Greece starts marathon of change

If the Greeks do not regain the markets’ confidence, they may fail to refinance the €20 billion ($28 billion) debt due in April and May. And more billions to come in the months after. But besides this immediate crisis, Greece is running a marathon to restore their financial balance and credibility, The Economist indicates. To make things worse, they carry with them the weight of two centuries of default and fiscal trouble. Although all eyes are on Greece today, several other EU countries face these challenges, with Spain and Portugal leading the list.

One Greek commenter on this sharp article in The Economist, who calls himself 'Scepsis', wrote that this is truly an embarrassing time to be Greek and that it is difficult to argue that Greece is worthy of being called European. In his view Greece needs severe structural changes in labour laws, education, health, transparency, reduction in the rampant corruption (a major disincentive to foreign investment), tax evasion etc etc as well as a general change in attitude… Either they wake up, or the future looks really bleak…

The sorry state of Greece is a test not only for the country's policy makers but also for Europe.In 1985, Brussels already bailed out Papandreou 'senior', but the country did not change its attitude and policies at the root. Now the son and political heir George Papandreou indicates he will act  firmly, Europe must and no doubt will be more vigilant this time around. The stakes are high indeed, as Papandreou said in a television address. The government has no choice other than to act with force to prevent the country of  “falling over a cliff”. George Papandreou, who was born in St. Paul, Minnesota and went to high school in the US and in Sweden and studied at Amhurst, Stockholm University, LSE and Harvard seems the man who could lead his country out of the slum, but he will need the support of all, his adversaries included, to succeed.

The European Commission accepted Greece’s “stability and development” plan; later this month the European finance ministers are likely to approve it as well. Still, reducing the deficit from 12.7% of GDP to below 3% in 2012 seems an impossible journey. Besides severe austerity measures and drastic changes in the economy, the country truly will have to reinvent itself and run a marathon of change. Greek farmers today scaled back their protest, but at the same time Greece’s largest union announced plans to hold a general strike later this month. There is a lot of work to be done in facing the facts and getting all in on positive action, even when painful. Communication and permanent updating of the credibility effort will be key to a recovery. Europe should also step in and speak up. With a clear and loud voice. The credibility crisis is international, as stock markets today indicate loss in confidence yet again. The fear exists that this Greek financial virus can touch markets everywhere, in Europe and far beyond, reaching Australia.