Monday, 20 May 2013

Plan B to Take Greece to the Drachma

This article was published by EnetEnglish. Watch the Al Jazeera report

Leftwing activists and politicians have launched a new political party espousing a return to the drachma and ditching of the euro.

Plan B, as the party is called, is the brainchild of Alekos Alavanos, the former leader of Syriza. "Greece is a now a country with no achievement. It’s a society that has lost its self-confidence and its perspective for the future," Alavanos told EnetEnglish. "We cannot wait one day," he said, "because Greece is dying. There is a generation of people who have never known work. Young people are starting to forget what they studied." Unemployment for the 18-24 age group now stands at 64 percent. 

Alavanos believes that Greece can only rebound under a devalued currency, because the euro is making Greek products and services expensive to overseas buyers and to other Greeks. "There is not even one example in the last century of a developed country like Greece that has been in a recession, in a depression, to find its way out with a hard currency. Now we have as our own currency the currency of the Germans," he says.

Greece's economy is forecast to shrink by 4.2% this year, losing a quarter of its value since the beginning of the recession in 2008. Unemployment stands at 27% and is to grow. Even forecasts by the country's creditors do not see a return to robust growth for several years, while the European Commission believes that unemployment will remain above 20% for at least three years. Unemployment in the 18-24 age group currently stands at 64 percent. 

That is a problem, because Prime Minister Antonis Samaras came to power promising to focus on growth rather than recession. He had told voters that each point of GDP growth creates about 50,000 jobs, helping to drive tax revenues upward.

Plan B presents its own problems, however. Most economists believe that a drachma would be devalued by 60% in relation to the euro (even Plan B admits to a likely 50% devaluation). That would make Greece's €300bn debt, which is denominated in euros and dollars, even more difficult to pay off. But Alavanos says this will just make painful truths clearer. "Everyone knows, everyone, even the Germans … that Greece cannot pay its debts …  This is a reality and everyone will accept it finally even if he does not like it," he said. Plan B's manifesto says that "the debt writeoff must be overwhelming".

Greece forced its private sector lenders to accept losses of up to 75 percent last year, in the biggest restructuring on record. It would now be asking European taxpayers to do the same, since European sovereigns have now bought most Greek debt in echange for two bailout loans. That is a more difficult proposition. 

Falling out

Alavanos led Synaspismos, the main party in Syriza, and helped pave the way for Syriza's current leader, Alexis Tsipras, to rise to the top. But the two had a falling out in 2010 over whose protege would carry the nomination for Athens prefect in the local elections, and Alavanos lost out. He now believes that Syriza has left voters without any real alternative to austerity by compromising too far with the troika, and many voters agree.

Syriza entered the 2012 election campaign promising to rip up Greece's loan agreements and the memoranda of austerity measures that accompanied them. A few days before the May 6 election Syriza nuanced its position, saying that it would not jeopardise the flow of loan instalments that was keeping the government payroll afloat, and insuring millions of pensions; it would instead revise the terms of the loan. It further reassured voters that it would never advocate a departure from the eurozone.

This chimed with the wishes of about three quarters of Greeks, which through the crisis have polled in favour of staying within the eurozone despite the hardships that involves. But Alavanos believes that majority has eroded through the crisis. "I think it's now about 50-50," he told EnetEnglish, adding that "sometimes you have to go against the flow".

He is adamant, however: "We need a currency that can help Greek exports and help us reconquer a part of our internal market. So there is not any other solution."

Alavanos has demonstrated a particular talent at riding the popular mood by focusing on single issues. In 1999 he rose to fame by criticising the then-socialist Pasok government for handing Kurdish rebel leader Abdullah Ocalan over to Turkey. Ocalan was an international fugitive, and sought refugee status while hiding out at Greece's Nairobi embassy. Three ministers were sacked over the debacle, and Alavanos led protest marches in central Athens.

He assumed the leadership of Synaspismos shortly thereafter, and in 2006 took the party to the unprecedented height of 17% in opinion polls by becoming the leading voice opposing the conservative New Democracy government's education reforms, saying that they amounted to privatisation of the university system. The rise was ephemeral, however. Synaspismos deflated to its core voter base of just over four percent within a year. Tsipras, has arguably done better by taking the party to 27% of the popular vote in the June 2012 election.

Plan B may now damage Syriza if it manages to paint it as a compromised opposition; but it could end up helping the government, which this year asked its eurozone partners to forgive much of the country's debt. Strong support for the drachma party might bring back fears of Greek contagion to the eurozone. Anaemic support, however, might suggest to the eurozone that the Greeks' vaunted spirit has fizzled out. 

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