Home' Trinidad and Tobago Guardian : May 3rd 2015 Contents SBG14 FINANCE
SUNDAY BUSINESS GUARDIAN www.guardian.co.tt MAY 3 • 2015
It s crunch time for Greece. Again A
series of deadlines are looming that
could trigger the country s exit from
the euro - with all the political and
financial upheaval that would entail.
Or we may see a political rapprochement,
longed-for respite from austerity for the Greeks,
and a slow return to economic stability and
What s it to be?
We asked a range of experts for their views
on what could, and should, happen next for
Professor Otmar Issing
President, Centre for Financial Studies at
Goethe University Frankfurt; former chief econ-
omist at the European Central Bank (ECB)
Prof Otmar Issing says Europe has done
enough for Greece and a line must be drawn
Prof Issing is hawkish on Greece s culpability
and the need for Athens to learn to live within
"There is no question that Greece is respon-
sible herself for the mess she is in," he says.
"It started with misguided policies even before
the start and continued over many years."
A member country cannot continue end-
lessly violating rules
Simply writing off Greece s debt would
"immediately raise demands by other countries
with high debt", he says, and would be espe-
cially difficult for the ECB and other debtors
to swallow, given that banks and other private
investors have already renounced "more than
50 per cent of their claims; the largest debt
relief in history."
Europe has done more than enough for
Greece and a line must be drawn, he believes,
even if this means it has to leave the euro.
While this would show that "the exchange
rate regime is not irreversible", it would also
"be a strong signal that a member country
cannot continue endlessly violating rules and
Chief economic adviser, Centre for Economics
and Business Research; former joint head of
the UK s government economic service
Greek-born Vicky Pryce thinks it is "ridicu-
lous" for Europe to expect Greece to pay off
its debts in its current economic state
Vicky Pryce admits that the negotiating
stance of the Greeks has been "very aggressive",
as the recent sidelining of finance minister
Yanis Varoufakis in recent negotiations might
But she believes it is "ridiculous to assume
that Greece will ever be able to pay its debt
back in current conditions."
The Greeks need to... promise
anything...even if they then do nothing to
fulfil those promises
In her view, it is unfair to expect more struc-
tural reform and austerity "when the economy
is collapsing around you. You can t have a
country growing again if you ve killed all entre-
She recommends a rather surprising course
"My view is that the Greeks need to stop
this liquidity crisis and promise anything -
showing willingness is the most important
thing - even if they then do nothing to fulfil
"The Greeks need to compromise even more,
and so does Europe," she concludes.
Chair, World Economic Forum s Global
Financial System Initiative; former minister
for finance, Sweden
Anders Borg thinks the Greek government
needs to "get serious"
The Greeks "are wasting time by fooling
around, they need to give Europe access to
their government data and get serious," says
Part of the problem has been a lack of mutu-
al trust between European negotiators and the
country s new, inexperienced left-wing Syriza
government, he believes.
It s not certain (the Greeks) want to be saved
Once Greece shows a willingness to continue
reforming; including opening up more of its
markets to competition and taxing property
more heavily, Europe could soften its demands
on Greece in return, he thinks.
If negotiations were to fail, then leaving the
euro would be a "meltdown scenario" for
Greece, resulting in capital controls on the
banks, and even some bank closures, he says.
Import prices would "go through the roof"
and investment would "fall through the floor".
For the rest of Europe, a Grexit would be
less serious, so the onus is on Greece to do
more, concludes Borg.
But judging by their behaviour so far "it s
not certain that they want to be saved," he
President, Central Union of Greek Chambers
Constantinos Michalos sees "a warming of
relationships" between Greece and Germany
Greece needs a period of stability more than
anything else, says Constantinos Michalos.
"Everyone recognises that we cannot pos-
sibly endure any more austerity measures," he
says. "They have taken their toll on the fabric
of Greek society."
But his country needs longer to implement
"the reforms we all recognise are necessary".
Reforms to national insurance, pensions and
labour laws, plus a 15 per cent flat tax rate for
the business community would "enhance
growth and attract foreign direct investment,"
Michalos remains confident that Greece will
remain in the euro if the immediate "liquidity
crunch" can be avoided. This will require polit-
ical agreement between Greek prime minister
Alexis Tsipras and German chancellor Angela
And there are signs of "an evident warming
of relationships", he believes.
Managing director, International Monetary
The IMF s Christine Lagarde has promised
to be "flexible" in negotiations with Greece
Its the International Monetary Fund, Euro-
pean Commission, and the European Central
Bank who are at the coal-face when it comes
to working out the way ahead for Greece. But
they mostly keep their cards close to their
Two years ago IMF managing director Chris-
tine Lagarde seemed impressed by Greece s
efforts to reduce its budget deficit, calling
them "exceptional". But she is still keen that
the country does more to tackle tax evasion,
reduce the size of the public sector and increase
Lagarde has said the IMF is prepared to be
"flexible" in its approach, not about the loan
interest repayments, but about how Greece
goes about reforming its beleaguered econo-
Head, The European Central Bank
The ECB, which has increased emergency
liquidity funding for Greek banks to about
€77bn, also thinks the country needs to do
more to secure extra funding.
"More work, much more work is needed
now and it s urgent," ECB head Mario Draghi
said earlier this month. "We all want Greece
to succeed. The answer is in the hands of the
What next for Greece?
Greece in numbers
€320bn: Greece's debt mountain
€240bn: European bailout
€56bn Greece owes Germany
177 per cent country's debt-to-GDP ratio
25 per cent fall in GDP since 2010
26 per cent Greek unemployment rate
Source: ECB, IMF, Greek National Statis-
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