Now that the Greek referendum's results have come in, I would like to briefly chip in with my views on the Greek financial crisis. In a nutshell, I think Greece should default and leave the Euro, for its own and everyone else's sake.
First of all, let me state that I am not against European integration as such. I think that the whole of Europe trying to move towards common laws and standards makes sense, and allowing Europeans to travel and live freely throughout the continent is a wonderful step forward. On the other hand, I feel that creating a single currency for such a lot of countries with quite different levels of economic development and differing political and economic systems has turned out to be a real mistake.
Looking back, it might have been better if only the richer countries of Northern Europe (Germany, Austria, the Benelux countries, Finland and at most France) had adopted the Euro. All of the weaker countries within the Eurozone (Italy, Spain, Portugal, Ireland and Greece) have paid a heavy price for giving up on their own currencies. And Greece, the poorest country to adopt the Euro, has paid the heaviest price of all.
The truth is that Greece is not, in spite of popular perception, a Western European country. Socially and politically it belongs to the Balkans, or even the Levant. That it should be using the same currency as Germany and the Netherlands makes little sense. The responsibility for the mistaken decision of allowing Greece into the Euro has to rest mostly on the shoulders of the richer and more powerful countries in the EU, and of the European Union as a whole.
It is of course true that Greece engaged in some "creative accounting" in order to qualify for the Euro. But is it really believable that the other European governments and the European Central Bank didn't know about this? Misplaced idealism and an eye on quick profits obviously took precedence over caution.
On the other hand, Greece's ruling class also has to take some of the blame. In 2002 the vast majority of Greece's elite, just like the vast majority of the Italian, Spanish and Portuguese elites, where entirely in favour of adopting the Euro. It is quite understandable that the ordinary people were enthusiastic as well, seeing the adoption of the Euro as proof that their country had finally "arrived" and was going to turn into a little Germany on the Mediterranean. The politicians, on the other hand, might have seen what was coming.
Much of the public in Northern Europe takes the easy way out and blames the Greeks for not paying their taxes and being corrupt. The Greek system is indeed not on a par with Germany or Belgium in terms of efficiency and transparency, and that should have been assessed before allowing the country into the common currency to begin with. Blaming the ordinary people of Greece, most of whom have toiled honestly and paid their taxes all their lives and now find themselves suddenly tasting destitution, is unfair.
I am no expert on the Greek economy in particular or on the terms of the bailout. All the same, at the risk of sounding naive, I am going to state my opinion that the best course of action for the Greeks in the long run might well be to leave the Euro and adopt the Drachma again. They can then devalue their currency until the economy gets back on track.
As for the huge foreign debt the country faces, defaulting might be the best solution. Other European countries and the IMF have already poured a lot of money into Greece so that it could be used to pay back its debt to foreign banks. To a large extent the tax-payers of Western Europe paid to bail out their own banks. Now Greece is left with a huge debt to other European countries and the IMF, which it will keep having to borrow to repay. There will never be a route out of this crisis unless the debt stops being repaid, once and for all.