Blog AnalysisEconomy Euro zone

In the Greek crisis, a lack of courage and political vision (Philippe Lamberts)

PhilLamberts@PE150624(BRUSSELS2) B2 questioned Philippe Lamberts, the co-president of the Greens group in the European Parliament on the Greek crisis. Mathematician, passed through the private sector (at IBM) before entering politics, Philippe Lamberts undoubtedly embodies – along with a few others – what is best in MEPs. Solid convictions but also in-depth work. A sense of relevance but also long-term thinking. Le Vert has carved out a reputation for itself by following the various financial market reforms implemented at the European level. And his point of view helps to see things more clearly…

How could we fail to find a solution before June 30?

On the Greek side, many things could be accepted provided that there is a firm commitment to debt restructuring. What we refused on the European side. Which is absurd because everyone knows that, by hook or by crook, the debt will have to be restructured. This is a completely ideological position. The IMF wanted to restructure the debt but with conditions that were too costly. The IMF and the Europeans have, in fact, combined their inflexibilities and missed the negotiation. Much can be said about the amateurism and about-face of the Greeks. But what can we not say about the lack of a sense of responsibility among European political leaders?

Wasn't the Greek referendum really timely though?

The calling of the referendum comes at a bizarre time. If the issue was debt restructuring, it had to be done as soon as possible. But doing it on horseback just as the program ends creates unnecessary tension. It's not very responsible. But the politically irresponsible are on both sides. In a negotiation, it is the one with the most power who must move forward, having precisely this sense of responsibility. And he wasn't there. For some, there was an ideology crushed by reality and, for others, a self-esteem wounded by the Greeks. The European cause must not be used to make a government that is not on your side bite the dust. And you have to know how to overcome bad personal relationships. It is not just a question of budgetary discipline and finances, it is a political choice.

European leaders have not been up to the task?

I am waiting to see a European leader assume his responsibilities today. I was waiting for Juncker. And, clearly, he took sides without taking the necessary height. Juncker, Merkel and others have an overwhelming responsibility for what is a European failure.

Was a solution possible?

We were close. If Jean-Claude Juncker had said I undertake to study the restructuring of the debt. It was the trigger that could trigger the rest. He didn't dare to break this taboo. But Juncker did not dare… This is a serious political error. (…) We must see that behind Juncker, there are relays of German-style ordoliberalism, embodied by Martin Selmayr and Frans Timmermans. We're not really well served

Juncker is not alone, the European leaders also seem absent?

We lack political strategists. The German Chancellor Angela Merkel is a tactician not a strategist. She showed it on nuclear power, changing her mind after Fukushima. She's not a visionary, either. She doesn't know how to gain altitude. She does not behave like a statesman. As for François Hollande is the fly of the coach. And this is not the first time. The only subject where he missed the mark was Mali. Wolfgang Schäuble and the others cloak themselves in virtue, in a sense of responsibility. But they are crushed by short sighted 'three bullets'. On the European crisis as a whole, we are witnessing a lack of courage.

A lack of courage?

Yes. There is a total lack of political courage. And Greece is not the only example. We saw this at the last European Council on the question of welcoming refugees. To welcome 60.000 refugees over two years, Europe is currently hesitant, whereas at the time of the war in former Yugoslavia, Germany and Austria alone welcomed several hundred thousand refugees. Where is Europe today? There is a very deep crisis in the European idea. I'm waiting for Merkel to wake up. We have to whistle for the end of recess.

Why does tackling debt restructuring seem so difficult?

It is a question of both hubris and political obsession. Because tackling the debt means recognizing that the Policy mix imposed on Greece for five years has not worked.

Debt restructuring is not enough. Do we need major reforms in Greece, starting with the Greek state?

It's obvious. Everyone knows it. We must build a Greek state. We must get out of clientelism, re-establish a tax administration. It cannot be done in one or two years. It is the work of a whole generation. Look how long it took West Germany to bring East Germany up to speed. And it was Germany...

However, Syriza wasted its chances?

Instead of working directly after their election, they continued the electoral campaign for several months. They wasted political capital unnecessarily. It's true. When the negotiating team was restructured in April – early May, the work really began. But there is a real desire at Syriza to turn the page on clientelism. This is the first time that a political party since the start of the crisis has had this desire. We must seize this chance.

There is no more fat for Greece, it is often said. Are there still cuts possible without damage?

Defense spending must be touched. The Greek army fields more units and aircraft than the German army and has disproportionate defense expenditures. No one has ever found fault with that. This government, which wants to do something, must be encouraged to move in this direction.

Everyone seems to be resolving today for a Grexit, an exit of Greece from the Eurozone. Is this a good thing?

