When a situation arises in any country where all the banks are closed, because there is no money and ATMs can only offer rationed amounts, one would want to wake up from such a nightmare in a hurry.
Unfortunately, such a situation is not a mere nightmare; in Greece it is reality and is called “capital control”.
Greece, one of the world’s oldest civilisations and mother to democracy is currently on its knees economically. It has been on financial life-support from European creditors since 2010 and its failure to repay its debts has pushed the Greek economy into a state of cardiac arrest.
The country defaulted on a rescheduled repayment of a loan worth US$1.6 billion to the International Monetary Fund (IMF). Punitive austerity measures are being meted out to Greece by the troika of the IMF, the European Central Bank (ECB) and the European Commission.
These austerity measures are not new to Africa. Many African countries experienced the same measures imposed under the “structural adjustment programmes” of the IMF and World Bank, which caused great suffering through slashing of spending on health care, education and agriculture.
What Greece is experiencing is similar to what most African countries faced in their attempts to balance austerity with humane policies. When the crunch comes, the creditors always try to absolve themselves of their role in creating an economic mess.
The scapegoat has always been that African countries are corrupt and are slow in implementation of austerity measures, while in reality it is the conditions demanded by the creditors that lead to harsh economic circumstances.
It is not yet certain how the situation in Greece will finally play itself out. Though Greece is a fully-fledged member of the European Union, it remains a sovereign state. The vast majority of Greeks want to stay in the EU. However, the unfolding situation could see Greece being forced out of the Eurozone.
As a member of the EU, Greece and other countries in a similar situation, had to be saved from bankruptcy for the sake of economic stability of the Eurozone. The Greek crisis is as much a political crisis as it is an economic one.
Greece is bound to its creditors by a double layer of political institutions – those of the EU and those of the Eurozone.
Ordinarily, when you owe someone money, you don’t debate about it, you simply pay back in accordance with the terms and conditions for repayment. However, being an old democracy and the fact that Greeks are a legendary people, who pride themselves on a long history of democracy, Greece has called a debate (referendum) to allow Greeks to vote either “No” or “Yes” to accept or refuse the terms of repayment proposed by the creditors, the terms which the government has already refused to abide by.
Consulting and involving the people in the affairs of the country – especially regarding their economy – through a referendum is the first lesson that we need to learn from the Greek situation. The troika has tried tooth and nail to bully the Greek government into not consulting with its people over further austerity measures, as democracy requires.
The Greek government refused and chose the democratic route. Through this stance, Greece has shown that economic might is not always right. This reminds one of the firm stance taken by Thomas Sankara of Burkina Faso against the imposition of structural adjustment programmes. This should be the clarion call to all of Africa to reject odious debts accrued from past regimes.
The key lesson here is that in any fight against economic injustice and bullying, the people are the most potent source of power. Therefore, giving them a voice in decision-making is a core strategy.
There is a school of thought that advances the idea of democratic politics as a weapon for social justice. We need to embrace this if we care about the wellbeing of our people. This is more so, because the most important function of a state is to protect those who cannot protect themselves.
We also need to be cognizant of the fact that the Greek experience is confirmation of what Africans have been saying about the effects of punitive austerity measures all along. They can be irreparably devastating to a country.
The Greek situation teaches us that Africa needs to preserve its hard-won macroeconomic stability by borrowing carefully and spending wisely. Greece is known to have had a consumptive budget rather than a productive one; its public wage rate was the most extravagant in Europe; its pension system was flawed and pervasive tax evasion further worsened the situation.
Like individuals, governments also go bankrupt if they spend beyond their means. Therefore, when people start questioning government’s expenditure, someone ought to listen and take heed.
Dr. Charles Mubita holds a PhD in International Relations from the University of Southern California.