It is being called the "moment of truth" for the population of Greece, which is trapped between having to undergo even further austerity measures to get loans to pay its billion-dollar debt or forgo that possibility and be kicked out of the European Union (EU) for defaulting on its debt.And while tens of thousands of Greeks continue to be on street protest against further cuts in welfare and other forms of support spending by the Government, they know that to be pushed out of the EU, the country's support base and one of the major lenders, is not really an option to be adopted. Nevertheless, the thousands on the streets seem prepared to resist further austerity measures even if it means being dumped by the EU bloc.It matters little at this crucial moment to analyse why and how the country grew a US$485 billion debt. Such an academic analysis will undoubtedly be good at a later time to avoid further decline and descent. The more immediate and important act for survival is for the population to give support to the new administration and the economic recovery measures put in place by Prime Minister George Papandreou.
The measures are deemed to be absolutely necessary in order for the country to draw down on the 12 billion euro tranche of a 110 billion euro overall package that has been put together by the EU and the International Monetary Fund (IMF).As is typical of such loan assistance programmes, severe austerity measures, job cuts and widespread privatisation of state companies are being demanded. The EU ministerial team is now awaiting acceptance of the measures before the loan funds can be distributed next month.
But the Greeks are not in this difficult financial situation by themselves. The member countries of the European Union, their banks and other financial institutions and other private sector organisations are involved. If the Greek Government and its people do not accept the conditionalities to receive the loan, then they will not be in a position to pay the European banks to which the debt is owed.France, Germany, the UK, Italy, Spain and the US across the Atlantic are those countries which are vulnerable to any decision by opposition politicians and the Greek population to refuse the loan conditions and therefore default on payments.
But large segments of the protesters and other commentators are claiming that the bailout funds will not assist the Greek people but would rather save the European banking system from severe if not life-threatening blows.The protests in this phase were started in a peaceful mood; they have deteriorated since then as, understandably, tempers have become hot in the face of no advance on their demands. Essentially, the protesters have been saying that they want out of the economic system designed by their Prime Minister, the EU and the IMF.
They see no future in it for meeting their needs, only further cutbacks to their already low standard of living, unemployment having reached over 20 per cent and climbing.Beyond Europe, as was witnessed two years ago in the international recession, any major disturbance in a core centre such as Europe must inevitably spread to other parts of the global village economy.We in the Caribbean therefore have every interest in this unfolding European economic drama. First of all, any significant decline in the EU will affect our exports. A decline too in tourist arrivals from that part of the world will impact seriously on the Caribbean tourism industry which has just begun to recover.It is certain, given the economic adversity that has been suffered, that there needs to be a reassessment of the international economic system for the good of all mankind.