No, I don’t think so. It is politically unrealistic because I don’t think there are serious political forces in Greece, which would go for that. This scenario is unrealistic economically too. There would be huge problems. Much debt is denominated in Euro. Its revaluation through the reintroduction of drachma would be a shock, because the nominal cost is much higher. So, I don’t think this is a realistic and good option. Rather, the Greeks should look to the Baltic republics or to Bulgaria. You are linked to the Euro and maintain a stable rate. You do not devalue, but you try to regain competitiveness through what is called internal devaluation – reducing wages or reducing the wage growth and improving productivity. This is the right approach.
Many economists consider the Greek crisis the beginning of the end of the Eurozone. What is its future in your opinion?
No, I don’t that catastrophic scenario has to be fulfilled. I think the crisis in Greece has its background. The Eurozone countries faced problems, which existed before and they did not cope with. Decisions should be made both on country levels and European level. Look at Spain and its socialist government. They are true Thatcherists – they are slashing public expenses, they are reforming the labour market in order to avoid the Greek problems and regain the confidence of the market. To some extent the same goes on in Portugal, Ireland. And these are respected member countries of the Eurozone. At European level there is much discussion how to strengthen fiscal discipline, how to make stability growth effective. So, there are initiatives.
Having in mind the level of the Greek investments in South-East Europe, will the Greek economic crisis affect them?
If Greece copes with the problems through reforms that would also reduce the risks for the other countries. And besides, these countries should first of all look at their own economic problems before the crisis.
You have said that not all the policies are positive for the economic growth, namely the European policy on the climate change. Would you explain what do you mean?
First of all, because there is insufficient analytical data concerning the decisions for serious reductions of emissions taken during the top-level meeting several years ago. I haven’t seen any analytical justification. It matters because of the consequences. For example, the so-called non-conventional fuels are more expensive than conventional fuels. If there is a technological breakthrough it may be the other way round. But so far there is no technological breakthrough. The mandatory increase in the share of bio-fuels means that these bio-fuels should be subsidized. Someone has to subsidize these fuels. This goes for the European Union and this goes for the United States. And this is a clash; this is in conflict with the fiscal side of the economy. So, the decisions taken in the European Union should be based on better analytical foundations. And the countries of the European Union should care about it in order not to suffer the consequences.
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