The Greek Tragedy
Wednesday, 31 March 2010
Mahmudur Rahman
For all of the progress or lack of it, the image of Greece is essentially a touristy country basking in the glory of its rich history and heritage. The blue and white flag is at odds with the imagery in the mind of white and green representing the flowing robes and the green haloes so easily identified with the Olympic movement. But the country has now staked claim to a dubious international first.
A few days after the revelation (and subsequent-no follow up media reports) of an exclusive and discrete dinner in the US with the purported agenda of seeking ways of reducing the value of the Euro, came the news that the Greek economy had sunk into irretrievable debt. Since then, confidence of investors was shattered so much that the US dollar began to pick up on strength even though nothing remarkable was happening in terms of the economic pick-up in the United States. With the Euro and the Sterling almost at even levels, the dollar quietly regains its value.
But there's much more to the crash of the Greek economy than meets the eye. It brings back to focus one of the earliest fears expressed 30 years ago by the British-who, inspite of being very much with the EU and the common market, have refused to join a joint currency or a common passport. The Brits stated up front that they were not confident about the ability of some of the EU member states to keep their economies in sound shape. And while initially, Germany had refused any prospects of a bailout for the Greeks, it has now joined up with the French to drum up a 22 billion Euro disaster package and support an approach to the IMF for assistance. The package is conditional in that it will only be released if Greek fails to garner international borrowing to lift itself out of the morass. That condition appears to be gallery histrionics and seems targeted at allaying concerns of voters who aren't too happy with the economic situation in the EU in current days.
There was much more in terms of geo-politics, apart from economic compulsions, behind the creation of the EU. With the communist bloc holding on to its ground and the US eager in expanding its economic agenda abroad, European leaders realized that as small countries it had no hope of having its voice heard. The UK was not willing to let go of it's albeit dwindling leadership position and Germany was still being watched with suspicion.
Once the die was cast at Maastricht, there really was no looking back and there were stages when Britain risked being sent to Coventry on grounds of not joining up fully with the EU.
But why did Germany abruptly do a turn around? There has dawned a realization, probably prompted by the French that what happens to Greece today could be an issue for some other EU countries in the future. If the confidence in the common market is shaken, the political ramifications would be significant. The Germans must know well that in these days of financial institutions shy of forking out loans to businesses without proper evaluation of risks, it would be extremely difficult for organizations to consider bailing out a country. On the other hand, Germany could well use the leverage gained by it and other countries following their gaining stakes in financial institutions through bailing them out. A nudge here and there, backed by guarantees might just do the trick. And what the EU, for all their condemnation of Greek for having allowed their economy to have come to such a pass, have acknowledged is that if prosperity was enjoyed together so too must distress. (The writer is a former Head of Corporate & Regulatory Affairs of British American Tobacco Bangladesh, former Chief Executive Officer of Bangladesh Cricket Board and specializes in corporate affairs, communications and corporate social responsibility. He can be reached at e-mail : mahmudrahman@gmail.com)
For all of the progress or lack of it, the image of Greece is essentially a touristy country basking in the glory of its rich history and heritage. The blue and white flag is at odds with the imagery in the mind of white and green representing the flowing robes and the green haloes so easily identified with the Olympic movement. But the country has now staked claim to a dubious international first.
A few days after the revelation (and subsequent-no follow up media reports) of an exclusive and discrete dinner in the US with the purported agenda of seeking ways of reducing the value of the Euro, came the news that the Greek economy had sunk into irretrievable debt. Since then, confidence of investors was shattered so much that the US dollar began to pick up on strength even though nothing remarkable was happening in terms of the economic pick-up in the United States. With the Euro and the Sterling almost at even levels, the dollar quietly regains its value.
But there's much more to the crash of the Greek economy than meets the eye. It brings back to focus one of the earliest fears expressed 30 years ago by the British-who, inspite of being very much with the EU and the common market, have refused to join a joint currency or a common passport. The Brits stated up front that they were not confident about the ability of some of the EU member states to keep their economies in sound shape. And while initially, Germany had refused any prospects of a bailout for the Greeks, it has now joined up with the French to drum up a 22 billion Euro disaster package and support an approach to the IMF for assistance. The package is conditional in that it will only be released if Greek fails to garner international borrowing to lift itself out of the morass. That condition appears to be gallery histrionics and seems targeted at allaying concerns of voters who aren't too happy with the economic situation in the EU in current days.
There was much more in terms of geo-politics, apart from economic compulsions, behind the creation of the EU. With the communist bloc holding on to its ground and the US eager in expanding its economic agenda abroad, European leaders realized that as small countries it had no hope of having its voice heard. The UK was not willing to let go of it's albeit dwindling leadership position and Germany was still being watched with suspicion.
Once the die was cast at Maastricht, there really was no looking back and there were stages when Britain risked being sent to Coventry on grounds of not joining up fully with the EU.
But why did Germany abruptly do a turn around? There has dawned a realization, probably prompted by the French that what happens to Greece today could be an issue for some other EU countries in the future. If the confidence in the common market is shaken, the political ramifications would be significant. The Germans must know well that in these days of financial institutions shy of forking out loans to businesses without proper evaluation of risks, it would be extremely difficult for organizations to consider bailing out a country. On the other hand, Germany could well use the leverage gained by it and other countries following their gaining stakes in financial institutions through bailing them out. A nudge here and there, backed by guarantees might just do the trick. And what the EU, for all their condemnation of Greek for having allowed their economy to have come to such a pass, have acknowledged is that if prosperity was enjoyed together so too must distress. (The writer is a former Head of Corporate & Regulatory Affairs of British American Tobacco Bangladesh, former Chief Executive Officer of Bangladesh Cricket Board and specializes in corporate affairs, communications and corporate social responsibility. He can be reached at e-mail : mahmudrahman@gmail.com)