Leaders: EU must allow a Greek default

GREEK tragedy, by definition, never has a happy ending. That invariable rule applies to the present financial meltdown in Greece.

The crisis has now reached unbearable proportions, with a proud and civilised nation being forced back into poverty by seemingly remorseless creditors. Did the Greeks bring this disaster upon themselves? Yes, but they had an awful lot of help – not least from those who are now most vociferously denouncing and harassing them. Regardless of what latest expedients may be cobbled together by the Euro Group tomorrow, the logic of the situation is inevitable: Greece must be allowed to exit the euro in as orderly a manner as can be contrived.

When former chancellor Alistair Darling describes European leaders’ policy towards Greece as “sheer lunacy”, the cat is out of the bag, especially when he very frankly adds that “nobody actually believes it will work privately, if you speak to people”. His solution is an orderly Greek default, which is the only course of action that now makes any sense. Even if the latest bailout package goes through tomorrow without any further hitches, that would still leave Greece’s indebtedness at 129 per cent of GDP by 2020, instead of the official 120 per cent target. Either is unsustainable. Greece has no prospect of recovery under an austerity regime that is now cutting into the bones of the economy, destroying all mechanisms of growth.

Now the whole house of cards is collapsing. There are truly harrowing pictures of people perched on ledges as the suicide rate soars. Crime is also massively on the rise. Private misery is spilling over into public disorder. Despite assurances from the Greek opposition conservative leader that his party, if elected in April’s general election, would honour the bailout terms, European leaders remain nervous about a popular backlash in Greece forcing a repudiation of the austerity programme.

The truth is that Greece’s economy was always incompatible with Eurozone membership. Greece bluffed its way in by fiddling its accounts, but it was encouraged to do so by a complicit EU eager to expand the Eurozone empire. It is the same integrationist obsession that has caused European leaders to throw billions of euros of their taxpayers’ money at the Greek problem, in a desperate attempt to prevent an exit from the currency union.

That kind of tunnel vision can no longer be indulged. Rather than throw more good money after bad, the EU leadership must allow a Greek default. There would be many hazards to such a move, but the risks could be calculated and, to some extent, contained. If, instead, Greece collapses monumentally as a result of unsustainable austerity measures, the contagion could spread across the Mediterranean and into Ireland, as Darling points out, with more calamitous consequences. Democracy has already become a casualty of Greece’s indebtedness, with the unelected Lucas Papademos, former governor of the Bank of Greece, imposed as prime minister by European leaders.

In essence, the term “European leaders” now means Germany. Frugal German voters have been outraged by the spectacle of their money bailing out what they see as Greeks’ irresponsible, tax-evading lifestyle. To appease them, Greece is being put through the austerity mangle. But the population will not endure much more. It seems everybody can see that a Greek exit is the only true option except EU leaders. This genuine fault-line will not go away. That has to be recognised. There is no risk-free option, but the least hazardous solution is an orderly default.

Fans deserve answers

IT WOULD be a terrible blow to Scottish football if Glasgow Rangers Football Club was either to fold or to be partially salvaged as a barely recognisable shadow of its former self. Many clubs have been in massive debt and survived as strong entities: why should Rangers not do the same?

One of the major factors to fuel fans’ anger and suspicion has been the obvious lack of transparency surrounding the running of the club and the takeover by new chairman Craig Whyte. The memorable comment by administrators Duff and Phelps that “we haven’t got visibility” on the £24 million of Ticketus money relating to season tickets raised many eyebrows. So did the SFA’s statement that its inquiry into the “Fit and Proper Person” requirement with regard to Whyte “has been restricted by the club’s solicitors’ continued failure to share information in a timely or detailed manner”.

It would be fair to say that Whyte’s business record is also less than clear. Nothing wrong with that in most circumstances, but running a football club with the history and status of Rangers is not most circumstances. He has in the past been censured for putting company assets beyond creditors’ reach. There are many justifiable questions that can be asked. It would seem that the answers to many of these questions lie with Whyte. The fans are owed complete transparency.