On the verge of bankruptcy! Yet somehow Greece continues to hold on by the slimmest of fiscal margins.
But the economic turmoil the country is experiencing at the moment is a coincidence. Bad judgment and poor timing in relation to its decision to join the European monetary arrangement can account significantly for the prevailing state of financial distress in the country.
And, indeed, there are serious lessons which we in the Caribbean ought to take away from the present economic climate in Greece. In an eye-opening piece entitled Greece: Why Did Its Economy Fall So Hard? that was carried by The Telegraph, Harry Wallop claimed that “Greece has long lived beyond its means and spent much of the last two centuries defaulting on its debts”.
“Joining the euro was meant to put an end to all that. However, it merely seems to have exacerbated its problems.”
But why was that? Wallop went on to suggest that “Quite simply, [Greece’s] debts were too high and inflation was out of control.
“By 2000, the European Union finally allowed it to join, though there were suspicions at the time that Greece was operating a limbo dance – squeezing its figures to hit the stringent euro criteria only for them to flip back to dangerous levels once it had entered.”
Clearly, from a purely logical perspective, several lessons for Caribbean countries emerge from Greece’s experience as illustrated by Harry Wallop.
First, citizens of a country living beyond their means are bound to be hit by an economic tsunami if remedies are not sought and taken heed of immediately.
Second, economic problems cannot be hidden, certainly not indefinitely. Third, within the context of regional integration, strict convergence criteria ought to be decided and enforced without fear. As significant as these lessons are, it is the third in the list that concerns me the most.
You see, the CARICOM Single Market and?Economy (CSME) is supposed to be the institutional mechanism that creates the greatest potential for growth and development of Caribbean economies.
But extrapolating from Greece’s experience as part of a European economic union, it seems logical to infer that unless prevailing economic conditions in a country are ideal based on established criteria, an individual country should never be rushed into a regional integration initiative. Otherwise, the fallout can easily outstrip possible benefits from such unions.
Within the context of the CSME, our leaders should take another serious look at the convergence criteria set for regional economies to qualify them for entry into this important integration movement.
In as much as Caribbean people are eager to forge ahead in unity and broaden the integration process, care and caution must be exercised at all times to ensure that no country ends up in a disadvantageous position dueto participating in the CSME before it was ready.
Indeed, the European Union is fortunate that it can continue to bail out Greece and other countries that have landed in financial and economic commotion.
We in the Caribbean will never be that providential. Therefore, as we seek to deepen and broaden the CSME, we must always be guided by the following proverb: “Timing is everything!”