Greek savings are a 'sensational achievement'

EUROZONE CRISIS

DW.DE

http://www.dw.de/greek-savings-are-a-sensational-achievement/a-16322050

European parliament member Jorgo Chatzimarkakis explains why the Greek government has done a good job in handling the state debt crisis so far - but why it also needs more time.

DW: The German chancellor and the German finance minister say that Greece will not go bankrupt and will stay in the eurozone, while the troika of lenders [the European Union, European Central Bank and the International Monetary Fund] will deliver its assessment report next week. The EU summit acknowledged the Greeks' performance and in November Greece will receive several additional billions of euros in aid. Can we say that Greece has been saved?

Jorgo Chatzimarkakis: Greece is a member of the European Union and the eurozone, and it will remain as such. What "saved" means is a matter of definition. If it means Greece being able to borrow money at a sustainable rate in the financial markets, this will still take many, many years. But if we look at the net deficit - if we take away the interest and compound interest that Greece has to pay - then we are left with a deficit of 1.5 billion euros ($1.95 billion). This is a sensational achievement for a three-year period - and it can be built upon. However, that doesn't mean Greece will be competitive - this will still take a long time.

The next aid payment, 31 billion euros, will probably arrive regardless of what the troika report says. Can we assume, based on German Finance Minister Wolfgang Schäuble's statements, that the Greek state will not go bankrupt?

We can assume that the aid will continue. How the payments will be structured has not been decided yet - whether they will, for example, come in one go or in smaller doses. It's still not clear if the Greek government will be the recipient - i.e. the finance minister - or the president of the central bank, as in the past. It's possible that things will work by different rules. It's possible that the "fixed account" concept will be assessed and maybe also tested.

It's becoming apparent that the community wants to keep Greece in the eurozone for reasons that are not connected to Greece itself but to the stability of the world market. At the same time, there is a desire to maintain pressure on countries that have a debt crisis.

Isn't it a sign of mistrust towards the Greek government if the money doesn't flow into the national reserve but gets directed towards pre-determined causes?

The greatest sign of mistrust have been the constant calls by German politicians for Greece to leave the eurozone. Chancellor candidate Peer Steinbrück referred to it as bullying. It was bullying! It was damaging to Greece as an investment location - it was the greatest mistrust that could possibly be expressed. The fact that the German chancellor didn't just receive Greek Prime Minister Samaras in Berlin but traveled to Athens herself - connected with the desire and intention to keep Greece in the eurozone - is an initial pledge of trust.

If now, during the implementation of the reform program, stricter controls are introduced, they won't only apply to Greece. After all, Schäuble himself suggested endowing the monetary affairs commissioner with clear authority - he would like to give the European Commissioner for Economic and Monetary Affairs and the Euro the power of veto over national budgets. This establishes very tough controls for all budgets. The worst case scenario from a German point of view would be if a Spanish or Greek politician had control over the German budget - that's why I believe that trust is good, but controls are better. This will be the case in the eurozone in the future.

The whole summer long we kept hearing - from the German coalition and its own FDP [Free Democratic Party] leader Philipp Rösler - that Greece will only get money if it satisfies certain conditions. Has this happened? Has Greece done what it had to do?

For the first time since the eruption of the state debt crisis, the Greeks, with the government led by Antonis Samaras, haven't just pretended they are doing something but have truly demonstrated their willingness to act. What was achieved in Greece in the last three years was that the savings targets amount to 20 percent of the gross domestic product.

Greece has saved one fifth of its economic output - this has never happened before in the EU. It's a European record that should be recognized. At the same time, recession has set in - the economy has crashed. What we're experiencing in Greece is the fourth-largest recession in history. This kind of recession causes the state budget's resources, the tax revenues, to diminish significantly, and it changes the parameters of the restructuring program on a daily basis. Frankly, the troika has never grasped this. It wanted to approach the matter econometrically, but unfortunately not politically. But in a politically-charged environment - which is assessed every day by politicians and journalists - it cannot take such an approach. The troika has only given up on this in the past week.

The recession is galloping on. Does Greece need more time?

The Greeks have defined their desired timeframe, and that's two years. While Wolfgang Schäuble is talking about 2020 and not 2014. But that's too short-sighted. If you look at Greek history, the country gained independence from the Ottoman Empire in 1821. So 2021 - 200 years later - could be symbolically similar: the year in which Greece regains financial independence. This is the amount of time we need, and it certainly won't be achieved through demands for budget cuts alone - growth needs to happen at the same time.

Jorgo Chatzimarkakis, 46, has been a member of the European Parliament since 2004. Greek by descent, he is also a member of Germany's Free Democratic Party and has been involved in projects related to Greek economic reform. In 2011 his doctorate was revoked after a plagiarism investigation by the University of Bonn. In 2012 the Cologne Administrative Court dismissed Chatzimarkakis' action against the university.

Interview: Bernd Riegert / ew