Galery

1

Victoria Mindova

Drachma or euro is certainly the dilemma, which will determine the future of both Greece and Europe. The mistakes made in managing the crisis in the Mediterranean country will find a place in economics textbooks, local analysts say. As it is not quite clear which way the balance will tip for Greece, fierce debates on the topic continue. The online edition of the British newspaper The Guardian held an interactive discussion between its readers and three of the most vocal supporters of the leftist government in Greece. Economist Costas Lapavitsas, professor in law Costas Douzinas and journalist Aris Chatzistefanou were available to the English-speaking audience for two hours and answered questions about the future of the country and the euro after the elections on 17 June this year.

The three interlocutors openly supported the positions of the radical left party SYRIZA. It won many unexpected supporters in Greece with the motto "Let us cancel the Memorandum" and it is very likely to become the first party after the elections in June. SYRIZA's promises that the country will continue to settle in euro, even if it cancels the bailout agreement, seem appealing to all Greeks, but unrealistic to many of them.

Costas Lapavitsas is well known to our readers with his early statements against the bailout agreement made in 2010 and his participation in the debate on whether Greece should stay in the euro or not, held in Athens this spring. There, Lapavitsas allied with Nouriel Roubini in trying to convince the audience that Greece would be betteroff  outside the euro area than inside it. Then, the results after the debate showed that only about 30% of the audience was convinced that Greece would be better off outside the single currency union than in it. Today, he sees the exit of Greece from the euro as the only possible scenario and the payment of its external debt as an unnecessary sacrifice for the country. According to him, the result will eventually be the same. The question remains whether Greece should voluntarily make the first move or should wait to coincidentally reach the shore of the drachma like a castaway after a storm.

"First, Greece is heading toward the exit anyway because of the tremendous austerity while servicing a huge debt. It simply cannot be done. Second, Greece must prepare for exit to ameliorate its impact and to protect Greek people as far as possible. No preparations appears to have been made so far, which is inexcusable. Third, there will be severe short term costs to exit but the medium to long-term perspective will be positive for Greek economy and society." Lapavitsas insisted that the estimation of short-term costs by bank research departments, incidentally, is unreliable, including the latest by the National Bank of Greece. Often it is nothing but naked scaremongering. Lapavitsas insists that the projections made by banks and other financial institutions on the effect of the drachma on the local economy are weak and called the latest report of the National Bank of Greece unreliable. "Most often this is pure scaremongering," said Lapavitsas referring to the forecasts for the collapse of living standards when exiting the euro.

In the communication struggle, that is taking place during the second pre-election period this summer ordinary people are trying to find clear answers to specific questions. As part of this process, GRRepotrer asked the supporters of the formation of a left government that is to cancel the obligations of Greece under the Memorandum: "How will Greece finance its economy if there is no financial help from the European Central Bank and International Monetary Fund?" Aris Chatzistefanou, who is an active supporter of the left idea in Greece and the author of the movie "Catastroika - the privatization goes public," answered it. Here is his reply:

"Almost all the loans that Greece has received in the last few months go directly to its foreign bank account for debt payment. By taxing in a fair way the financial capital, the church (one of the biggest landowners in Greece) and ship-owners we will have enough income to support ourselves. Even with today’s corrupted system the income of the state could guarantee salaries and pensions. Unfortunately, after the imposition of austerity packages, the government left the tax collection agencies in disarray."

Lapavitsas replied to GRReporter’s question about the separation of Greece from European aid and the consequences of this action, "Greece can certainly sort its problems out - if it takes charge of its destiny instead of expecting its 'partners' to make decisions for it. The most important step at this stage is not to comply with the structural adjustment programme because this means certain economic and social failure. Greece must lift austerity if it is to stand a chance. Second, Greece must default on its debt and start the process of cancellation. Greece simply cannot pay its debt, and nor will it ever become capable of doing so. If these steps bring exit from the euro, which I think they will, Greece must confront the new conditions as they emerge and turn them to its advantage. The alternative, in my view, is slow death dictated by the European Union, the European Central Bank and the International Monetary Fund. SYRIZA appears to have grasped the importance of the first two steps but not necessarily of the third."