By Nicos E. Devletoglou, Huffington post
A special European synod should urgently settle the deepening controversy.
The multiple admonishments between Athens and its increasingly hardline partners in Europe in recent days are out of place — even as part of a high-stakes game testing contrasting approaches to dealing with Greece's bulging debt. Particularly in the midst of an already caustic election campaign in Greece and a snap national poll due on Sunday, Jan. 25, that is unlikely to help stabilize the country, let alone help it pay off debts.
Now seems to be the right moment for the leaders who are directly concerned here to seek a fresh, viable solution relying on currently accepted principles of contemporary behavioral economics. Ignored with a vengeance by both sides so far, they grace both today's applied economic thinking and modern interdisciplinary accounting and characteristically show that the sovereign debt of Greece does not in fact exceed €150 billion, putting it some 50-percent below the astonishing €350-billion level — imagined all along — which would disturbingly raise the debt to 170 percent of GDP.
This hardly unexpected conclusion follows unaided when we factor in, comprehensively evaluate, and then accordingly take into account the massive damage, both in human and financial terms, caused by the misguided (and also widely acknowledged as poorly researched) "blind austerity" policies in Europe — exceptionally aggressively enforced in Greece during the past six difficult years.
It is therefore not a question of merely postponing Greek debt payments due next year, nor is it a question of repudiating significant chunks of Greece's debt, as mainly the hard-left opposition in Greece tends to propose. It would certainly be more realistic if we seriously questioned instead — in good faith and in the context of a European synod or open conference that naturally includes representatives of all parties involved, plus third-party experts — the less-than-convincing absolutism promoted by, among others, Germany's finance minister, Wolfgang Schäuble, who, as a proponent of austerity, insists that "all previously agreed Greek debt must be paid in full regardless of the composition of the next Greek government."
Such a proposition remains largely untenable, because first, as suggested, we would have to establish institutionally what the net remaining Greek debt is — after downward-adjusting it to compensate for, say, the shocking and still-rising rates of hunger and suicide and the lethal levels of unemployment that are already practically eviscerating the social and economic fabric of Greece, driven by the devastating momentum of continuing austerity, which is also responsible for the endemically collapsing aggregate demand in the eurozone's longest-suffering country, with steadily vanishing prospects of growth — generally prevalent elsewhere in Europe too — and nowadays threatening to bring Europe's Grande Démise yet closer as the euro continues depreciating and the eurozone slides deeper into deflation.
Nicos E. Devletoglou, Emeritus Professor of Economics at the University of Athens, is the author of the books Academia in Anarchy: An Economic Diagnosis (Basic Books), written jointly with Nobel Prize Laureate in Economics James Buchanan, and Consumer Behaviour: An Experiment in Analytical Economics (Harper and Row).
