Greece: a 13th hour reprieve?

by George Hatjoullis

As emergency meetings pop up all over many must be expecting that the eurozone and Greece come up with an 11th hour reprieve. Unfortunately, this seems unlikely. There is now a complete loss of trust between Greece and its eurozone family. The language has become quite undiplomatic. Last night I witnessed an attempt by two unnamed officials  to precipitate a run on Greek banks. I assume it was deliberate as no one could not grasp the significance of stating to journalists that the banks may not open Monday. The press dutifully telegraphed the statement across Twitter and most ignored ECB denials. Irresponsible behaviour by all and quite shocking to a veteran of the Northern Rock debacle.

The differences between the Greek government and the eurozone family remain, pensions, VAT and debt relief. Greece has a point on all three. Pensions function as the only income for many extended families where no welfare is available. VAT is a collection not a rate problem. Debt relief is widely recognised by all, except the eurozone, as necessary. For their part the eurozone family simply do not trust Greece (and not just this government I might add) to live up to any agreements. They too have a point.

Greece has a poor track record on integrity. This seems rooted in an unfortunate cultural trait, that to cheat and get away with it is somehow ‘clever’.The same trait can be found elsewhere in southern Europe, and most certainly in Cyprus, but in Greece it is endemic. For anyone that wishes to get indignant at this observation please note that I am ethnically Greek-Cypriot, married to a very Greek, Greek-Cypriot and have lots of family and friends in both Cyprus and Greece. So give it a rest please. However my purpose is not to condemn my own origins. It is to highlight that when Germans say Greece cannot be trusted they have some basis and it is for Greece to finally excise this trait and regain the trust.

Another trait is the tenacity of the Greek people. Freedom or death is a strong sentiment among Greeks and it has served them well in the past. It is an admirable quality and one of which i am proud. Visit the Arcadia Monastery in Crete if you want to see what it means in practice. I defy anyone of Greek origin, however faint, to visit this holy place and not be moved. To see lots of tourists crawling over it without any real understanding or respect left me slightly disturbed. However, this is the fate of Greece; to live off past glories. It is time to change this but it seems this will not happen without more pain and suffering. Moreover, Freedom or Death is no longer a productive sentiment. The eurozone is family, not the Ottomans or the Nazis. This sentiment has no place when dealing with family.

So what happens now? We may see an 11th hour reprieve but probably not. I suspect we are heading for a 13th hour reprieve. The talks will fail and Greece move technically into default with the IMF. Capital controls will be imposed and Greek banks ration cash. Economic dislocation will disrupt Greece. Demonstrations will become violent and maybe even talk of a coup will emerge. The eurozone family will confront the reality of repudiation of debts, market disruption but most important the loss of irrevocability of eurozone membership. Geo-political concerns will result in pressure from the USA. This will focus minds. The grim reality for Greece and the eurozone will confront all and overwhelm the bad feeling and distrust. A new, sensible, agreement and a new beginning will emerge. Any other outcome is unthinkable.