemployment rate climbed to 28% (60% for young people), average income decreased by 40%, while according to Eurostat’s data, Greece became the EU country with the highest index of social inequality.

And the worst result: Despite badly damaging the social fabric, this Program failed to invigorate the competitiveness of the Greek economy. Public debt soared from 124% to 180% of GDP, and despite the heavy sacrifices of the people, the Greek economy remains trapped in continuous uncertainty caused by unattainable fiscal balance targets that further the vicious cycle of austerity and recession. The new Greek government’s main goal during these last four months has been to put an end to this vicious cycle, an end to this uncertainty. Doing so requires a mutually beneficial agreement that will set realistic goals regarding surpluses, while also reinstating an agenda of growth and investment. A final solution to the Greek problem is now more mature and more necessary than ever.

Such an agreement will also spell the end of the European economic crisis that began 7 years ago, by putting an end to the cycle of uncertainty in the Eurozone. Today, Europe has the opportunity to make decisions that will trigger a rapid recovery of the Greek and European economy by ending Grexit scenarios, scenarios that prevent the long-term stabilization of the European economy and may, at any given time, weaken the confidence of both citizens and investors in our common currency. Many, however, claim that the Greek side is not cooperating to reach an agreement because it comes to the negotiations intransigent and without proposals. Is this really the case?

Because these times are critical, perhaps historic–not only for the future of Greece but also for the future of Europe–I would like to take this opportunity to present the truth, and to responsibly inform the world’s public opinion about the real intentions and positions of Greece. The Greek government, on the basis of the Eurogroup’s decision on February 20th, has submitted a broad package of reform proposals, with the intent to reach an agreement that will combine respect for the mandate of the Greek people with respect for the rules and decisions governing the Eurozone.