‘there was money’ meant that no
preparation or planning was made with regard to Greece’s principal problem,
the need both to fund and to reverse the exponential growth in the deficit.
This problem was no secret: it had been noted in the reports of a range of
internationalorganisations, in the commentary of the foreign media and by
certain sections within PASOK.3
Prime Minister G. Papandreou’s programme statement in Parliament on
16 October 2009 was a repetition of his pre-election promises. There was no
indication of substantive developments in terms of policy, nor of
the European economy.
The discussion over restructuring Greek debt was, in essence, a discussion
about ensuring the sustainability of debt and averting bankruptcy. The sustainability of debt is never a given, in any case. That is why the internationalorganisations examined what would happen in the case of a Greek default,
while Greece remained completely silent, both domestically and internationally, on the matter. The Maastricht Treaty set a maximum level for a country’s
sovereign debt at 60% of GDP. At such a level, debt can be serviced in an
orderly way; it
role (in particular for credit rating
the ability to enter into administrative arrangements with
supervisory authorities, internationalorganisations and the
administrations of third countries.
In general, ESMA works at a
high level, setting standards, while national supervisory
possible effects of a Grexit. The necessary denial
by the Commission followed so as to placate Greek anger. Nevertheless, for
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The election of 6 May: euro or drachma? 245
an internationalorganisation, such as the European Commission, comprised
of developed nations as it is, it is inconceivable not to make preparations for
an event that was looking increasingly likely with the passage of every day.
A high-ranking European official said what was already evident: ‘The whole
world is examining what is a possibility. It would be
provisions concerning the EFSF and
the ESM were overtaken by events and new agreements had to be negotiated.
Was acceptance of the Memorandum mandatory?
Could Greece have been given the money without political conditions or
upon more favourable terms?
The Memorandum underpinned a loan of €110 billion to Greece. Financial
support to a sovereign state or a private entity, on the brink of bankruptcy,
is never going to be granted without stringent conditions to minimise the
creditor’s risk of losing its capital. Loans granted by internationalorganisations, or by states to
with dangerous side-effects 57
The government did not try to prevent the explosion of protest. It maintained an equivocal stance on the Memorandum. It did not demur when party
officials publicly proclaimed that the measures did not correspond to govern
ment ideology. It let it be tacitly understood that the Memorandum reforms
had been imposed, and that it would have followed another policy, had it
been free to decide. The Troika representatives were described by one minister
as ‘middling to minor employees of internationalorganisations’, to whom