Please, please stop calling it a “Grexit“. The word (a portmanteau of “Greek” and “exit”) has been doing the rounds recently, as the possibility of Greece rejecting the conditions of its EU/IMF emergency loans, defaulting on its debts and leaving the Single Currency altogether start to grow worryingly real. Still, none of that is an excuse for the word “Grexit”.
Last week, Debating Europe attended a European Movement International briefing in Brussels with László Andor, European Commissioner for Employment, Social Affairs and Inclusion. We took the opportunity to put one of your comments to Commisioner Andor for him to react. Joe had sent in the following, putting things quite starkly: “[Greece, France and other countries may] not agree with austerity, but if they have no money, they can’t spend it.“
Commissioner Andor, however, disagreed. He argued that the recent elections offered a chance for “fresh political debate” and that it was time for a change of direction:
Well, I think this is exactly the time to reconsider the fiscal consolidation policies as they have been implemented in the last two or three years… I believe if there is a new, fresh political debate about this, this will take into account the objectives of employment and social cohesion stronger than in the past period.
Elsewhere on the Commission, there also seems to be growing support for a shift in policy. We recently spoke to Commissioner Joaquín Almunia, European Commissioner for Competition and a Vice President of the Commission, to ask his opinion on the “growth versus austerity” debate. As Oliver put it, “Some political movements preferred pure austerity, others saw that reforms were necessary, but wanted to flank them with growth initiatives.” Which camp would Almunia fall into? He responded:
Growth should be produced through different engines. On the one hand, repairing the damages caused in the financial system by the crisis… on the other hand, through structural reforms that will be growth friendly… and, third, through some policy initiatives that will compensate the aggregate demand that is being lost because of the adjustments that are needed.
The promise of “policy initiatives” to compensate for the loss of aggregate demand will be particularly intriguing for those who argue that a focus purely on austerity has hit a brick wall. We asked Commissioner Almunia if he supported ECB President Mario Draghi’s call for a “growth compact” to complement the “fiscal compact” setting limits on national budgets:
We need now at the present moment, when some of our economies are suffering a recession, we need to coordinate actions conducive to growth. If you can call this a ‘growth compact’ to complement the fiscal compact, I agree with this.
What do YOU think? Are you optimistic about the idea of a “growth compact” to complement the “fiscal compact”? Or, with Greece risking default and an exit from the eurozone, do you think it’s a case of “too little, too late”? And what should these growth-oriented “policy initiatives” actually look like? Let us know your thoughts in the form below, and we’ll take them to policy-makers and experts for their reactions.
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Well, I think that we must have determination to find a way to out of this crisis. I hope! Greece can pay all alone what happened in is country. They need no more words but realy actions to provid is future.
Too little, too late. The problem of Greece, as well as Portugal, Spain, Ireland and Italy, is that there is no real central authority to control the economy and Germany acts in its own interest, not in the common interest, controling the currency. If it was for the common interest, the euro would have been devaluated already, increasing the competitiveness of the weakest european economies – and the overal european economy, because it seems that really only Germany is doing well. As it is right now, I believe that at least the southern countries and Ireland should leave the Euro so they could relaunch their economies, even if against german opinion and will.
As a Greek who votes for SYRIZA, all we wanted is a little reason. There’s no way that the current situation continues. We already have 2000 people who commited suicide, we have heard tones of racist crap from other europeans (because their governments themselves were the first ones to initiate this kind of racist hate speech).
It’s the 5th year of recession in Greece, more and more people everyday can’t even afford the basics, students at school are passing out from hunger etc etc. At the same time the Neo-Nazis got into the parliament with 7% of the votes. Which means that we ALREADY have 7% of the population in greece who are so desperate that they see the only solution in violence and hatered.
At the same time we just get screwed avery time, as for example with the immigrants and the Dublin II agreement which is an agreement that actually solves the immigration problem for the whole europe appart from Greece, which became the “european detention center” for almost the 50% of illigal immigrants that exist in the EU.