This would be a catastrophic failure for the European Union. A Grexit, at the accounting level, is first and foremost a failure to pay. And therefore the passage of the debt as a burden for our Member States. This means that France finds itself with around 40 billion more debt, Germany 56 billion euros, Belgium 7 billion, etc. This does not turn everyone red, because it is spread over several years. But this does not make it easier to achieve the objectives of the stability pact. For me however, the main negative consequence is not there.

Do you think the consequences are more political than financial?

Yes. Grexit is above all anchoring in the reality that European construction is not a one-way construction, that we can go backwards. It is a signal of distrust that is sent to the financial markets, on the one hand. The instruments of the European Central Bank are certainly more solid today. But we open up a field of possibilities that we would have been better off not opening. It is also and above all a signal of mistrust sent to European citizens. We are creating a path for all those who want to leave the Euro Zone and Europe, the Le Pen and Melenchon who only dream of that. It is an encouragement to leave Europe. We have all the parameters of the political crisis.

If I come back to the financial consequences, can we predict the consequences of a possible Grexit. Can we calculate it, predict it?

If they get out, no one really knows what will happen. The financial mechanism is not a deterministic mechanism. They are human beings, who react in ways that are not always rational. We saw it with Lehman Brothers. Here it is not the same because we are in the presence of States. But we can have attacks on States. And what I fear are the chain reactions. Because the economy is fragile. To respond to the crisis, the country was flooded with liquidity. We have not reinvested in reality. Look at the stock price today. We returned to 2007 prices, at exuberant levels, with prices largely overvalued in relation to real profits. There may be a correction at some point. We also have elements of fragility in the system. There are bubbles in certain sectors, real estate for example, financial too. Student loans represent a total of $1500 billion in the United States. It is unclear whether they will all be refundable. Some of these loans may have been securitized and are now in hands other than the original creditors. If Greece does not reimburse, why not Ireland or Portugal or even Italy. From the moment there is doubt, there will be an increase in the debt which can cause default. It is a cycle of self-fulfilling prediction.

Why make an exception for Greece and not for the others?

We must stop making ideology and return to reality. We must see the systemic effect of a Greek bankruptcy on the economic level, on the political level. And this touches the heart of the European idea of ​​shared prosperity. When we see the integration of Portugal, of Spain… there has been this shared progress. There is no European integration without financial transfers. That's how it works. This is how West Germany proceeded with East Germany with colossal transfers. Without financial solidarity, the EU is over.

But is solidarity with Greece expensive?

Having financial solidarity helps increase growth on the continent. If Germany believes that it can ensure its growth solely through exports outside Europe, it is wrong. Most of its exports are within the European market. Strangling Greece is foreign to its future growth. If Europeans believe that they will always have influence in the world, they are wrong. Europe, which weighs around 1/6th today, will only weigh 1/20th in a few decades. Believing that each country will retain sovereignty is illusory. It is only together that we will be able to maintain and regain sovereignty, the power to act. This is where the message that Merkel, Hollande and the others should be sending… I am a European sovereigntist. And I think we need to equip ourselves with the tools to do that.

How Europe can regain sovereignty and be effective. What remains to be done?

A lot ! Firstly, I dream of a system where each citizen would be given an 'education' budget at the start, which they could spend wherever they want, with real diploma equivalences. Take Belgium. We have good schools. We can become an exporter of skills that others do not have. But there needs to be compensation. Then, we need tax reform, tax equivalence. Everyone can win. This requires political will. We cannot continue to live with inequalities. Finally, the internal market. We live on a fiction of an integrated market, it is not true. Ask SMEs what challenges they face. Before thinking about making a TTIP (transatlantic treaty), we must think about the internal market, put in place a real system of recognition of qualifications, access to the profession, and eliminate the possibilities of social dumping. The worker posting system is not working well. We need an embryo of European social security. The construction site is immense. Fourth area of ​​action: the energy transition. This cannot work on the scale of a country. This must be done at European level. The Energy Union project is far from that. Imagine what a sovereign Europe would mean in energy, political and economic terms. This would be a tremendous engine of economic growth. But also a political signal. The mark of a certain autonomy and security. What investors are looking for.

(Comments collected by Nicolas Gros-Verheyde)


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Nicolas Gros Verheyde

Chief editor of the B2 site. Graduated in European law from the University of Paris I Pantheon Sorbonne and listener to the 65th session of the IHEDN (Institut des Hautes Etudes de la Défense Nationale. Journalist since 1989, founded B2 - Bruxelles2 in 2008. EU/NATO correspondent in Brussels for Sud-Ouest (previously West-France and France-Soir).