24 June 2015 — Damned if you do and damned if you don’t
Varoufakis finally sent a comprehensive set of measures to the Eurogroup, and what a horrible set of measures they are. As the bulk of the adjustment has been passed onto taxation, rather than expenditure reduction (protecting state-sector wages and pensions) the package is indeed distinctly recessionary.
To add insult to injury the IMF is said to reject the proposal today, on the basis that it is recessionary… The IMF… Recessionary. Surreal, once again.
Why is the package so hard? One could argue that this is because 5 months have been lost haggling, with the result that the economy deteriorated, so that more effort is needed to ensure that the target of a (even reduced) primary surplus is achieved. This however is a little like the post-communist reform effort where causation for horrible decisions was impossible to determine. Are governments taking dreadful measures because they have been asked, or are they doing it to themselves to achieve targets set by their creditors?
The end result is that this is a package that is clearly antithetical to what Syriza stands for. A package that may get a deal with the creditors, but it satisfies no-one. As Samaras noted (I hate to quote Samaras, but this was apt), Syriza promissed Thessaloniki (programme), but ended up giving Thessaloniki away.
An election becomes now even more necessary. The Greeks are coming closer to the horrible choice of austerity within Euro, or austerity without Euro.