Europe's big fat Greek problem and its implications to us…

Google ‘Greece’ and words like ‘bailout’, ‘meltdown’, ‘austerity’, ‘Banks’ shares collapse’ and ‘Euro zone’ jump at you. It is not a good time to be Greek- it is in the news for all the wrong reasons lately. One cannot help but feel for that beautiful island country. To understand what happened; one must go back, way back in time. History: The hilarious ‘90’s movie- “My Big Fat Greek Wedding” is a good introduction to matters Greek. It is a comedy where typical white American (Anglo-Saxon) marries a Greek girl and is faced by something typical American are not used to ( which we see in Rwanda and Africa all the time); an extended family full of opinionated (sometimes obnoxious) aunts and uncles who all have seem to have a bigger say on the matter at hand. One truism that comes through in the movie when the soon-to-be-groom talks to one of the older male relatives of the bride. The Greek mumbles in Greek that they, (the Greeks), were civilized and were discussing philosophy at a time the groom’s ancestors were still climbing trees! I have seen this attitude in my few Greek friends- they are a proud people, (but then who is not?); and rightly so too. Greek culture and civilization is the foundation of modern Western (read world) civilization and culture. From Politics to philosophy, sports to science, the indelible mark of the Greece or Hellas, as they call themselves, can be seen in words like democracy, economics, Pythagoras theorem, Olympics, and many others that have Grecian origins. One wonders, how did the Greek culture spread so much in the world? The simple answer: Rome. Upon conquering Greece as they marked out the Roman Empire, the more practical Romans (soldiers and all) fell in love with Greek culture which they considered more refined….some sort of ‘haute couture’. Greece greatly influenced Roman culture; as Horace said, Graecia capta ferum victorem cepit. (“Captive Greece captured her rude conqueror”.) This influence was in literature, sport, science, and politics, among others. Greece became the language of civilization in the Roman Empire. Even the Christian Bible’s New Testament was first written in Greek with the more educated apostles like Paul speaking Greek. Rome opened Greek civilization to the world- especially Western Europe the influence of Greco-Roman culture. This is still so today. The Meltdown: ‘Economics’ has its roots in Greek word ekonomos - stewardship (house management). It is a Greek word, so why have the Greeks been unable to manage their own economy? Or have they? Greece made some very smart economics decisions earlier on; since joining the European Community (subsequently the European Union) in 198. Since adopting the Euro in 2001 (thus becoming a member of the Euro zone), it experienced a period of sustained growth that tripled the country’s GDP in 7 years from $12,400 in 2001 to $31,700 in 2008. Investments in industry, enterprise and heavy infrastructure and funds from the European Union characterized this period and resulted in growing revenues from tourism, shipping and a fast-growing service sector raised the country’s standard of living to unprecedented levels. The Greek government, encouraged by the European Commission, European Central Bank, private banking institutions, and the Greek business community also took out loans to pay Greek and foreign infrastructure companies for a wide variety of infrastructure projects such as those related to the 2004 Summer Olympic Games in Athens. Government deficits were also consistently underreported; then the 2007–08 Financial Crisis began. It badly affected Greece’s economy, GDP fell by nearly 20% from 2008 to 2010 and the government’s capacity to repay its creditors was drastically reduced and thus the melt down began. The Greek meltdown is Europe’s big fat problem. Europe created it. The ‘false and misplaced confidence’ that came from sustained strong growth at the turn of the millennium, poor reporting, Greece being primarily a service economy, as well as demographic factors occasioned by large number of pensioners compared to the economically productive population are at the core of this matter. When the financial crisis began in US it had to have the domino effect Europe has mishandled the situation. Austerity measures were bound to be counterproductive. They stifled national income and the ‘feel good factors’ that necessitate spending wiped out. In an economy, especially a service economy like Greece that had a thriving sector, expenditure in such services is the backbone of the economy; it is what drives it. This sector is also very volatile and easy to lose. Rwanda can learn from Greece in the need for diversity in the economy, and the importance of the ‘brick and mortar’ sectors like manufacturing and agriculture in the economy even as we improve the Information Technology and Service Sectors. We also need to have more disposable income in the economy; perhaps RRA might consider reducing tax rates? However, even more crucial is the ability and practice of thinking for ourselves. Greece has depended too much on Europe and presumed it infallible…they were caught napping by the financial crisis. They must think for themselves now, as must we. The writer is a Project Management and Entrepreneurship Development Consultant based in Kigali. sam.kebongo@gmail.com

Opinions

Europe's big fat Greek problem and its implications to us…