Greece: a country under assault?

Euro group critics misunderstood Greece’s problem, LBS expert says


Socially minded critics have been too quick to blame Greece’s fate on Euro group austerity, a strategy expert from London Business School has said.

Michael Jacobides, Associate Professor of Strategy and Entrepreneurship, London Business School, made the comments writing in the Harvard Business Review this week.

“Greece”, he said, “offered a tantalizing opportunity to socially minded critics to condemn the approach taken by the euro group under Germany’s leadership. Greece was seen as an exemplar of a country under assault, victim of the waning European sense of cohesion and social justice, and of ineffectual, neoliberal policies.”

While he acknowledges that among EU policies there are some which are punitive and even counter-productive, Dr Jacobides warns against the temptation to blame austerity gone mad for the root causes of the Greek financial and ensuing political, crises.

He writes: “Greece’s main problem isn’t its currency. Rather, it is that its Byzantine regulations and institutional uncertainties discourage investments and reduce competitive pressures. Grexit would further restrict available capital, shatter the fragile banking sector, and increase the investment gap.”

There is no getting away from the pressing need for structural reform. Then there is the somewhat inconvenient truth that for all its progressive promises, Syriza has done little to combat tax evasion or oligopolies. And while the €600 million yearly annual government subsidy for pensioners was protected, only €200 million were granted to cope with Greece’s humanitarian crisis.

With an election on the horizon, Jacobides urges commentators to use their influence wisely, separating the symptoms from the causes.