Yanis Varoufakis, Greece’s former finance minister says his country will be the hardest hit by the economic turmoil of the coronavirus pandemic. Even though Greece has been a model for other nations to follow in its response to the threat, Varoufakis, and other experts say Greeks may suffer the most. Can the EU survive the unfairness of the past magnified by this disaster?
The Greek leadership was fast to take decisive measures to avert an even bigger COVID-19 catastrophe. Shuttering schools and imposing other restrictions since mid-March, the Greeks dodged a pandemic bullet that seems likely to doom other countries to years of negative impacts. Italy and Spain behind the other worst cases, Greece is uniquely vulnerable because of the role tourism plays in its economy. Varoufakis was quoted as saying:
“I very much fear that Greece will have the largest number of people who go hungry as a result of the economic dimension of this pandemic.”
The former minister points out that Greece “never recovered” from the 2009 financial crisis, and that years of austerity, recession, and stagnation still haunt the people despite recent upticks in economic numbers. Now, the IMF warns that Greece’s GDP is expected to drop by 10 percent this year, making it the hardest hit in the Eurozone.
Varoufakis, who is now the leader of the Greek left-wing party MeRA25, warns that Greece cannot conduct “business as usual,” since the people could be devastated by continued failed practices. He also said banks should not continue to sell non-performing loans to funds and put homeowners at risk of foreclosures – especially after people have been asked to stay indoors for weeks on end to contain the spread of COVID-19.
“Imagine if once they’re out of their homes, we take their homes away, on behalf of vulture funds that have purchased them.”
Some days ago, Varoufakis wrote an article for Project Syndicate about EU solidarity and how Greek, Italian, and Spanish leaders are failing the people by insisting on something ridiculous. In the story, he addresses “coronabonds” and the erroneous approaches of southern Europeans to try and get Germany and Northwestern Europe to share the brunt of the crisis.
At critical meetings of the Eurogroup of eurozone finance ministers, Varoufaki says “coronabonds” were given the kiss of death at the Eurogroup meeting on April 9. The Greek politician condemned leadership for trying to appeal to the Germans and the Dutch out of solidarity, instead of pressuring them to save themselves from an EU meltdown.
“The European Central Bank could be issuing its own Eurobonds on behalf of the whole of the Euro area, not pushing more debt onto the shoulders of the Italian state, the Spanish state, the Greek state that cannot shoulder it.”
The gist of Yanis Varoufakis’ argument is that the more solvent economies are only more liquid because of their partner states which are now in trouble. He says a shared burden is the only way to save the union, which is not exactly rocket science to anyone who can read.
Three days ago Varoufakis told the Eurogroup that fallout from the crisis would result in Matteo Salvini, leader of the right-wing Lega party, replacing Giuseppe Conte as Italy’s Prime Minister. He went on to say this would lead to a swift move by the Italians to ditch the euro for good.
The bigger problem is the nature of these “loans” and how Italians, Spaniards and Greeks will, within a year or two, be expected to exact still more drastic austerity measures in order to repay the new loans and to get the governments back in line with the lenders. At the end of the day, the people of these countries cannot stomach it. This is the harsh truth Varoufakis seems to be trying to get across.
What he’s suggesting to the more privileged EU states is, if Italy, Spain, and Greece leave the EU, Germany’s privileged saving position will be all done. Greece’s former financial guru says the better off states must be approached, not with cries for brotherhood, but with the harsh reality approach. Lucas Guttenberg, the deputy director of the Jacques Delors Centre, a think tank in Berlin was quoted earlier this month saying:
“Clearly, it is no one’s fault, but if some countries come out of this much stronger than others, that is going to politically undermine the European project as a whole.”
The expert suggests a more evenly shared burden like Yanis Varoufakis spoke out for. Basically, Germany, the Netherlands, Austria, and Finland are trying to hardline the rest to conserve their own coronavirus war chests and to benefit from these loans. Currently, southern European nations seem to coalesce for a uniform push to get the help they need, and without ending up in revolutions over more destroyed pensions and lives two years down the road.
Here on Crete, you can ask anyone and the idea of a return to the Drachma has universal appeal. If Greece is to suffer, most people prefer the short term pain in order to make the country more prosperous and competitive.