Sunday 12th July 2020
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November 27, 2012
November 27, 2012

Agreement for a miracle

Author: Panos Panagiotou Translator: Anna Papoutsi
Source: TVXS  Category: On the crisis
This article is also available in: eles

A transnational “agreement or contract” is, according to the definition, “a written or verbal concurrence of will between several states to create legal rights and obligations binding for the signatories”.

On the other hand, a “miracle” is any event that, according to the established, scientifically accepted criteria, is considered inexplicable and is a statistical improbable but positive result.

The reason why there was a need for the November 27th agreement to tackle the Greek crisis is that all the previous “agreements” failed because they aimed at the statistically improbable and the scientifically inexplicable. Thus, they were setting as a precondition for their fruition Greece to attaint global fiscal records that, obviously, could only be achieved by a miracle.

The lack of realistic goals provoked a generalised uncertainty as to Greece’s competence to achieve them and, in combination with the constant measures of undue austerity and the total lack of development measures, intensified the vicious circle that the country had entered into. As a result, since the first Memorandum and until the “agreement” of November 27th, the country has dramatically reduced its fiscal deficit but has also lost more than 1/5 of its GDP, the economy has collapsed achieving a negative rather than a positive series of records.

Thus, having as a weapon the experience of the past one would hope that any sort of new “agreement” to tackle the Greek crisis would avoid the fatal mistake of all the previous ones, which is to be based on questionable if not unrealistic expectations.

But still, based on yesterday’s agreement, in order for the Greek debt to reach 124% of GDP by 2020, which is the highest it has ever been during the country’s modern history, Greece has, not only to reduce its debt by €50 billion, but also to increase its GDP by €60 billion, achieving at the same time primary surpluses and a development rate higher than 4% per year as of 2014.

And this when the Greek recession will be the highest in the world in 2012 and in 2013 it is expected to be at equivalent heights of world record.

But because many people believe in miracles, international reports have already started, just hours after the new “agreement”, foreseeing the failure of the new agreement mentioning essentially the need for a new Memorandum in the not so far future. And this time, even the troika seems to have lost their faith since they linked the disbursement of any tranches for Greece with the implementation of measures and left the window open for new agreements in the future, when this one will have failed.

Thus, the very next day of yet another “solution” to the Greek problem, the harsh reality is that, by the end of 2013, Greece will have lost more than 25% of its GDP in only 5 years, the official unemployment rate will be close to 30%, for young people reaching probably more than 60%, and the economy and society will be at the worst point ever.

Therefore, to the question: how can a series of measures that, in the recent past have brought a reduction of GDP of about 60 billion euro, cause in the near future an increase of 60 billion euro, in particular since Greece not only has it not gone up even one position in the Global Competitiveness Index (GCI) but has actually dropped more than 25 positions since the first memorandum, the answer seems to be one: only with a miracle.


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