quarta-feira, 4 de fevereiro de 2015

Greece owes a debt to Spain

What are Spaniards to make of the news from Greece? A radical leftwing party that barely existed as a political force before the financial crisis has swept to power, promising that it will no longer accept demands that international creditors have hitherto presented as non-negotiable.

The Spanish people, like others in southern Europe, have had a taste of the Greeks’ plight. About a quarter of Spain’s workforce is unemployed — not far off the figure in Greece. Both countries have had to endure crushing austerity programmes aimed at winning the confidence of creditors, and to secure conditional promises of support from European and international institutions. Few can say as sincerely as the Spanish that they feel Greece’s pain.

Nonetheless, when Spaniards talk about Syriza’s election victory in Greece last month, the mood is more of circumspection than sympathy.

Part of the story is that Spain, despite the fragility of its own finances, has lent considerable sums to Athens — about €26bn, if you include Madrid’s contribution to the eurozone rescue funds. This is more than half the €40bn that Spain itself received from the European Stability Mechanism to recapitalise its banks.

Look at it this way, it can seem as though a disproportionate share of the eurozone’s reserves of financial solidarity come from the very countries that are most in need of support.

Yet despite what some commentators have been saying, the big worry for most Spaniards is not that Athens will default on its debts. It is widely accepted that some kind of deal will be reached. This is unlikely to involve a reduction in the nominal amount that Greece must repay, but the real value of repayments will probably be whittled down nonetheless by deferring payment and lowering the interest rates in some form or another — the time-honoured solution of “extend and pretend”.

On the contrary: it is not because our situations are opposed that Spaniards are fearful of events in Greece. It is because they share some similarity. The really big fear is that politicians in Greece will engage in a round of brinkmanship — both with international creditors, and with the eurozone’s monetary authorities — that will forever drive a wedge between the north and south of the eurozone.

If investors get their fingers burnt in Athens, they will hesitate to write cheques in Madrid, Milan or Lisbon. If Germans feel that sharing a currency with Greece no longer serves their interests, they will feel the same about any monetary union that includes the other countries of southern Europe. Lose control of the situation in Greece, and a destructive gap will open between the eurozone’s creditor and debtor nations.

Then there is the prospect that the political upheaval that has been wrought in Greece could happen here as well. After all, many of the circumstances are similar. While the Spanish economy has been doing better recently, the sense of recovery has not been widely shared. A large part of the population — those without jobs, or whose salaries have been cut — has so far scarcely perceived the economic rebound. Most Spaniards feel poorer than they did before the crisis. The lesson that many Spaniards would take from a Greek default is that austerity has not delivered in either place.

Backsliding by Greece could undermine the momentum of Prime Minister Mariano Rajoy’s reformist government and give even more impetus to Spain’s radical left Podemos party. On the other hand, if Syriza succeeds in reforming Greece, this could spur positive changes in Spain and elsewhere, paving the way for reconciliation between north and south and for a strengthening of the monetary union.

For now, the popularity of Podemos reflects, not a roar of approval for its policies, but a howl of anger from a disaffected group of Spanish voters. For now, in fact, Podemos does not really have any policies that it can sell as an alternative to the reformist programme of Mr Rajoy. But the fear of the traditional parties, and especially the governing Popular party, is that if Syriza gets its way in Greece, Podemos might revive the idea of a writedown on the Spanish debt. Chaos could follow.

Spain has begun the painful work of reform under great stress and with much sacrifice. It needs to do much more. Greece, twice rescued, has also made sacrifices, but is yet to push really deep reforms. Many in Spain would like to see reforms that would foster growth. European policy has already started to change. So extend and pretend — and reform and grow.

Andrés Ortega is a fellow at the Elcano Royal Institute and a former head of policy planning in the Spanish prime minister’s office

Fonte: FT