Sunday 21 June 2015

Bailouts won't change a thing...

Whilst most people are increasingly likely to greet news about Greece with a sense of fatigue, the main battle lines appear to criss-cross political camps. The arguments have been rehearsed endlessly so I spare you another repeat. However, there is one aspect that receives less attention. It's the ability of the Greek government to reform as opposed to its willingness to do so.

Much of the discussion hinges on whether Greece can get the breathing space through another bailout (or a long term debt relief) to reform its economy and become competitive in the world markets again. This assumes however that the Greek government has the wherewithal to actually carry out reforms at this stage. It seems to me that this is a huge assumption to make given the parlous state of its tax system and the traditionally low levels of administrative governance in the country. So, despite all talk about the pros and cons of bailouts, even if Greece would be afforded some space and time, it is unlikely to emerge any time soon as the all new and shiny South European twin sister of Germany.

This aspect shifts the perspective from what the Greek government is willing to do (triggering nasty discussions about blame) to what it can and can not do, prompting a realistic calculations of the chances to reform. It is that realism that should guide politicians on Monday what to do about Greece, rather than indulging in fantasy scenarios.

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