Monday, 30 May 2011

Greece, A Byronic Tragedy

In the UK we have forgotten much of our own history in Greece. Between 1945 and 1947 the UK spend £85 million in the money of that time maintaining a large force of its own troops and supporting the Army of the liberated Greek Government in a bitter Civil War.

This happened because in the agreements of the Great Powers at the end of the war the restoration of Greece came within the UK remit. With a financial crisis at home the USA then had to step in to take on the tasks.

The history of the Greek State from then to now is very complicated. It joined the EU in 1981 and signed up to the Euro project that began in 1999. In recent decades the growth in tourism had led to many Brit’s visiting Greece and some migrating there.

There was a time when some of my best friends were bankers. It was another time and in another place and in a different world. In a passing conversation I was asked my opinion of the Euro project and the wisdom or otherwise of the British internal wrangling over joining.

The bankers were entranced by the removal of all that fiddling with many currencies, the apparent ease of exchange and the hope of a single currency imposing a degree of common purpose and Germanic discipline over the various governments. There was almost a belief that the Euro would end uncertainty.

My doubts were not welcomed. First, it was a purely fiat currency that was based on a theoretical construct of money management through rates of interest set by the new European Central Bank. They thought that being German it would be stable and able to control.

My concern was that as the actual money issue was in the hands of so many people there could be a problem. The other issue was whether the governments of the relevant states could actually begin to control their policy management and economic policies to achieve that stability.

More to the point was that whilst a common currency might help things along in the good times, what happened in the bad times and when some sort of external shock or parallel shocks occurred? Could the levels of co-operation and common purpose be maintained if conflicts of policy began to arise?

The country that I was concerned with was Italy, once notorious for its inflation and depreciation of the lire. Spain was also problematical, the old peseta being highly variable. The French were not much better, the old franc had collapsed and the new Franc just about jogging along before the Euro came into being.

For the smaller countries there was an assumption that if the larger states kept their heads and sensible financial and economic policies the rest would fall into place or be forced by some unknown force field in compliance. What I knew of history told me that unbridled optimism was the high road to disaster.

Now we are seeing what could amount to another collapse of government in Greece this time with some ugly issues. The high income groups now pay little tax at all, the public sector is large, there has been major inward migration and the welfare provision is both extensive and generous.

The outside authorities have entered the fray because they are providing the bail out money and there will have to be conditions. These seem to amount to a virtual sell off of much of the public sector provision and generations of severe debt repayments on high interest, characterised as the debt slavery of the Greeks. This may be right.

In 1823 after a bitter war the Greeks managed to detach themselves from the Ottoman Empire and attain a degree of independence. Many in Britain gave their voices, money and full support to their cause. Now the IMF has moved in.

As Byron might put it “The Assyrian came down like the wolf on the fold, And his cohorts were gleaming in purple and gold…” But that was about another place. He also said “The isles of Greece, the isles of Greece! Where burning Sappho loved and sung, Where grew the arts of war and peace,”

Byron died in Greece, not in battle but as many did in that period during any war but of a fever. He was widely honoured in Greece and elsewhere for his vision of liberty. Now his Greece is no longer independent and its people are in yet another period of foreign domination.

“The mountains look on Marathon – And Marathon looks on the sea; And musing there an hour alone, I dream’d that Greece might still be free”

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