Day: October 22, 2012

Dora Bakoyannis’ view on Greek crisis

Achilleas Youth – the new youth wing of AHEPA Australasia – interviewed the Hon. Dora Bakoyannis, current MP for Athens District A, on the topic of the Greek sovereign debt crisis.

President of Achilleas Youth, Jiannis Tsaousis, asked Mrs Bakoyannis what lead Greece to its current situation at “the edge of abyss”; why liberalism has traditionally been strongly unpopular in Greece; the path of real reform needed for Greece to realise long-term prosperity; the decay of the modern Greek state and how the diaspora can help its motherland in extreme times of need as those Hellenes traverse today.

The former Foreign Minister of Greece (2006-09), Minister for Culture (1992-93), Lord Mayor of Athens (2003-06) and World Mayor 2005 noted the “political price” she has paid for pushing for real reforms in Greece in 2010 by voting for the May 2010 IMF/EU/ECB bailout, as she was sacked by the New Democracy party and only welcomed back in June 2012.

Furthermore, the former Foreign Minister and prominent Greek liberal said “we must demolish” the Greek state as it is known, which she believes was built on hollow foundations from the start, after the fall of the junta in 1974 and especially after 1981 when the first PASOK government was elected.

In reference to the IMF’s recent change of tact towards Greece, as Christine Lagarde, the IMF’s Managing Director has begun to openly promote a two-year extension to Greece’s bailout terms, Mrs Bakoyannis says that she has been “warning these troika gentlemen” of the consequences of the horizontal cuts asked for, in pushing for real, structural reform in Greece.

Importantly, Mrs Bakoyannis said that investors will never lose out from Greece, Mrs Bakoyannis affirmed to Achilleas Youth that she is in Greek politics for the long run to remake the Greek state and society.

Janis A. Emmanouilidis, a senior policy analyst at the European Policy Center, talks about potential risks of Greece’s exit from the Eurozone.

We have seen over the last couple of weeks that there is a strong determination in the German Government and Germany to do whatever is needed to keep the country within the Eurozone provided that the country i.e. Greece will be able to fulfill the obligations which have been agreed between the Greek Government and the troika.

But it seems that the German Government is more committed than in the past to do whatever is needed to avoid the exit of Greece from the Eurozone.

Are they concerned about the so called domino effect?

Well, there are obvious risks which would be linked to a potential exit of one country and in this case Greece from the Eurozone that would worsen the situation in other member states, that could lead other members of the Eurozone to the same path.

So, one wants to avoid entering this path of countries exiting the Eurozone and it seems that one is ready to do that at a lot of costs because the risks of that happening would go much beyond Greece and thus become much more costly than only the Greek component of a potential exit or restructuring.

And what kind of risks exactly are we talking about?

Well, there are obviously financial and economic risks if Greece would exit the Eurozone and other countries might follow.

That would have enormous direct financial cost for banks, financial institutions which have invested in the bonds of these sovereign countries.

But it would also have political effects because if we would have a move towards disintegration of the Eurozone, that would obviously have an effect which goes beyond the common currency affecting also the EU as such.

But if I’m not mistaken most of the Greek politicians are unwilling to exit from the Eurozone.

And then, why would other countries want to follow if Greece leaves the Eurozone?

Well, as you said correctly the Greek political elite and also the majority of Greek citizens want the country to remain within the Eurozone.

But on the other hand we’ve seen that over the last 5-6 years the country is in a deep recession and we see that the attempts to exit the crisis have put enormous pressure on the citizens and their daily lives.

So, if the situation worsens we can’t exclude that a majority at some stage might think that sticking to the Greek crisis recipe may not be the right way. If that’s the case – that could have also a negative effect on the other member states triggering not only economic and fiscal but also political negative domino effect.

When we are talking about the Greek recipe, if I’m not mistaken it all comes down to austerity measures.

It is a mixture. Obviously they need to cut down the huge deficit which the country had found itself in in 2009-2010. And a lot has been achieved since then and the country is even to having a primary surplus in the upcoming period.

So, there is a strong emphasis of cutting down expenditures but at the same time the things which have been agreed between the Greek Government and its European supporters and also the IMF and the troika – the things which have been agreed among them include a lot of structural reforms.

So, we are talking about both – major structural reforms and cutting down expenditures and in this case that also leads to austerity.