As the conditions for deciding on whether Greece stays in the eurozone are being worked out (see the following pages), I would like to add a few comments to those made over the previous few days.
Improvisation and mistakes. The sometimes violent nature of the disorder in Athens has drawn the attention of an unusually high number of journalists, photographers, filmmakers and observers. This is quite logical because it is essential that all Europeans are aware of what is happening in an EU country. Nonetheless, some of the improvised reportage broadcast has contained inaccuracies and mistakes that sometimes have nothing at all with what is really going on.
As this column predicted, Europe has been accused of seeking to exclude one of its members, although there is no question at all of Greece leaving the EU. On the contrary, the EU is extending and strengthening its support to the Greek people and the country's economic relaunch. Confusing the EU with the eurozone is an inaccuracy that belies the truth. With regard to the Eurogroup, it is false to claim that it is demanding the repayment of billions of euros it had previously granted Greece. On the contrary, it is preparing to grant even larger amounts of money, so that the country is able to avoid bankruptcy next month. Respect for certain rules, in return, is an indispensable condition for the euro to remain a currency that is respected throughout the world and one that still remains useful to Europe. With regard to the violence in Athens, its leaders are a minority made up, to a large extent, of those who have benefited from the abuses and inconsistency displayed by the local political class.
This situation has already been denounced by Guy Verhofstadt, in particular. The Nobel prize-winner for 2010, Christopher Pissarides (born on Cyprus to Greek parents), indicated that the Greek public-sector is “an army made up of 965,000 civil servants and employees”. From among these, 15,000 will lose their jobs by the end of the year and 150,000 will no longer be working by the end of 2015 (for every five workers who lose their jobs, only one worker will be taken on and wages will be reduced by 20%). The retirement age that was set at 55, will be changed but very gradually, pointed out Mr Pissarides. It is indispensable that those who lose their jobs are not forgotten about but it is even more important to fight against tax evasion, which undermines the very foundations of the euro.
Which Greeks want to leave the euro? Some of the demonstrators in Athens are demanding that the country leave the euro. This was written in big letters on their banners. This is a legitimate measure but those demanding it are leaving out an important detail: in the absence of immediate funding (extremely substantial, at that) from the Eurogroup, their country would not be able to pay off current spending obligations, including the wages of the huge numbers of the country's civil servants. Participation in the euro without respecting its rules has led Greece to extend the anomalies that provoked the current difficulties, to the advantage of a number of banks throughout Europe and beyond. Allowing the efforts currently being made to ultimately and above all benefit the world of finance should be avoided.
An initiative that should not be ignored. The European Central Bank is prepared to forego the interest owed on the Greek treasury bonds it owns. Mario Draghi made this announcement last Thursday. EUROPE 10549 provided a report about this and I am not therefore announcing anything new but I would like to add a few more considerations. It is not possible for the ECB not to charge a nominal value on the Greek bonds because it cannot grant monetary assistance to a member state. Nonetheless, it can decide on not making a profit out of them and the interest owed can therefore become the property of member states, which can then grant it to Greece as part of the aid plan to the country.
In my opinion, it is not the operational mechanism that is interesting (one has to trust the ECB) but rather, the fact that the interest rates, regarded as being too high, will not be deducted. The rates demanded by the financial markets for the purchase of Greek treasury bonds (and those of other struggling countries in the eurozone) are so high that they are effectively characteristic of usury, the behaviour that only the acceptance of the implicit risk involved can justify. The implicit risk involves the possibility that the debtor is not able to respect its commitments. This effectively means that such a possibility is a normal counterpart involved in demands set by the usurer, which would in all other situations be totally inadmissible. The behaviour of the ECB should therefore, in a certain sense, represent the standard model: the creditor has to accept the possibility of a debt default or not demand excessive interest.
(FR/transl.fl)