Saturday, January 28, 2012

Farewell then Greece

The FT has an extraordinary leak of German plans for the future of Greece. Essentially if they come to pass we will no longer be able to describe Greece as a country. A nation yes, a culture most definitely, but a country.

No longer.

The strictures are devastating,
1. Absolute priority to debt service Greece has to legally commit itself to giving absolute priority to future debt service. This commitment has to be legally enshrined by the Greek Parliament. State revenues are to be used first and foremost for debt service, only any remaining revenue may be used to finance primary expenditure. This will reassure public and private creditors that the Hellenic Republic will honour its comittments after PSI and will positively influence market access. De facto elimination of the possibility of a default would make the threat of a non-disbursement of a GRC II tranche much more credible. If a future tranche is not disbursed, Greece can not threaten its lenders with a default, but will instead have to accept further cuts in primary expenditures as the only possible consequence of any non-disbursement.
You will pay off your debts to us before anything. Before teachers, nurses, police essential services, the lot. Nothing less than a Teutonic Jyrza.

To cap that this regime will be enforced by a Pasha from Brussels,
2. Transfer of national budgetary sovereignty Budget consolidation has to be put under a strict steering and control system. Given the disappointing compliance so far, Greece has to accept shifting budgetary sovereignty to the European level for a certain period of time. A budget commissioner has to be appointed by the Eurogroup with the task of ensuring budgetary control. He must have the power a) to implement a centralized reporting and surveillance system covering all major blocks of expenditure in the Greek budget, b) to veto decisions not in line with the budgetary targets set by the Troika and c) will be tasked to ensure compliance with the above mentioned rule to prioritize debt service.
Farewell then Greece. Is it not time to resurrect the shade of Kostas Georgakis or even Demetrius Ypsilantis?

Καλλιῶναι μίας ὥρας ἐλεύθερη ζωή,
παρὰ σαράντα χρόνοι, σκλαβιὰ καὶ φυλακή.

1 comment:

Edward Spalton said...

One has ever sympathy for the Greek people and wonders when they will rise up and hang the corrupt politicians who got them into the mess.

However, this does put Mr. Salmond's policy of "independence in Europe" for Scotland in its proper setting.