Greece and Europe: The Need for a Political Response

02/09/2015 01:40 pm ET | Updated Apr 11, 2015

During the years of crisis, Europe's integration seems to have reached a limit, which cannot be exceeded. For the past seven years, Greece as well as Europe, has been subsisting the alternating ebb and flow of both optimistic and pessimistic expectations. We are still there. In an unstable and uncertain environment, the main means to bring about balance between grand illusions and inefficient choices is pragmatism.

Within this setting then, Greece's and Europe's relationship is going today through a highly uncertain phase. Neither side desires rupture. Probably an agreement will be reached, probably it will take time. In any case though, the impact of such an impending issue can be particularly serious. A redundant tension would have an adverse impact on both sides, mostly on the weakest link that is Greece.

The conditions of a new agreement and the matter of Greece's debt will be negotiated and decided in the framework of EU's institutions. However, there are further crucial issues concerning both Greece and Europe, with serious impending consequences on Greece's growth. Both sides have failed to face significant, even if different, questions during their course of action.

One major challenge in Europe during these years is the widening gap between the social reality faced by broader parts of its societies and the political management of these problems. Whatever surfaced during the crisis, beyond all real national causes, is also due to errors associated to broader European policies. Social or political tensions, divergences, skepticism and populism escalated. In ten years the European political scene has experienced the most severe upheavals of recent decades. Populism along with anti-European attitudes is gaining significant ground every year. This is not Greece's fault. Quite the contrary. Greece's unemployment rate reached 27 percent due to the crisis while an average reduction of disposable personal income of about 37 percent was recorded, which means that many peoples' income decreased much more than 37 percent while, obviously, other's less, without that meaning that the repercussions of this 'less' were least painful. Nevertheless, Europe should acknowledge that still 75 percent of the Greek society stays pro-European.

The fact that in the last elections, around 50 percent of Greek voters rejected the traditional ruling parties in light of generating a new perspective and appointed forces that would negotiate the constraints and limitations set by the Memoranda, should come as no surprise. If other European countries, facing much less significant difficulties, strengthened fervent anti-European nationalist and populist forces, their reaction to a crisis equivalent to Greece's, would not be limited to a simple renegotiation of terms. One can only imagine the turmoil those societies would experience if they endured what Greece has all recent years.

Greece's pressing priorities today are summarized in five critical issues: transforming in-depth its limited competitiveness and productivity; handling unemployment; facing the vast transformation of the public sector and the political management so that the state does become the developmental engine it ought to and not a mechanism of social and economic decline; restoring social justice by reducing tax evasion and underground economy and, also, finding pragmatic answers on a range of financial issues, such as the amount of debt and the imposed commitments to historically unrealistic primary surpluses, never before met by any country within the modern world. The first four points ought to be the government's top priorities, even if European policies are required for their implementation, while the last point is a matter that should be taken up mainly by Europe.

Many issues arise due to Greece's weak productive base. However, neither the Troika nor Europe showed any real interest in transforming and strengthening Greece's real economy and production base, although such an advancement is equally a fundamental condition for the success of fiscal adjustment. Today, without national and European synergy on investment policy, technology, education, institutional framework and broader economic and governance issues, macroeconomic imbalances and stagnation will continue to prevail as a result of the weak and fragile productive base of the Greek economy.

Given all current complex problems characterizing the European landscape, Greece must abandon many myths and stereotypes, accept that the country itself is the source of many significant problems and that it should mobilize its own internal forces. Europe on the other hand should also admit to its mistakes. Both should agree on a common agenda, where Greece will not obliterate all the sacrifices made by its people and Europe will acknowledge Greece's situation six years after the onset of the crisis, will try to understand why the situation in Greece and in Europe failed to be where it was supposed to be and will re-orient its policies to enhance all crucial drivers of growth. Obviously, within a stable macro-economic framework. EU's bureaucratic policies did not lead very far. Today, extreme circumstances call for innovative political approaches. However, regarding Greece, success depends mainly on Greece abandoning unrealistic perceptions on how growth is accomplished when in crisis, given a weak technology and productivity base.

A political choice followed by both sides would give a strong sign of hope inside and outside Greece. Therefore, the first round of discussions must come soon to an end. What must be done and can be done in a country ruled by a left-wing government is far too much. And many of them are to the interest of both sides. However, Europe is the powerful actor in this relationship. It ought to show solidarity, if not to the government, to the Greek people. Solidarity though is not measured in offering money or charity. It is also defined by understanding problems, searching effective political answers and showing political support. I am referring to policy approaches, which regardless of the struggles they might bring about, will provide Greece with a more promising perspective, after being on the verge of collapse and going through a painful recovery; a situation never before experienced by any other European country.