Indicative example. Why are we returning once again to the case of Greece? It accounts for just 2 or 3% of the economy of the eurozone… But this fact proves precisely that the euro can only work if all of its members respect its disciplines (and sort out any problems using the support instruments which exist for this purpose). If a single member state, even the very smallest, loses control, the whole system is compromised.
It is said - too lightly - that the general elections of 17 June in Greece represent a kind of referendum for or against the euro. In reality, if it returns a parliamentary majority in favour of honouring the commitments the country has made, this will just be the first stage; it is then that Greece will get down to business, in other words bringing about the in-depth reforms which the government has undertaken to carry out. The European Commission, the European Central Bank and the International Monetary Fund, which make up the supervision troika, will be paying very close attention. As early as 30 May, the European Commission called on the Greek authorities to speed up the agreed reforms as much as possible, if they want the volume and timetable of the payments scheduled under the rescue plan to be respected.
The rescue plan provides for funding to Greece of €130 billion, subject to austerity measures and the concretisation of the major reforms planned. This section has already reported on a great many studies and analyses which show that several member states and other bodies are preparing for the hypothetical situation in which Greece is unable to respect these commitments, which would entail the blocking of funding by the troika and Greece's departure from the eurozone.
Christine Lagarde's coup. The statements made last week by Christine Lagarde, Director-General of the IMF, attracted a number of lively reactions, increased the confusion, heated up the atmosphere still further and gave rise to additional analyses. Let us gloss over the excessive reactions informed by political rivalries and, most importantly, let us not forget that the IMF is one of the bodies which are bankrolling Greece and which will continue to do so, and that its number one duty is to support the emerging and developing countries. Its Board of Governors is there to ensure a balance in its actions, lay down priorities and make sure that the conditions negotiated with beneficiaries are adhered to. Ms Lagarde has to take account of these characteristics, particularly now that an increase in IMF capital has been slated. The countries which benefit from its funding are under supervision, they have to abide by their commitments. If the Greek bailout plan was changed without the IMF's green light, its funding could be suspended. Some of the reactions to Ms Lagarde's statements did not bear these realities in mind.
Additional analyses. I feel that our time would be better spent if we left aside the polemic aspect and focus instead on the additional analyses brought about by Ms Lagarde's coup. A study (by the consultancy McKinsey) stated that in 2009, tax evasion in Greece lost the public coffers between €15 and 20 billion, or between 60 and 80% of the budgetary deficit; effective tax collection would therefore bring in the lion's share. Real efforts on the part of the Greek authorities have been noted (with the support of the IMF itself): the financial brigade police is comparing declared income with standards of living, many business people have been arrested, fines of a total of €8 billion have been handed out: but only €100 million has actually been recovered, because the procedures are slow and many of the guilty parties have declared bankruptcy! An OECD study showed that €33 billion in tax was owed to the State in Greece, the list of main debtors was even published; but just one billion has been recovered and eight billion are theoretically recoverable. A number of studies acknowledge that the State has made and is making efforts, but the problems are deeply rooted: in Greece's history, political domination has long come from overseas. In such cases, the citizens do not feel that the State represents them. In countries with many years' subjection to foreign occupation, the State sometimes starts to look like an entity to be mistrusted. Other studies argue that in Greece, they are a long way past this stage and tax the State with failing to get across the message that it is not an entity which is intruding and state that it should have organised relations with its citizens better.
According to various other analyses, the real problem in Greece is not a budgetary one, but one of productivity: neither industry nor agriculture produces enough. Tourism, the number one industry of the country (16.5% of gross domestic product, 18.4% of jobs) has fallen considerably, even if there is now talk of a partial recovery… thanks in large part to Russian tourists.
The path of recovery. My conclusion is a very simple one: Greece has the elements to allow it to recover its economic and political situation and to safeguard and reactivate all that is unique about it from a historical and artistic point of view, to the advantage of the whole of Europe. But it needs the time and support of the EU. Drawing out its current problems is not a solution for either Greece or the EU, because:
Greece cannot respect the commitments it has made under the agreed timetable;
this situation would bring about increasing problems with the EU. The costs are untenable, at a time when nearly all member states are facing the need to reduce their budgetary deficits whilst re-launching their economies, to prevent the eurozone from imploding. According to a number of sources, those behind the financial speculation now have the end of the euro in their sights and are getting geared up to make spectacular profits. Fears of the end of the euro are also believed to be the reason for growing concerns of the American President, due to the fallout that this will have for the position of the dollar and the economy of the United States.
No one is denying that Greece's exit from the Eurozone would bring about enormous problems and complications, and a number of sources have acknowledged that the work to achieve this is already underway. Artificially prolonging the uncertainty is not a solution because, when the time comes, the remedies would become increasingly complex and expensive. In the framework of the aid plan for Greece of May 2010 and March 2012, €120 billion have already been spent and further payments are imminent unless something changes. Action is unavoidable.
Let us not forget the recent declarations of the German finance minister on the repercussions of Greece's exit from the eurozone: "Risks of contagion? Europe will not flounder as easily as that (…). We have learned a lot in the last two years and created protection instruments. The dangers of contamination to other countries are now lower; the eurozone as a whole has become more resistant”. Additionally, the extra concessions to Greece, above and beyond their phenomenal cost, may lead to similar requests from other political forces in other indebted eurozone member states.
The EU's support to Greece will be increased and improved. I add a reminder which is becoming repetitive on my part: how can we fail to react to the systematic lies of the ignorant or the demagogical who state that, if it left the euro, Greece would be leaving the European entity? I must therefore stress once again that it will remain a full member of the EU, keep its place in the institutions, take part in negotiations on the next financial perspectives. Support for its plans and reforms would be stepped up. One example of an initiative which has already been launched has just been published in our bulletin 10625: the ERDF (European Regional Development Fund) is providing 80% of the funding for a motorway to link the Greek region of Aktio with the North-South axis of the country, an axis which is part of the trans-European transport network (TEN-T). The ERDF's funding is for nearly €181 million, and the work will create thousands of immediate jobs. This is one of the 181 priority projects that the EU will co-finance in Greece and which will help to boost economic growth. They represent just one aspect of what is planned.
Many economists believe that EU/Greece cooperation, taken apart from the misadventures of the euro, offers highly favourable prospects. As long, of course, as the vital internal reforms (particularly as regards tax fraud) are followed through.
(FR/transl.fl)