About two weeks ago we thought it useful to comment on the parlous financial situation of Greece, and the encounters which the government of that country was having in relation to seeking assistance from the International Monetary Fund (IMF), as well as from the countries of the European Union that are members of what is now described as the Eurozone. The confrontation, we observed, would not have been entirely foreign to countries of the developing world including the Caricom arena, the managements of whose economies, particularly since the mid-1970s, have periodically found themselves seeking to find a resolution of their problems through the IMF.
At that time it was apparent that what we can call the western part of the international community, as represented through the IMF and the World Bank, were insisting that the price for necessary assistance from those institutions was a strict subscription to the tenets for economic reform laid down by them. And gradually, the countries, most notoriously Jamaica under the leadership of Michael Manley, and Guyana felt constrained to come to terms, a process in which Jamaica in particular, is still deeply involved. And indeed, the country has seemed to become a poster-boy of the international financial institutions, a status seemingly approved of by President Obama as he visited Jamaica in April of this year.
Greece, under the leadership of a party and government indicating a radicalism towards the international financial community not unlike that of the Manley government, has, in the months since its election to the leadership of the country in January of this year, struggled with the IMF and the major countries of the Eurozone in respect of acceptance of certain stringent financial and economic policies, as the price of benefiting from their assistance.
It seems to be the case that towards the end of the last fortnight or so, a stalemate was the evident result of this confrontation, with German Chancellor Angela Merkel indicating strong support for the position being taken by the IMF and the EU.
The Greek government’s response to hold referendum last Sunday as the indicator of what it should do next, would appear to have taken EU governments by surprise. And in turn the EU’s response would seem to have been dictated by opinion polls which indicated that the government would have only a narrow chance of securing the approval of the electorate for the position which it had taken.
As became evident towards the end of last week, probably taking into account opinion polls showing a very narrow majority in the government’s favour, the EU governments seem to have taken comfort in the strategies and tactics essentially promoted by Chancellor Merkel’s government, and appeared to have taken the position that the support of the Greek electorate would be at best lukewarm. And this position would have been strengthened by the widespread panic created by the Greek banks running short of money and their subsequent closure.
So there can be no doubt that the referendum result of 60% to 39% was entirely unexpected by the Eurozone leaderships and the IMF, a situation now indicated by the almost simultaneous decision by the German and French governments in particular to resume discussions with Greek Prime Minister Alex Tsipras’ government. Clearly, the Eurozone governments and the IMF had felt that their decision would lead, at worst, to a very narrow level of support for the government, insufficient to justify the reopening of discussions, or at best, to a defeat in the face of the initial financial panic.
It is not possible to say whether the resumption of discussions will lead to a conclusion beneficial to the Greeks. But what seems clear is that, unlike the situations in a number of countries over the last few decades, a confrontation with the IMF has ended with an IMF return to the country on, as it were, that country’s own terms, rather than a situation of IMF departure and a country’s further financial decline.
That the Greek government is unlikely to be particularly sanguine about the result of further discussions is indicated by its decision, following its substantial victory, to make a genuflection to the EU and IMF leaderships by sacrificing the government’s Minister of Finance, Yanis Varoufakis, who, during the course of the referendum campaign, had described the Eurozone’s position as “terrorism”.
From the wider EU perspective, the eyes of populations in other countries will have been wide open, given what was presumed to have been a conclusion within the EU that a Greek defeat would have meant exclusion from the Union, referred to as Greek Exit or Grexit. The background to this was, of course, the decision of the British Government to hold a referendum on Britain’s membership before the end of 2017, a negative result of which would have to be a British departure or exit (Brexit) from the EU.
From that perspective, the recent events in Greece will have had a significance for the wider European-wide grouping of countries, and now heightened speculation on the possible outcome of a referendum in Britain.
