There are critical elections under progress today in Greece, the outcome of which could determine the fate of Greece and the Euro Zone.
Greece is the country which gave democracy to the world. The world has to accept the outcome of the elections – whether we like it or not. Most likely the world might have to deal with the Leftist party which could win the elections against the conservative party, but so be it.
Parties fighting an election always have a different view once they win the election. Could be different in Greece though, but sobriety could hit sooner than anywhere else. While the austerity plan is the main plank of the election, it is a fact that the austerity measures undertaken by the government have already hit the Greeks badly, and the country is not in good shape.
But, the issue is whether the bad shape of Greece would improve if Greece chooses to walk out of their deal with Euro Zone for the bailout and operate on their own, which means they walk out of the Euro currency as well. Unlikely. In the short and medium term, Greece would not only go into a tailspin economically and politically, inflicting more damage on its citizens, but would also cause a big damage to the world economy – especially the developing ones like Brazil, Russia, India, China, Indonesia and South Africa. Such a negative impact could be avoided, if the new Greek government revisits the bailout agreement and renegotiates it in the interest of everyone.
The Euro Zone founders, especially Germany, should be willing to renegotiate (they may not necessarily agree) and have to persuaded by G-8 and G-20 leaders in the interest of saving the world economy. Further, Europe would get hit by other countries such as Spain and Italy, and the early resolution of the Greek crisis would give confidence to these other countries in some kind of economic trouble.
While we cannot say what would happen, it is important to realize that Greece is in deep economic crisis, and should be helped to recover. Greece should create employment opportunities for its youth and push tourism and shipping industries to grow (these are the two mainstay industries for Greece). Greece cannot falter and pull the entire world into a huge crisis at this stage – the global leaders and financial institutions would have to work out some plan acceptable to all without worsening the crisis for the Greek citizens from what it is already.
The world can do well without another economic crisis like the Lehman crisis of 2008. What is needed today is economic rationalism. Level-headed thinking and sympathy for the millions of people who are already affected, need to be combined into a reasonable and time-bound action plan which calls for infrastructure investments, public sector jobs, investment protection and youth employment.
Greece need to survive for the benefit of mankind.
17th June 2012