Alexander Downer has appealed for Australian’s to reconsider their view of Greece and its ongoing economic problems.
Writing in The Melbourne Review this week, Australia’s former foreign minister says that the world’s media coverage, which so often suggests that the Greek people themselves brought on the crisis, needs to be challenged.
Describing the Greek debt crisis as “a terrible story of public policy failure”, Mr Downer took the opportunity to chronicle the sequence of events that have led to the present situation in Greece.
“They signed up to joining the euro and in doing so accepted that their government debt should never exceed 60 per cent of GDP and the budget deficit should stay below three per cent of GDP… they’ve come nowhere near it,” said the UN’s envoy to Cyprus.
“To avoid default, the Greeks have asked the rest of the eurozone for help. They’ve said they will, but at a very steep price. That price will extract a very high human toll. Greece has to implement an austerity package more drastic and socially savage than anything we’ve experienced since the Great Depression.”
Mr Downer asked Australians to imagine what their response would be to such an austerity package, involving increased taxation across the board.
“30,000 public servants are to be retrenched, pensions reduced by up to 20 per cent and public sector pay severely cut.
Now imagine doing all that here in Australia! Imagine the reaction of the unions. Imagine the reaction of voters! The public would be outraged,” said Mr Downer. “And this was before the latest, additional austerity measures were foisted on the Greeks.
“With the latest package, they have to cut government spending by a further 1.5 per cent of GDP. If we had to do that, it would mean spending cuts of around $150 billion. And the minimum wage has to be cut by over 20 per cent. I’m not sure why but our media don’t focus on this pain. Riots may not be responsible or even excusable but I think you’d agree, with austerity packages of these dimensions they are explicable.”
Mr Downer said that a belief in Greece being better-off by defaulting on its loans was misconceived. “Greece would leave the eurozone and re-introduce the Drachma. At a guess it would depreciate by about 50 per cent. So the savings and assets of Greeks would be halved in value.”
The former Coalition minister said that as for blame, there were a number of culprits, but no one should forget the ordinary, honest people who faced the consequences of government mismanagement.
“Successive Greek governments cooked the books. Secondly, the banks were more than happy to keep lending money, thinking that because Greece was in the euro nothing could go wrong. Thirdly, the politicians just kept spending – unconcerned about the consequences. Finally, the voters elected those politicians.”
Mr Downer pleaded for Australians to reassess their reaction to the events in Greece in the run up to the general election that is likely to take place at the end of April or early May.
“…spare a thought for the average Greek “working family”. They are seeing their living standards devastated. For those of us who like Greece and like the Greeks, it’s a very sad situation.”
