It is only natural, that the entire planet follows the campaign for the American presidential elections with great interest. The U.S. and its president play a very important role in world peace, in world economy and growth. Every position taken by the presidential candidates, every declaration, every speech and even every single word uttered during the campaign is counted, analyzed, magnified, interpreted, scrutinized; it generates expectations or worries, it reproduces or brakes away from stereotypes.
As a Greek citizen, politician and a former Commissioner of the European Union, who has the privilege to currently be a Fellow at Harvard University, I follow with great interest the positions and differences of the presidential candidates, fully aware of the significance these elections have for Europe and Greece.
When I listened to Governor Romney referring repeatedly with disdain to Greece and its dire situation, I found it shocking, insulting and incomprehensible. Greece and its people are facing enormous problems due also to a world crisis which started in the U.S. in 2007‐08. The Greek crisis is just a step away from being equivalent to the Great Depression the US and its people experienced in the 1930s. The American people endured great suffering and pain, but managed to came out stronger, thanks to their courage and an inspired leadership to overcome the crisis. The U.S. changed the dynamics of its economy, experienced growth and prosperity and became a global power.
Greece, is certainly a small country, its economy amounts to just 1.6 percent of European Union GDP; today it faces enormous economic and social problems due to a great extent to errors and deficiencies of its political system. The people of Greece, similar to Americans, are a proud people. Through the ages they have immensely contributed to democracy and world civilization. Today they are making painful sacrifices and giving a great fight to overcome the crisis, efforts that have already produced remarkable fiscal adjustments as noticed by all major international institutions.
Greece is also a country with great potential, well-trained human capital, unexploited natural resources and a very powerful Diaspora; a Diaspora, which has contributed, especially in the US, to economic growth, to the moral values of the American nation; a Diaspora that has given tangible proof of the diligence, the enterprising spirit, the imaginativeness of the Greeks.
It is incomprehensible and saddening that Governor Romney has repeatedly used Greece's present crisis and dire situation as a negative example in front of national audiences, insulting the Greek people and amplifying an adverse perception the country faces and by that, contributing to the realization of a self-fulfilling prophecy.
I am certain that this is the result of bad advice that delves in ignorance and is not worthy of a candidate who vows to build alliances on a global level. It is not presidential to have to mend ties with a traditional and trusted ally -- ties that should have not being damaged in the first place.
Having in mind the hardships the American people faced during their crisis, it would be brave on the part of Governor Romney if even now that the campaign is coming to an end he showed his solidarity and respect for the fight of the Greek people. It is simply an act leadership.
A famous quote is attributed to Antonio Gramsci, ancient leader of the Italian Communist Party: “The Old is dead. The new cannot be born. This is the age of monsters”.
For many, Greece’s “age of monsters” began with the result of its recent elections on the 6th of May which saw the electoral collapse of the two main Greek parties – the Socialists and the Conservatives, the entry of the “Golden Dawn” Neo-Nazi party in Parliament and the significant rise of the Radical Left SYRIZA party to the second spot. The inability of the parties to form a viable coalition, especially due to the unwillingness of the radical left, led to new elections that are planned take place on the 17th of June.
However, it is important to properly understand what led to this electoral balkanization.
A short answer is that, in effect, Germany chose to forsake its own past. The Treaty of Versailles, ratified after the end of World War I in 1919 created a dynamic that produced recession, hyperinflation and political instability for the main losing party, Germany. The treaty carried within it the seeds of its own undoing and effectively led to the rise of National Socialism in 1933. After the end of World War II the lesson from the Versailles Treaty was very clear for the Allies. The Marshall Plan, conceived by the American government, led to the reconstruction of Europe and in a matter of decades, Germany was, once more, the locomotive of European growth.
At a conference “Capital + Vision” on the topic of “The development of the Greek economy : when and how?” , held in Athens on Sept.29, former European Commissioner Anna Diamantopoulou, proposed a particular initiative by the European Council. She said:
The crisis of public dept soon turned into a threat of exclusion of Greece from the euro and lead to o question of existence for the Eurozone.
The European leadership faced with the dilemma “unification or break up”, seems to have decided on “economic and political unity” , after all the recent decisions at European level.
We need to put an end to all threats and statements, at different levels, on the exclusion of Greece from the euro. As long as this scaremorgening is continued, there is no chance for economic recovery, no chance for development, even if all the upcoming austerity measures are imposed and fully accepted.
It will be impossible to attract foreign investment, non feasible any small or major internal investment. There will hardly be any interest for the return of money deposits to the greek Banks,
It is necessary, I believe, that the Greek government – with the support of all Greek political parties and the European parties to which they belong – should ask that the Conclusions of the upcoming European Summit confirm its will to defend the cohesion of the Eurozone and its integrity, that is confirm that all eurozone countries will stay with the euro , according to the EU treaties and the interests of the people of the European Monetary Union. In simple terms, the European Council should make absolutely clear to all concerned that no country will leave the Euro…”
After fully analyzing the overall situation in the Greek economy and making her proposals on what she considers necessary for the greek government to do, Ms Diamantopoulou added in her closing statement on the particular issue:
Growth about which everyone talks in Greece and Europe, needs a “proper climate” and “money”. To attract private capital and eventually public borrowing we need to achieve a “climate” of stability both in terms of internal political conditions in Greece and in terms of our currency.
