Lazy Greeks and deja vu

As the Greek debt negotiations wheeze towards a (temporary) resolution with the banks, the former Greek finance minister and current energy minister George Papaconstantinou was in Holland plugging some Greek energy and export projects, as well as shoring-up support with the Dutch government for EU assistance. The Netherlands may not be big, he told the FD in an interview summarised in today's edition, but it is influential in EU financial circles particularly, and Holland is an important trading partner anyhow. Reason enough to drop by. But he had some other interesting observations about the current Greek problems which have wider relevance.

Credit crunch

Papaconstantinou notes that perfectly capable Greek exporters and domestic producers are being killed at the moment by the banking system's lack of liquidity and highly restrictive lending policies. Where have we heard this before? All through central and eastern Europe since 2009 the banks have not been doing their jobs, and the EU and multilateral DFIs see this (see the 'Vienna Initiative' as a response) but are not doing enough. The domestic Central Banks are not responding sufficiently (some can't) in these countries, and the already overreaching ECB's mandate is restricted to Euroland.

In the discussion about disappointing Greek economic performance this doesn't get enough play. Stimulus is needed, and the banking sector should be central to the efforts.

Lazy Greeks

The minister regrets that even mainstream European political parties seem to dabble now and again in national stereotyping -- e.g., the lazy, tax-avoiding, malingering Greek who doesn't deserve help. Seeking explanations for economic non-performance in cultural profiling is an old and long-discredited line of analysis. It reminds me of early development studies blaming African and Asian cultures and social structures for their 'backwardness'. The so-called 'Amoral Familism' of southern Italians was a famous academic version of this from the 1950s.

Papaconstantinou puts his finger on it when he points out that, statistically, the Greeks work at least as hard as anyone else. But the institutional structure of the country has failed, and if it can be reformed sufficiently actually to enable growth and production, then the current crisis may yet have a salutary impact. I am not sure how convinced he is this is achievable, but at least a lot of energy is going in this direction at the moment.

Rational debate?

The last point our visitor makes is that 'the debate in Europe could be a bit more rational.' He points to the large German and Dutch export surpluses with Greece, and other factors which undermine the dominant theme of one-way benefits traffic North-to-South. Rational public debate? This may be asking for too much. Although compared with the US Republican primaries, the debate here is serene and academic in tone!

-Jan Cherim

Read the FD article here:

‘Beeld van luie Griek klopt van geen kant’ | Het Financieele Dagblad