Europe Didn't Work by Larry Elliott

Author:Larry Elliott
Language: eng
Format: epub
ISBN: 9780300228793
Publisher: Yale University Press

CHAPTER 7

THE SISYPHUS EFFECT

Greece’s tormented euro-odyssey

Alexis: ‘You’ve got everything except one thing: madness! A man needs a little madness, or else …’

Basil: ‘Or else?’

Alexis: ‘… he never dares cut the rope and be free.’

Zorba the Greek

To the Greek people, 2016 looked likely to prove another Unhappy New Year. More than five years into a seemingly interminable crisis, the country’s woes showed no sign of coming to an end.

On 14 January, Gerry Rice, director of the International Monetary Fund’s Communications Department, told a press conference: ‘Greece’s pension system is unaffordable. As it stands the contributions are not sufficient to finance the generous level of benefits requiring transfers of the state of close to 10 per cent of GDP each year.’ For good measure, he added ‘the vulnerable banking sector [and] the structural impediments to growth’ to Greece’s list of woes.1

The previous month, Prime Minister Alexis Tsipras had insisted that the IMF should keep out of Greece’s affairs, and that the country’s third bailout since 2010 could be handled entirely within the Eurozone. Perhaps ironically, this chimed with the critics of the Fund’s involvement with previous bailouts, on the grounds that the IMF ought not to be lending to developed economies within the European Union. ‘By any standards, the entanglement with the Eurozone crisis is a whopper of a screw-up,’ declared Jeremy Warner in the Daily Telegraph, adding that ‘heads must roll’. Nor was there any doubt as to whose head should be first on the chopping block: ‘If this were any normal organization, the IMF’s managing director, Christine Lagarde, would be forced to resign and someone with less of a vested interest in propping up the folie de grandeur of European monetary union installed in her place.’2

At his press conference, Gerry Rice was confronted with Mr Tsipras’s reluctance to countenance IMF involvement in the third bailout. To the question, ‘The prime minister and his ministers ask you many times to leave Greece and the Greek problem. Why do you insist to stay?’ Rice replied: ‘Maybe just as a first order of business. Just to remind you, Greece has requested a programme from the IMF.’

Indeed it had. Having perhaps remembered this, the Greek government executed a swift U-turn. The following day’s edition of the London financial paper City AM reported that Jeroen Dijsselbloem, the Dutch finance minister who doubled as president of the Eurogroup of Eurozone finance ministers, had spoken to his Greek opposite number Euclid Tsakalotos who ‘confirmed to me that the Greek government accepts that the IMF needs to be part of the process’.3

To someone returning to Earth after a twelve-month space voyage, this may have seemed a monumental cave-in of the sort that prompts ministerial resignations and puts a question mark over the future of governments. But after a year of Mr Tsipras’s prime ministership, this was pretty much par for the course. Outright defiance of the country’s creditors and EU partners followed by acquiescence followed in turn by another ‘last stand’ had become something of a pattern since Mr Tsipras had taken office on 26 January 2015.

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