These are dispiriting days in Europe. I am in the Hague today, meeting with the foreign ministry. There is a sense of distress, and sadness.
The latest economic figures from Greece show a massive decline in output, jobs, and tax receipts, all down double digits:
Greece’s manufacturing output contracted by 15.5pc in December from a year earlier; Industrial output fell 11.3pc, compared to minus 7.8pc in November. Unemployment jumped to 20.9pc in November, up from 18.2pc a month earlier.
And yet Eurozone finance ministers refused to OK the latest bailout, under terms agreed to by Greek political parties that are already committing suicide by agreeing to fiscal cutbacks with such dire results, until the country passes even more stringent laws to lower incomes, cut government spending, and raise taxes!
The IMF used to squeeze developing countries in this fashion when they got into debt troubles. The result was riots, political disorder, and slow and painful recovery (if they ever recovered). The IMF has now learned and agreed its ‘medicine’ was often too severe, and that they should have done more to obtain debt forgiveness and emphasize measures to boost growth to help struggling government get back on their feet. Why is Europe now doing to Greece what the IMF would no longer do (and Christine Lagarde, IMF chief, to her credit has asked for less pain and more support for growth in Greece)? This likely will end up bringing Greeks back into the street to oppose these deals, and create another breakdown over negotiations.
Meanwhile, it is now time to talk about a no-fly zone in Syria, as Assad is using Syrian jets to shower rockets on Homs. Tanks and the army are on the way to finish the job. Syrians are requesting safety corridors to evacuate Homs and seeking intervention. It is probably too late to help Homs, but Hama and other cities and regions can still be sheltered and the opposition revived. But time is now counting down, and momentum is shifting in Assad’s favor.