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In 2010, the Troika imposed a program of what is politely termed ‘fiscal adjustment’ on Greece, which, by the IMF’s own admission at the time would be “tough, difficult and painful’.
The plan called for a staggering adjustment amounting to 16 per-cent of Greek GDP, with official IMF predictions that total Greek output would only fall by 5 per-cent, and the government debt-to-GDP ratio would rise to 150 percent, followed by recovery beginning in early 2013.
Greek Governments’ went above and beyond what was expected of them, public sector employment was cut by over 25 percent, the fiscal deficit was reduced from 15.6 percent of GDP in 2009 to 1.4 percent this year (an unprecedented adjustment), while the cyclically adjusted primary budget surplus is now the largest in the Euro area.
Meanwhile, Greece ranks extremely highly in OECD economic reform rankings, and the 2015 Doing Business report ranks Greece as the 61st best country in which to do business - a rise of 48 places since 2010.
Where has all this left Greece? There has been no recovery, the contraction in Greek GDP was 5 times greater than IMF predictions and the debt-to-GDP ratio stands at over 180 percent.
Yet there is still no admission of any wrongdoing on the part of the IMF or European institutions.
More worryingly, the Greek story highlights a
trend in European politics towards the dominance of bureaucracy over the democratic process.
John Maynard Keynes, the great 20th century economist, wrote of the inherent wrongs of the Treaty of Versailles that “the policy of reducing Germany to servitude for a generation, of degrading the lives of millions of human beings, and of depriving a whole nation of happiness should be abhorrent and detestable.’ There are clear parallels with the current Greek crisis. Those who are in favour of a more democratic, inclusive and egalitarian Europe should be appalled at the treatment of Greece.
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