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The Drachma, The Myths And The Solutions

Myth 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.

Beware of Politicians Bearing Plans

malevitisWe often hear our politicians promising to prepare a national recovery plan, although such a plan already exists. It is the European ’s Agenda 2020, in the framework of which every member-state has set –and the Commission has approved- its own ambitious goals for growth, the structure of the economy, environmental protection, job creation etc.

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Give Technocrats A Chance

nikolopoulosElection time is approaching and Greece’s foreign creditors have already begun suggesting they will wait for the results before adopting a concrete stance.

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Rise in Crime Cause for Concern

stagos

Greek crime statistics for 2011 are a cause for concern. The general sense of a rising incidence in serious crime is backed by official police data which fully reflects the lack of security felt by citizens -many of which, including elderly people, have fallen victims to it.

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Greece Off Bounds of Capitalism


malevitisThe most important result of the Greek debt haircut –the biggest ever debt restructuring in history- was neither its size nor the impressive reduction in the interest payments which the country will have to make annually.

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The Nation State Still Calls The Tune


malevitisDevelopments on the international scene in the last four years have shown how wrong were those who had rushed to deliver the obituary of nation states on account of globalization. That is not to say, of course, that globalization is not a reality. What better proof of this than Greece -a tiny corner on the planet which has threatened to blow the global economy sky-high.

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Don't Shoot At Tourism


stagosThe incomes and well-being of a large segment of this country’s citizens, including those who express their indignation at the harsh austerity measures, depends, directly or indirectly, on its heavy industry –tourism. This sector provides jobs to hundreds of thousands of our compatriots, since the Good God took ensured this country was endowed generously enough to attract millions of tourists annually. With the trouble and the instability in some of our Arab competitors, we should logically see a greater number of visitors this year.

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The Campaign to Discredit Papademos

stagosMany Greek political and media centers were hostile to Lucas Papademos becoming prime minister right from the start. In fact, the leaders of the two main parties themselves, George Papandreou of PASOK and Antonis Samaras of New Democracy, tried to avoid him but reluctantly accepted him in the end.

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Heads High Now!


nikolopoulosHaving accepted harsh terms from its creditors, having made unprecedented sacrifices by European standards and having adopted within two years changes that other countries of Europe took decades to institute, Greece can now proudly claim its rights.

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The Biggest Threat to Europe

malevitisRising unemployment is the most serious threat to Europe at the moment. It hits the foundations of the European model of social cohesion, kindles racism, xenophobia and Euroskepticism, and tests the limits of our taxation, social insurance and welfare systems.

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