Estonia is proof that austerity can yield economic miracles. Greece is proof that luxurious government spending can be ruinous. Estonia is poorer than Greece. The combination of these truths is why Estonians are not enthused about bailing out Greece, yet again.
Estonia’s government is showing that it is truly European by signaling support for Greece’s third bailout since the financial crises began five years ago this month, despite continuing public opposition to the move. Prime Minister Andrus Ansip, speaking to Reuters, is testing whether his government can withstand extending a middle finger to popular opinion in this, arguably the most advanced of the former Soviet Republics.
“We have to understand that we are not just helping Greece or other countries, we are also protecting ourselves,” Ansip told Reuters in the interview. “So we are creating those firewalls, and when those firewalls are high enough then we don’t have to spend so much money on fire extinguishers and most likely we will not get fire in our house. So we have to go on, we have to be flexible.”
In a sop to the likely public outrage coming on this issue, Ansip made clear that this newfound support for subsidizing the torching of the Parthenon would not extend to debt relief. “We will not support those ideas. That is setting bad examples to all others,” he said, and one is almost certain that his chief advisers took the opportunity to wipe the sweat from their brows.
Estonia has very little to gain from flushing even more money into Greece’s more or less metaphorical toilet, and Ansip — who once movingly asked why poor but thriving Estonia should have to pay for rich but struggling Greece’s self-imposed wounds — is obviously aware of this. Nevertheless, emboldened by the fact that he has a couple of years left before his next elections and the fact that the Greeks have managed not to set fire to any major tourist spots, his government is now gambling that acting a bit more European and a bit less Estonian will have very little impact on his government politically.
This is a dangerous gamble. Estonia’s economy was an almost perfect fit for the European Union in part because of its strong combination of domestic demand and export prowess. Domestic demand has taken a recent hit despite economic growth, and exports have fallen on general European weakness, slowing projected growth accordingly. Poor but thriving Estonia may not be thriving much longer, and may not have enough to help rich but struggling Greece.
Nevertheless, as with the remainder of the Baltics, greater European interests appear to be trumping national ones, and so Greece has cleared yet another hurdle on the way to receiving more Northern funds to avoid unseemly riots and even more unseemly communists and fascists almost taking its government.
It is yet to be seen if Estonia just set up a similar outcome for itself.
Image Copyright theilr