The Drachma, The Myths And The SolutionsMyth No. 1 A return to the drachma would improve the competitiveness of Greek products. In 1980 $1 was exchanged for 42.64 drachmas, in 1987 for 135.18 drachmas and in 2000 for 308.93 drachmas. In other words, over this 20-year period, the drachma was devalued spectacularly, exports doubled in nominal value from $5.1 billion to $10.8 billion but the country’s trade deficit more than tripled, from $5.4 billion to $18.6 billion. It may be worth noting that between 1980 and 1993, the two devaluations of the continuous sliding of the drachma were accompanied by measures to protect the Greek economy. Still, imports rose faster than exports. It is also worth noting that between 2001 and 2008, with Greece in the euro, exports more than doubled, from $10.4 billion to $25.5 billion. Admittedly, after 2002 the country’s trade deficit widened rapidly, due to a steep increase in imports. But the euro is not the only factor to blame for this. Other factors (such as the Olympic Games, oil prices, much higher public spending, a change in the consumer model etc.) are mainly responsible for this development. Myth No.2. We will not pay our debt, or we shall pay it only in drachmas. Article 27 of the Vienna Convention –which Greece has signed, regarding the Law of Conventions, stipulates that “pact sunt servanda,” that is, that agreements must be honored. If we borrowed euros, we have to repay euros. As regards our other private creditors, our Constitution offers reasonable protection. Article 94 stipulates that refusal or inability to repay, leads to the auctioning of public property (airports, port etc.), in other words, what the bailout memorandum envisages. The solutions for saving the ship of the Greek economy which has run aground are three: First, a renegotiation of the bailout memorandum with our partners, which is feasible. Second, an intensification of efforts for a change of policy in the EU, in favor of expanding liquidity (in the form of a Eurobond, for instance), and Third, a new European growth plan. Unfortunately, Greece will again be absent when negotiations begin in Brussels for the “growth package,” due to the transitory nature of its caretaker government. The first time it was absent, even though it did have a proper government, was in 1992, when the White Paper on “Growth, Competitiveness and Employment” was thrashed out. |
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