Seriously, it’s a situation that goes beyond us. But we can’t go on with taking all this crap. If the EU is, as it seems, a project to sustain a rich North with awesome living standards and a South where we will dump all the problems then we will simply decide that we are not so keen to be part of it.
If Greece exits the eurozone, we sure know that we will be the first who will suffer from this. But life without dignity is no life and this is the feeling of the greek people. Moreover, if we get out, maybe we will save the rest of the european countries who are facing problems from the application of Merkel’s barbaric neoliberal policies.
HUMANS ABOVE PROFITS.
Greece cannot sustain the reforms required, to fix its paralysed and corrupted public sector, and to increase its productivity within the EU. Germany cannot understand that we are talking for two different Greeces. The one of hardly trying to produce and to follow the new innovative era, and the other of the old conservatisme, hiding under neo-marxist and nazi crap. I recognize though, that most of IMF measures were on the wrong side, plus Papandeou’s goverment couldnt even imagine the application of the few good ones, that is why we are at this point now. As conclusion the fight must be given in the Eurozone.
a grande questo a cooperao dos pases que constituem a UE. enquanto competirem destroem a UE em todos os nveis.
well said Antonio..there is no hope of growth in a country where the taxes and wage cuts have reduced the average man’s savings down to nothing. We have nothing left to pay more taxes that are due this summer after the elections. You can’t get blood from a stone. They need to start chasing big business and the rich who have millions salted away.
Am I optimistic about a growth compact?
No I’m not optimistic.
Am I optimistic…I live in Greece, you have got to be joking! Over the last couple of years the ordinary people in Greece have been suffering the burdens of wage cuts, high prices and even higher taxes. They have nothing else left to lose. Before there is any growth there needs to be a major clamp down on the big business and rich people who have been lining their pockets for years and not paying much tax. There can’t be growth while people are going hungry in order to pay their taxes!
Each week, questions are stable and thought … As correct answers, and so little time, for the dynamics of what happens in the European Union. . Actions for “parity” positions, area of ”buffer” and others, will limit the political activities and comfort, but will block internal decay and disagreement. Union must come from the area of gifts, making solid rules for actions defined ad hoc and centrally dependent.
Greece showed that it does not understand finance, can not make policy .. possible and seek another sponsor for their bad practices.
Europe needed its own view among the political turmoil in financial players, unified vision in perspective .. and at least one win for “courage” and start!
Unless we embrace some degree of real federalism in Europe, the EU will fall in the next year! And in that case, ressentment among european nations will be in an unparalleled level and I don’t even want to imagine what will follow…
Unlike us, the emerging countries have economic growth BECAUSE THEY DON’T HAVE THE WELFARE STATE.
Either you choose growth as Mrs Merkel did, either the welfare state as M. Hollande would. But you cannot have it both ways.
I think it is time to call the eurozone a day and split it. Let Greece, Portugal, Spain, Ireland and perhaps Italy leave the common currency, devalue their national new currency and be independent from Germany and the rest of the rich states for a few years. When they stabilize their economies and fix their finances they can rejoin. Germany has highjacked the eurozone and the European project and acts as a bully.
And that comes from a staunch pro-European and supporter of the common currency. I have always supported the euro, but like everybody I was not aware of its faults. I trusted that our politicians knew what they were doing when they were launching the euro. Obviously they did not.
And now we have Frau Merkel imposing more and more austerity on Greece and other states. Well let?s slash the German workers? salaries by 50% let us rise the taxes they pay up to 23% let us destroy millions of jobs in Germany and let us see how will the ordinary German will be able to cope and if it supports the euro still.
Austerity would be good if coupled with growth stimulus and funding. Just austerity, and in its harshest form, the harshest we saw in Europe for decades, only turns the public opinion?s against the euro or the European project and it is simply scandalous as all this is happening to save the banks and the please the Markets. And it does not work.. Nothing has been achieved in Greece for the past two years of austerity apart the rise of the far right and the far left. That makes it harder to cooperate and find a solution both within the Greek government and Europe. We need to start seeing investments now in Greece, but all we get from ?Our Partners? are threats and bullying!
