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Experts: Greece’s example shows detrimental effect of IMF, EU lending policies

July 06, 2015, 16:54 UTC+3 Zamyatina Tamara
© AP Photo/Petros Giannakouris

MOSCOW, July 6. /TASS/. The results of the referendum in Greece show that the European Union has failed to offer Athens a clear-cut program of economic recovery, except for its demands for belt-tightening, tax increases, pension and social payment cuts. The lending terms offered by the IMF and European financial institutions do only harm, experts polled by TASS said on Monday.

Debt-laden Greece owing creditors more than €300 billion voted in a referendum on Sunday to decide on whether to agree to the terms of European lenders. Most of the Greeks (61.31%) voted against the creditor terms.

The results of the referendum will allow Greek Prime Minister Alexis Tsipras to strengthen his positions at further talks with the European Union on the terms of lending as he will rely on the Greek people’s will, Deputy Dean at the Faculty of World Politics and World Economy at the Higher School of Economics Andrei Suzdaltsev told TASS.

"However, the financial and economic situation in Greece will only deteriorate. The country has neither money nor liquid properties. The Greek privatization program includes such exotic proposals as the sale of 50 uninhabited islands where, incidentally, there is no water, or the buildings of Greek embassies abroad. But these are small assets, which will not rescue the Greek economy. A financial crisis will break out there in the coming hours," Suzdaltsev said.

"The European Union establishment is really frightened by the voting results, which may cause a domino effect. Spain, Italy and Portugal have gigantic debts incomparable with Greece’s debts and may follow Athens’ path," the expert said.

"Apart from negative political consequences, there are fears about a decline in economic activity in the EU. Oil prices have gone down on the world markets after the referendum results were announced. This is the beginning of economic destabilization, the beginning of an uncontrollable process, which is aggravated by an influx of illegal migrants into the EU and the Ukraine crisis," he added.

"The proposals by some analysts that Russia should buy out Greece from the European Union are absurd. Despite good bilateral relations between Moscow and Athens, Moscow does not intend to rescue the European Union with Russian money," the expert said.

Greece will stay in the eurozone after all, Director of the Department for Strategic Analysis and Developments at Vnesheconombank Vladimir Andrianov said.

‘To all appearances, a compromise will be found and the EU will agree to Greek debt restructuring. But this will negatively affect the EU monetary and credit market and the economy of Germany and France, in the first place," Andrianov said.

"The loan terms offered by the IMF are a bluff. They only cause damage, which can be evidenced by the example of Ukraine where the social and economic situation has disastrously deteriorated over just a year and a half due to the so-called Western aid," the expert said.

At the same time, the European Union has showed its weakness and the absence of common sense in relation to Greece and has actually become a toy in the US hands," he added.

"Russia could create a precedent in relations with the EU and render Athens financial assistance, if Greece pursued more independent policy," the expert said.

The Tsipras government has gained additional legitimacy at the talks with international creditors, said Nadezhda Arbatova, head of the Department for European Political Studies at the Institute of World Economy and International Relations of the Russian Academy of Sciences.

"But the Tsipras government will collapse, irrespective of the referendum results, unless Greece launches real economic reforms," Arbatova said.

"When Greece was admitted to the euro area, Brussels was aware that the country fell short of European standards. As a result, Germany and France are now paying the price for their mistake. Neither the eurozone nor the European Union will collapse after the referendum results in Greece. But the euro will see a new inflationary spiral. The EU will most likely offer Greece concessional lending terms during talks in Brussels while the Tsipras government will agree to unpopular reforms," the expert said.

"I don’t share the position of those who believe that if an unpleasant thing has happened with Greece in the European Union, this is good for Russia. No dramatic events will follow after the Greek referendum. Nothing will change in relations between Russia and Greece. Tourists will continue visiting Hellas. Positive bilateral relations will continue along with economic ties," Arbatova said.

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