Greece, like Yugoslavia under sanctions, is starting to be cut off from the world economy. This time, it is not due to war, but rather economics, and, let’s face it, politics. The debt binge of the first decade of the new millennium was going to require massive belt tightening to pay under any circumstances, just as it has in Ireland, Portugal, now Spain and likely soon others.
The inability of Greece to reform, and even, on May 6, to elect a coherent government has resulted in the market taking the situation into its own hands. Greeks are taking advantage of the EU’s lack of currency controls to take their money out of the country, by the billions. Investors are cutting and running. Those who sell to Greece demand payment up front; commercial insurers, refuse any Greek business. And just days after the election, Russian Natural Gas behemoth Gazprom warned that the spigot will be turned off if Greece does not pay up.
Effectively Greece is under economic sanctions, dictated not by politics but by the market. A nation with a huge trade deficit in energy and even food is basically being cut out of world markets. This harkens back to Yugoslavia in the 1990s, though the Serbs had the advantage—an important one—of being utterly self sufficient in food and had a far, far lower level of economic integration with the rest of the world. Though they had serious indebtedness (which contributed not a little to Yugoslavia’s demise) their debt and trade deficit was far less than their Greek neighbors have today. As such, though the politics are different and (thus far) there is no war and violence, the sanctions effect on Greece may be eerily similar.
Of course, Yugoslavia in the 1990s suffered some of the highest inflation in world history, which thus far Greece has not. True, but whether this element of the Yugoslav equation comes into play is entirely a matter of what happens on the June 17 election. If Tsipras comes out on top and puts his imbecilic and ill-defined plans into play, Greece will likely be bounced from the Euro and hyperinflation will no doubt begin, complicated by not having a legacy currency already in existence and by the scarcity of vital products (food, medicine, fuel) due to the virtual sanctions on Greece.
Nearly twenty years on, Serbia is still reeling from the twin blows of sanctions and hyperinflation. The damage to national wealth and, perhaps more importantly, the national psyche, is palpable everywhere. Greece today is at the threshold of similar pain, and real prudence is necessary to avoid the abyss into which we now stare. One of the shoes has already dropped, the other is teetering at the edge.
Tsipras must not win.