It has been exactly five years since Greece joined the European Support Mechanism with the close cooperation of the International Monetary Fund (IMF). At that time, key and critical financial data were the following: GDP amounted to US$222.151 billion at the end of 2010, public debt was 148.3 percent of GDP, unemployment stood at 12.5 percent and the percentage of Greeks who were living below the poverty line (earning less than 60 percent of the national median disposable income) was 27.6 percent.
The policy of extreme austerity applied in the country at the behest of international creditors over the years has further aggravated the economic and social reality. As a result, GDP shrunk to 186.54 billion in 2014, public debt soared to 176 percent as a percentage of GDP, unemployment has risen dramatically to 26 percent, affecting mainly young people, many of whom have brilliant scientific knowledge and as a result migrate abroad. This serious loss of talent could help the country at this critical juncture. The percentage of Greeks living below the poverty line is 34.6 percent (3,795,100 people).
So, one understands from the above that the program of fiscal consolidation in a country that was already in recession before 2010 has completely failed and it would not be rational, economically or socially, to continue its application. These particularly restrictive fiscal policy and austerity measures form an exceptionally lethal debt-recession-austerity spiral, ruling out any prospect for development.
The debt is huge and unbearable
Therefore, the observed persistence in strict continuation of the extreme austerity program by creditors will have truly tragic consequences for the country. It will lead to total economic disaster, which will not be healed for decades. The number of homeless and impoverished citizens, who can already be seen in the streets of Athens, will multiply rapidly. Suicides, due to hopelessness and despair caused by the inability to survive, will continue its frantic growth trend. Children blacking out in schools due to lack of adequate nutrition will become a norm in everyday life.
With intensification of this critical period, the question then arises of what should be done so that Greece can leave the pitch dark tunnel of deep economic crisis and enter the bright avenue of development and progress.
First, the burden of debt the Greek economy carries on its back is huge and unbearable, and there seems to be no possibility of full repayment. Therefore, we need to write off the majority of the debt's nominal value so that the debt burden of the country can dip below 100% and become sustainable. This should be done with a technique that will not harm the other peoples of Europe. The repayment of the remaining debt will be connected to a “development clause” so as to serve for development purposes.
Secondly, require the reconstruction of production in the country with these key elements:
a) The sustainable equilibrium of the balance current account through changing the mix of produced products in the country, thus strengthening the export orientation margins of many sectors of the Greek economy.
b) Industrialization with the implementation of an integrated sustainable industrial policy and the development of domestic research and production of a wide range of high added-value products. The processing sector is particularly critical since it is impossible to hope for a country that will rise in the value chain in the global apportionment of labor without creating the necessary manufacturing base that includes the manufacturing of finished industrial products.
c) The special emphasis on tourism, to which Greece has a strong comparative advantage, shipping—Greece has the largest merchant fleet in the world—and certainly agriculture for the production of basic social goods.
d) The efficient exploitation of raw material—-such as bauxite from which aluminium is produced—and the potentially large oilfields located both in the Aegean and the Ionian Seas.
Building a modern and efficient state
Thirdly, we need to build a modern, efficient and rational state. We need a state that will operate with honesty and will not interpolate countless bureaucratic obstacles to business development and the effective fight against the Lernean Hydra of corruption and tax evasion, to remove the multiple negative economic, social and political consequences caused and finally to apply fair taxation.
The economic effects have not only to do with the losses of state finances but also with adverse effects in the private sector. When the notion that only bribing individuals holding nodal positions in public administration can achieve the desired effect is consolidated, investments are discouraged, fair competition is distorted and businesses that refuse to engage in such lawless and immoral trade are condemned to stagnation.
The social and political consequences of corruption are also extremely serious. Corruption causes citizens’ resentment, frustration and a collapse of a strong sense of values. It consolidates the belief that nothing works properly and that law-abiding citizens do not feel justified in being so. Institutions are undermined, shaken and ultimately slandered by the same democracy in the eyes of citizens. We need the immediate establishment of a fair tax system that will not encourage, and will not "justify" tax evasion, but will contribute decisively to the development of taxpayers’ consciences, and will have, as a result, a significant increase in government revenue.
Greece can’t handle austerity any longer
These measures should be applied immediately to pull Greece out of its coma and recession and lead to the much-desired path to development. This path will pull Greece away from the wild and dead-end austerity policies, which form the spearhead of financial capitalism in its attempt to repay their debt in full and maintain its sovereignty in an era of an intense and generalized capitalist crisis.
For their part, European citizens should stand in solidarity with the drama of the Greek people who, during all these years, have become a guinea pig. The vast majority of money borrowed by the Greek government does not go to Greek taxpayers, but rather to banks or to the payment of loans, or to recapitalize Greek banks, most of the cost of which the taxpayers bear.
Greece does not stand to continue with austerity. It has already reached its farthest limits. The standard of living has collapsed and with it the dignity of the Greek people. This will have to be understood by the creditors. The new third agreement with the extreme austerity measures will reinforce the recession and will act destructively. So, the time of conflict and rupture will not be far off.