Not a good sign of European solidarity, is it? So exit the euro, and rejoin only when the rich states have eventually decided to create a true fiscal union, when they fix the eurozone and heal its flaws and when they accept new members in make sure that everything is in order, both in the new member?s books and in theirs? expand the EU or the eurozone with all costs is not working anymore. I say yes to more integration and monetary union, but only if the rich states want to play fair..
First of all what do you put into growth ? Is it government spending or long-term structural reforms? The share of Government spending to GDP is very large in the EU (e.g 56% in France). Investments in infrastructure is interesting but we already have very good infrastructure and transportation systems in Europe ,so it won’t have a huge impact. Greece is a tiny problem. California is a bankrupt state but no one doubts the ability of the US government to solve its financial issues at least for the moment. The real solution to our problems isn’t another small treaty change that will help us gain some more time but a federal jump towards a Europe with real executive powers over governments and democratic legitimacy. Europe will be federal or won’t exist as we know it ! The intergovernmental approach has be proven to be ineffective !
I think it is time to call the eurozone a day and split it. Let Greece, Portugal, Spain, Ireland and perhaps Italy leave the common currency, devalue their national new currency and be independent from Germany and the rest of the rich states for a few years. When they stabilize their economies and fix their finances they can rejoin. Germany has highjacked the eurozone and the European project and acts as a bully.
And that comes from a staunch pro-European and supporter of the common currency. I have always supported the euro, but like everybody I was not aware of its faults. I trusted that our politicians knew what they were doing when they were launching the euro. Obviously they did not.
And now we have Frau Merkel imposing more and more austerity on Greece and other states. Well let’s slash the German workers’ salaries by 50% let us rise the taxes they pay up to 23% let us destroy millions of jobs in Germany and let us see how will the ordinary German will be able to cope and if it supports the euro still.
Austerity would be good if coupled with growth stimulus and funding. Just austerity, and in its harshest form, the harshest we saw in Europe for decades, only turns the public opinion’s against the euro or the European project and it is simply scandalous as all this is happening to save the banks and the please the Markets. And it does not work.. Nothing has been achieved in Greece for the past two years of austerity apart the rise of the far right and the far left. That makes it harder to cooperate and find a solution both within the Greek government and Europe. We need to start seeing investments now in Greece, but all we get from “Our Partners” are threats and bullying!
Not a good sign of European solidarity, is it? So exit the euro, and rejoin only when the rich states have eventually decided to create a true fiscal union, when they fix the eurozone and heal its flaws and when they accept new members in make sure that everything is in order, both in the new member’s books and in theirs… expand the EU or the eurozone with all costs is not working anymore. I say yes to more integration and monetary union, but only if the rich states want to play fair..
everything I have said above, but with a bit more analysis… http://eblanademocraticmove.blogspot.com/2012/05/what-now-for-greece-and-its-euro.html
extreme situations call for extreme measurements!
EU countries have different economies. Some need more austerity, some need spending. Some need specific and individualized combination of austerity and spending. Is EU bureaucracy ready for that, I don’t think so. It is no one answer for all.
A Grécia e alguns paises da Europa que adquiriram tanta divida no seu passado que depois apareceu a eurocrise agora a Grécia hoje tem duas opções pu tem um presente muito duro ou tem um futuro desastroso
Why are the European leaders so in love with the banks, corporations and big money? Why the love affair? Do they really believe they will be the saviours of us all?
If so, they are unfit for purpose.
http://www.youtube.com/watch?v=6WlmsqvKZvI
And here is some advice they may also want to absorb.
http://www.youtube.com/watch?v=_MPmav4TufY
The problem of the €-zone is not so much lack of growth but fundamental mistakes in its construction.
