During the
desperate dying months of the Second World War, British Prime Minister Winston
Churchill staked his reputation on trying to keep Greece out of communist hands
as the shadow of the Iron Curtain began to fall over the Balkans and eastern
Europe.
The prospect of a Syriza victory has
unsettled markets. It has also produced fresh headaches for the European Union
institutions. Less than three months into their mandate, the new European
Commission and European Council face the possibility of a new phase of
volatility in financial markets. While dire economic figures over the past year
have made it abundantly clear Europe’s trenchant economic problems had not gone
away, there has been widespread acceptance in Brussels that the acute phase of
the debt crisis had passed.
Now, rather than busying themselves with the
planned €300 billion investment plan and toying with ideas to stimulate
employment, senior EU figures find themselves grappling with pressing issues
such as debt restructuring and possible “Grexit”.
Disturbing developments
In fact the
re-emergence of the Greek debt crisis shows how the financial crisis and the
euro zone’s more deep-seated economic woes are inextricably linked. Much has
been made of the new mechanisms in place to tackle a Greek debt crisis,
including the €500 million European Stability Mechanism rescue fund and the
commitment to buy bonds of bailout countries through the Outright Monetary
Transactions (OMT) programme. But there have also been more disturbing
developments since 2012.
The deteriorating euro zone economy could in
many ways make a Greek debt crisis just as serious this time around. Deflation
is of critical concern. The consistent trend that has seen the inflation rate
gradually creep down, culminating in yesterday’s confirmation of a below-zero
inflation rate, has implications for Greece. With deflation causing the real
value of nominal debt to increase, the euro zone’s deflationary environment is
bad news for Greece, given its enormous debt levels.
Two events due to take place before the
Greek election will have vital implications for how the euro zone deals with
another potential Greek crisis. Next Wednesday the European Court of Justice
will rule on the challenge to the ECB’s OMT programme brought by a group of
German activists and politicians.
(Πηγή:
irishtimes.com)
