Between Europe and Turkey

Kathimerini (Greece) Sunday November 27, 2011

By Nikos Konstandaras

If Greece finds itself outside the eurozone it is in danger not only of being isolated from its European partners, of losing the economic and social gains of decades, and of undermining the reform effort that has begun: being left adrift in a region where everything is changing presents much greater risks. In the great redistribution of power and influence in our region, in Europe and around the planet, Greece will be in danger of becoming a satellite of the strongest country in the region, which at this time is no other than Turkey. This need not be accomplished through war or political blackmail, but simply through the merciless logic of numbers: the need of the newly poor Greeks to find cheap goods and services, willing customers and a supply of labor.

With the formation of the Papademos government and Antonis Samaras’s commitment to support it, the effort to manage Greece’s debt and get the economy back on its feet has entered a new phase. The sooner our main political parties realize that they have to work out ways to provide a safety net and a dignified quality of life for all citizens, and establish the foundations for the future, the sooner the opposition parties and unions get it into their heads that this is a national effort, the sooner we will be able to work out where we are and where we are going. This is not to say that criticism of the government and troika effort should stop — only the automatic rejection of every reform effort.

The situation could not be more dangerous. And it is not up to us to prevent what happens next. The euro’s fate will be decided at another level. It is clear now that the problem which became evident two years ago, at the start of the Greek crisis, is much greater than the Greek problem itself. Europe’s delay in taking action, mainly on account of German policy, shook investors’ confidence that the EU had the will and the mechanisms to deal with a crisis. Still unconvinced, they are pulling their funds from Europe, to the point where even countries at the eurozone’s heart are struggling to borrow. The EU’s leading powers must move immediately to take decisions that they held off for two years, to overturn policies that they held up as the Ten Commandments. If they manage to avert a major country’s default, the euro will be saved. If they are too late, our house will burn down.

Outside the eurozone, Greece will not be able to pay off its debt, in which case it will go bankrupt. It will not be able to borrow. Because we have no production base, and our agricultural products are much more expensive than our neighbors’, our only source of significant amounts of foreign currency will be tourism. Today, tourism accounts for 15 percent of GDP; how much can it grow in real value to cover necessary expenses such as the importation of fuel and foodstuffs?

Unable to buy goods in hard currency, with little production, without significant raw materials, without loans or EU funds, the Greek economy will contract. The country will have to turn to any market that can supply cheap products and loans in a “soft” currency. Turkey is ready to fill this need, with an economy that is already triple that of Greece in terms of GDP. However inflated the Turkish economy may be, however big a correction is down the road, it has such a great production base that it will be able to continue its dynamic export policy. At the same time, the devalued drachma will make the Greek market very attractive to Turkish investors and tourists — who are already appearing and are very welcome. The islands of the eastern Aegean will choose to get their supplies of goods and energy from the nearby Turkish mainland rather than distant Athens.

Greece’s greatest problem, however, is demographic. Our population is aging; fewer and fewer people are working to maintain pensioners and the unemployed. Our economy cannot bear our weight, unless we become part of a greater whole. It is a natural phenomenon that larger bodies bind smaller ones into orbit around them. At this time we are a part of Europe. Can we truly believe that if we break loose we will secure a better fate?