One example is the TARGET2 (Trans-European Automated Real-time Gross Settlement Express Transfer System) mechanism which puts enormous additional risks on German and other northern tax payers. In the TARGET2 balance the northern €-zone members turned out structurally to be in plus, the southern in minus. In case the €-zone would fall apart, the debts of the south would remain with German, Dutch and Finish tax payers. If only Greece drops the €, or doesn’t recover from its bancrupcy, it would cost the German taxpayer already now more than 100 Billion €, not to speak about all the other costs of a Greek exit.
A Politica de crescimento pode ser uma solução melhor que a austeridade e a divida deve ser controlada por parãmetros sustentáveis
The only way I can’t see to get out of the centrifuge of the Capitalist horror is to take the bull by the honrs and get moving at once before we are in such a severe situation we will be unable to avoid the possibility of civil unrest all over Europe.
Clearly the system we have doesn’t work any more. it cannot be turned into a political distraction of watching your fancy footwork.
Greece must default at once, followed by bankruptcy and forgiveness of debt altogether. This is a normal part of Capitalism, not something out of the blue. Argentina did this, and they have fared well as a result.
Next, you have to tax business and the rich. It is they who have brought us to this situation as a result of their lobbying and buying of politicians over the last fifty years, in order to remove themselves from normal and principled taxation. They rid us of the regulation and control brought in by F. Roosevelt. The problem came from the US as we are all held to ransom by that country. Time to shift that problem.
The move to taxation at the highest level has to be immediate, at about the equivalent of around £300,000 per annum, anything over that tax in the extreme And the propaganda they will buy must be ignored. The Internationals cannot and must not avoid or escape taxation. This is the one and only answer. Why the reluctance? Otherwise, Nationalise everything of importance to the welfare of the people and the country. That will give government absolute control.
Do not increase tax on the average person. This is counter productive and will get you nowhere. Apathy and anger will result.
When you use the Greek people as scapegoats it is the equivalent of using any group of people to avert the reality of responsibility where it belongs. It’s not just Greece in this mess, it is all western countries. Taking the steps above will change Europe’s situation overnight.
You owe this to all the people of Europe who do not deserve this chaos.
The idea of a “growth compact” to be complemented by a “fiscal compact” is obvious. Growth cannot be sustained without a suitable fiscal policy and regulation. The process Europe is attending to is not just a crisis it is progress and evolution. We are now experiencing the consequences of our policies, attitudes and behavior of the past decades. It’s proven not to work (people have been allowed to cultivate greed and ignore basic rules). Hence, stop look and listen then act.
The best way forward to enhance the European project is to reschedule national debts. In the case of Greece we should actually weaver the debt burden and put the balance at zero. Allow the country to quick start with a clean bill. Like that those who will loose out now will be compensating for the irresponsible gains of the past. In return the national government decentralizes authority to the regions and the EU parliament takes over the sovereign powers.
Hence, a growth compact is essential, however will not go far enough. It has to be driven by a fiscal pact and founded on structural reforms such as fully open internal market, write off of sovereign debts, empowerment of the regions, brining down of national boarders, endorsing the authority of the EU parliament,…
What Europe means to me, as a Greek? It means the child who killes its mother. Bruessel the “child” is killing its home.And thats Greece. It is not a financial issue, it is an issue of immorality an issue of killing DEMOCRACY. Thank You Bruessel, for killing your mother
why are you asking? i thought its planned already,,,,,lol
What right has a bunch of unelected, unaccountable, second-rate foreign politicians got to impose “EU citizenship” on British people? The sooner Britain is free from its Brussels oppressors the better.
Brussel is right asking austerity to Italy, Greece, etc. but this should happen without suffucating any measure for the growth. An authority can’t do this during a depressive moment. We made the homework (I talk about Italy), now let us breath because EU is becoming a nightmare and an easy scapegoat for all populist and euro-sceptycal parties.