General meaning with regard to the Greek problem. In the adventures of the eurozone, the case of Greece bears importance of a general nature. With its exit from the eurozone being, in my opinion, inescapable (see this column in yesterday's edition), what happens afterwards will affect the future development of the EU in its entirety. That's why it's important for everyone to analyse what the Greek situation will be as a member state outside the eurozone.
The Greek situation has a general resonance for at least three reasons:
Correcting. The first requirement is to correct the false impression that Greece would be excluded from the eurozone by a decision from other countries of the eurozone, or the Community institutions. This is wrong. The fundamental question is to know to what level a country from the eurozone can continue to receive funds that cost the other member states dear, when it does not respect the conditions defined by common agreement. Expulsion from the eurozone doesn't exist. The support instruments for countries in trouble are numerous and generous, they are constantly developed and expanded, and have different forms - financial support, temporary derogations, extensions of different deadlines. But these instruments are subject to conditions, and this column commented yesterday on how it is impossible for Greece to respect them. Greece will not be expelled but is going to lose the automatic additional aid.
Freedom to leave. We sometimes hear, in one eurozone country or another, of positions favouring Greece's exit from the eurozone. It should be clear that the door is open for it to leave - whoever wants to leave the euro is free to do so, whatever the complications (monetary or legal), and whatever the arrangements written in the laws in force. For the country wanting to leave the euro the appropriate procedure would be found, and the case of Sweden proves this. The countries of the euro could but say “Good riddance”.
In the EU forever. Let me once again remind you of this essential point - a country which leaves the euro would still remain part of the EU with the duties and benefits that this brings, including its place and role in the Community institutions. There is no impression that the EU is becoming less attractive - candidate countries for accession are not getting any fewer, quite the opposite in fact. And from this point of view the future awaiting Greece is instructive.
Encouraging outlook, if… The analyses show that a reinvigorated Greek economy is possible, thanks to Greece's boosting of strong traditional points and the creation of new activities.
For tourism, there's no problem. The number of tourists increased again last year. This year the elections with their complications and uncertainties have provoked a slight decrease, but things are, in fact, now improving. For certain countries of origin, a considerable increase has been recorded, especially Russia whose interest in the Mediterranean is ever on the rise.
For agriculture, traditional resources (olive oil, tomatoes, fruit) can easily be better exploited, and analyses of each product prove this.
A few new sectors are especially promising, principally solar energy, thanks to 300 days of sun per year. This energy particularly interests Germany as it has had to abandon nuclear energy. A colossal project, to be accomplished in Greece, has already been drawn up, with €20 million of investment, 20,000 hectares of photovoltaic parks and 10,000 megawatts to be produced by 2050.
European Commissioner for Energy Gunther Oettinger supports projects like this, which in his opinion could open the way to a truly integrated European energy market. But the Germans require clear perspectives, especially with regard to price, and nothing is yet in the bag. The Greek authorities, once free of their euro complications, should make solar energy a national priority and renew their contacts with the Germans with a specific goal in mind - photovoltaic panels manufactured in Germany and green energy produced in Greece.
Warnings and advice from economists and political figures. Some economists believe that the return to the drachma would imply fewer sacrifices for the Greek people than being forced to stay in the euro. Though the nominal salaries are decreasing and the number of public employees is being radically reduced, the households which are in debt with the euro as their currency, don't know how to get out of it; devaluation of a re-established drachma would be much less painful.
I well remember the reaction of Robert Goebbels, an MEP whom I hold in high regard, after travelling to Greece for work last March (see EUROPE 10574). He believed that the austerity imposed on Greece by the troika was too harsh and that the money used to help the Greek people was ineffective - a position which Mr Goebbels defended, scandalised at the 500,000 people deprived of income. But at the same time Mr Goebbels pointed out the measures for the Greeks themselves to take - increasing investment by using the European Structural Funds which remain unused in Greece; simplifying the tax system and making it more efficient; making shipowners and the Church, in particular, pay tax - as the Church “possesses enormous latifundia”; and simplifying the administrative machine to make it more efficient (11 ministers have to be consulted before a hotel project can be started!). Indeed, these are broadly the measures required by the troika, but without results. What would Mr Goebbels say today if he had been tasked with a similar trip?
It is true that some effort was made after his visit there. The European Commission set out, in conjunction with the Greek authorities, a list of 181 priority projects for co-financing with the ERDF (European Regional Development Fund). European funding could even be increased to 80% of the cost for the motorway to be inserted in the trans-European transport network. But it seems to me that these operations were already placed in a Greece which would in the meantime have left the eurozone, as the agreements state that Greece will have to accomplish internal reforms alongside these operations - reforms especially for more strongly tackling tax fraud, without any reference to the disciplines specific to the euro.
Let me remind you that the president of the European Commission, José Manuel Barroso, said in his statement after his visit to Athens that the place of Greece would remain in the heart of the eurozone, “for as long as it respects its commitments” - in other words, the conditions set out in the common “memorandum”.
An example. Costas Mitropoulas, the president who resigned from the Greek privatisation Fund (and was thus responsible for one of the essential aspects of the reforms) circulated his letter of resignation complaining to the government that it had in practice sabotaged his work. The fund over which he presided was tasked with preparing the privatisation files and for proceeding with the calls for tender and transfer. Mr Mitropoulas said that some of the authorities, instead of helping him in his task, were doing the opposite - to the extent that the only operations carried out consisted of transferring part of the telephone company OTE and the sale of the four Airbus planes which were on the State's hands after the privatisation of Olympic Airways.
Of course, the objectives for this year planned other operations too, including the sale of the State shares in Hellenic Petroleum, of the gas company Depra, of nickel mines, of several ports, and of buildings in the centre of Athens. It's obviously not my job to evaluate whether these are good actions for the State at this time, but they appear in the programme of recovery for the State budget.
It is true that some Greek political forces consider that the programme of the memorandum negotiated with the troika is “an aberration” and radically reject it. But it is true too that if the programme is not respected, Greece loses its funding which has been promised to it with conditions attached. Remaining a member of the EU, Greece could benefit from aid and support that could powerfully contribute to its economic recovery - if the Greek people agree.
The credibility of the eurozone is at stake. At the moment the eurozone is doubling its efforts to overcome its crisis and consolidate public finances, and create instruments and initiatives that will contribute to recovering the situation. It needs the member states in trouble to accept the necessary efforts and respect their commitments, while benefitting from essential support. The facts prove that Greece is not in a position to do this - yet resolution of its case is fundamental for the credibility of the eurozone as a whole.
Didier Reynders, the Belgian minister of foreign affairs, has just reminded people that Greece “is 2% of the GDP of the eurozone and 3% of the debt, and it has become a world problem. … All the measures taken today hit at the population, whilst whole tranches of the situation remain unreformed. … Continuously accumulating bailout plans is not a solution”. It is true that Mr Reynders does not speak about a Greek exit from the eurozone at all, as he is aware that the decisions have been put off until the autumn. But he makes reference to a “European authority which could block a certain number of things, in the area of defence for example”, a sector where Greece spends too much, in his opinion.
My conclusion is that the case of Greece is fundamental for the credibility of the eurozone, and that this zone will be dismantled if it is not regulated.
(FR/transl.fl)