No one does business if he is not sure which currency he will be dealing in. To put now, an end to all the uncertainty on the Euro and its future, the European Summit must affirm in an unequivocal and convincing manner that there is no way back to the Drachma, the Deutschmark or the Italian Lira. Bargaining on the Greek adjustment program, perished before seeing daylight and the extension of its implementation is irrelevant without a firm decision on the support of the Euro.
In a public address on Europe’s imminent choices, former EU Commissioner Anna Diamantopoulou offered a sobering analysis of the origins of Europe’s crisis and sketched a new narrative necessary to ensure European cohesion. She highlighted the lessons her country, Greece, had learned from the crisis and pointed to new opportunities for growth, as part of her Fisher Family Fellow speech on October 23, 2012.
Praising the US for its handling of the 2007-2008 financial crisis, Diamantopoulou pointed to the lack of a banking and fiscal union in Europe, which had made addressing the effects of the crisis in 2008 particularly difficult. The European Union had devised ad hoc mechanisms to bail out those member states that could not borrow at reasonable interest rates: Greece first, then Portugal and Ireland. These mechanisms had been the result of tense bargaining around Brussels’ negotiation tables, which had tested the unity of the Eurozone. The impression that the protracted negotiations had left on the rest of the world was that these responses were overall “too little, too late.” She was optimistic that the more flexible final procedures would ultimately result in greater integration: the creation of a banking and fiscal union and increased efforts to complete the economic and political union.
Dissolution of the European Union now seems all but off the table, she noted. Too great were the implied costs and too threatening the loss for the global economy. She cited a Prognos study, whereby the departure of Greece, Portugal, Spain and Italy from the European Union would result in a $22.3 trillion growth loss for the world economy. Already threatened by demographic decline that would leave the largest European countries at most at 1% of the world population by 2050, the EU’s political leaders needed to define a new vision for Europe to ensure its continued global relevance.
Europe needed new leadership and a new project, she said. This, however, could not be a single-nation enterprise. Germany, the largest economy in the Union and most probable leading country, was an “isolated giant.” She recommended German leadership use its leading position to build consensus and convince governments and European citizens of the necessity of the European enterprise. Germany would need to approach its role at the heart of Europe using a different paradigm: one of solidarity, discipline and vision, instead of dictating rules and engaging in finger-pointing. As of yet, she was unable to detect this necessary shift in the German government: it seemed to be guided more by internal electoral considerations and less by a long-term vision of Europe, which was “essential for Germany itself.”
Key to reinvigorating a European vision of the future was a new narrative. This had to incorporate five elements: advocacy of and pride in peace – the Union’s greatest achievement – and respect for nations and people; the definition of a new geopolitical role that included military strength and soft power; increased internal democracy, with a new treaty and greater democratic legitimacy in its own decision making; greater economic equality and finally, a better mechanisms to increase competitiveness and share the Union’s growth. European governments had to be willing to assume leadership to craft this narrative, but its institutions were similarly responsible. The ECB and the core European institutions had to work together to design a fiscal stimulus project similar to that implemented in the US. Perpetual austerity, she warned, would not produce growth. European leadership had to “inspire citizens with vision and deeds.”
She advocated for a “new kind of global understanding and cooperation,” to avoid a prolonged slump. Global growth would return as confidence in the European markets returned, she noted, echoing a recent article by former UK Prime Minister, Gordon Brown.
Greece in recovery
The crisis had demanded that her own country, Greece, make rapid fiscal adjustments. This had led to high levels of unemployment and an overall rise of poverty, threatening basic aspects of every day life, Diamantopoulou said. This uncertainty was giving rise to opposition movements on the democratic fringe: for example, Golden Dawn, an avowed neo-Nazi party was voted into the country’s parliament at the last election. “I am serious when I talk about a threat to democracy – it is also a threat for the stability in the Balkans and the viability of the European unification process,” she added.
Europe needed to initiate a “New Deal” for growth on its periphery. This would lend additional heft to the measures introduced by the current three-party coalition government in Greece that reformed taxation and the public sector. “Greek society needs relief, reform and recovery – just as was the case in the United States in 1933,” she said.
Lessons from the crisis
In the last part of her presentation, Commissioner Diamantopoulou reflected on lessons learned from the crisis. “The Greek adjustment program had important flaws,” she said. The Troika had set overly ambitious targets, which meant Greece could not but fall short of achieving them. Original predictions by the Troika had assumed that Greece would be able to borrow on the international market at reasonable interest rates by now. “We are far from that,” she noted. Greece could not be compared to a corporate restructuring project. “A whole people cannot be made to follow orders, as if they were employees.”
While European leaders had not facilitated the task of the Greek political elite by speculating on a Greek exit from the Euro, the Greek government had failed to see the depth and breadth of the problem at the outset. “We thus proceeded leisurely at the onset of the crisis and later postponed tough decisions. Most ministers refused to assume ownership of the reform programs they were instituting and measures introduced were often socially unjust, while in some cases failing to fulfill their objectives.”
Four lessons were now obvious: In a crisis of this magnitude one had to act immediately; implement the toughest measures right away; convey ownership to win over the ‘hearts-and-minds’ and communicate openly with the public to sustain this support. “One must pick goals that project national pride and increase social justice,” she said. She hoped the current Greek government had learned these lessons and would be able to – in the long-term – renew a country, which had “immense potential.”