With the Greece crisis heading into a decisive, but not a terminal weekend, the imminent question facing everyone in Greece is, which way to go?
To set the record straight, contrary to popular perception, this vote isn’t explicitly for staying in or out of Eurozone. The question simply is on a particular deal, that does not exist any longer. It is on a set of terms, the result on which would be indicative to Greek government and the entire world as well, as to what the Greeks feel is the way forth.
WHY A NO TO “YES”
We believe YES vote will be more detrimental, given the present circumstances or the deal that is being voted on. If there is a YES vote, then it can be safely assumed that the new deal will not be much different from the one presented earlier.
Given that, it will further contract Greek economy with further austerity measures. Greece has gone beyond the point where mere fiscal targeting will help it come back from the brink. In any case, this new deal will only be possible if they vote a NO,
Austerity imposed 2010 on wards was faulty not in idea, but the magnitude. They tried to do too much, too fast that now Greece has gone beyond the point where fiscal targeting will help it repay the debt.
It is clear where the western world wants Greece to go. This stems from not only for their concern of money, but also from other problem nations coming up with such demands, plus the uncovering of the farcical equality existing in Europe. Channels from DW TV (Germany) to CNN, all are trying to confuse the people that a NO is an exit, with the truth being otherwise. But their conclusions stem from the statement by Juncker who endorsed this view the first- another attempt at the blatant blackmail.
SHOW THEM THE DOOR!
So, for the people, one of the credible concerns is a GREXIT. One must challenge the notion that the NO vote will lead to an ejection from EU. This is because of several reasons:
1. The way the EU is codified, it is impossible to remove a country from the organization.
2. Since the referendum specifically talks about the views of the people on a particular deal (which no longer exists), the referendum becomes simply meaningless. Hence, it becomes an opportunity for Greeks to support their government once they go back to the drawing boards. Because as much as Northern Europe want it, they don’t want to be labelled anti-democratic. Further, the ramifications of a YES vote will be grave. It will not only question the legitimacy of the present Tsipras regime (quite vocal for a NO), but might also lead to snap elections again, leading to further chaos and uncertainty.
A NEW NORMAL
Further, the scepticism of moving to a Drachma might be unfounded. This is where the mechanics of the Euro and the membership come into picture, along with the precarious situation Greece finds itself in. The Greek economy is dominated by the Tertiary sector, about 73% for that matter.
THE WAY FORWARD
While there will be uncertainty and long term chaos both ways, what lies at the end is different.
Yes, the Drachma will devalue sharply. But this would be an opportunity to boost exports and will give a further impetus to the manufacturing sector as well. Given its proximity to major European markets, the Eastern European countries (facing an uptick in growth) and Russia and Eurasia as well, this recovery period in global economy will help Greece in kick-starting growth and improve employment situation.
Further, the freedom to set its own monetary policy will free it from the clutches of the ECB, dominated mainly by Germany and France. The policy of averaging out and then coming at monetary policy numbers, with weights to bigger economies, has been detrimental to Greece in the past five years.
Instead, what Greece needs is a major restructuring of about 20-30% of its loans, trimming of about 15-25% of its debt, and cheap money being infused there so as to kick-start the growth. A restructuring could also include issuing of growth-linkd bonds, something that Tsipras proposed earlier, but the ECB didnt pose enough faith in the Greek recovery.
One must also keep in mind consequential effects of EU withdrawing itself from Greece. This would be an opportunity for countries like China and Russia (even though both are in minor troubles of their own) to fill in the gap of the EU, not by providing loans, but by making productive investments, effectively hedging their own risks as well.
If money does not come from EU, it will come from Asia.
In any case, a NO vote is a win-win for Greece.
Views presented in the article are those of the author and not of ED.