07 November 2011

Debate: Should we feel sorry for Greece?

CER's Simon Tilford writes that Greece is at the eye of the storm gathering over the world economy, and threatening to tear the eurozone apart. But should the rest of us be sorry for Greece, or angry? Here, two experts present opposing arguments for and against sympathy.

AGAINST SYMPATHY - Nicholas Walton, European Council on Foreign Relations

The bottom line is that Greece has evidently squandered the benefits of being in the eurozone in a quite startling way. Instead of using low interest rates and the efficiencies of the world's largest single market as a mechanism to drive economic modernisation, Greek politicians continued their game of buying support by splurging state largesse. The Greek people played too.

The economic tide has now firmly receded, and it's obvious that the Greeks have been skinny dipping, with the result that this rather small corner of the mighty eurozone is now terrifying commanders-in-chief and potentates from Berlin, to Washington, to Beijing. This small crack in the dream of a common European currency has the potential to become a Charybdis-like whirlpool, sucking in the whole world economy. But in the depths of a crisis, the priority is not to blame or to feel too much pity - the real priority is to get out of the crisis. Now is not the time to feel sorry for the Greeks.

FOR SYMPATHY - Simon Tilford, Centre for European Reform

To argue that the Greeks have been backsliding, or reneging on their obligations, or free-riding on the goodwill of other eurozone economies is inaccurate and quite unfair. There is no doubt that Greece is one of the architects of its misfortune - successive Greek governments have mismanaged the country's public finances. But no country can put its public finances on a sustainable footing if its economy is in free fall, and these unprecedented cuts in public spending have pushed the economy into a deep slump.

If the Greeks fail to meet their budget targets (as they inevitably will, irrespective of how hard they try meet them), they will then be stripped of sovereignty over important aspects of economic policy. It's a terrible position to put a country into. It's very risky and, I would say, runs counter to what the European Union is supposed to stand for.

I don't have much sympathy for the Greek elite. They took the country into the currency union against the advice of most economists. The Greek people do deserve our sympathy, however. They face unprecedented economic hardship, with no light at the end of the tunnel.

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