Guy Verhofstadt tells it to Greece and the EU like it is

July 10, 2015 10:36 AM
In Liberal Democrat Voice

Greece flagGuy Verhofstadt, leader of the liberal ALDE group in the European Parliament, has set out a potential solution to the Greek crisis in an article for Politico. He makes it clear that there are faults on both sides and both sides need to take constructive action to resolve the crisis fairly for everyone.

We are in this mess because the Greeks never made a real reform package, or a clear break with their mistakes from the past. But also because Europe has followed wrong policies - policies of pure accountancy that slowly but steadily choked the Greek economy. Everybody can make the wrong policy choices, but we have been clinging on to them far too long.

He implores people to stop the scaremongering:

"The European people, both in the North and in the South, deserve better than what we have seen up until today. They deserve a stable eurozone: to work in, to invest in, to live in. What they do not deserve are bickering politicians in a paralyzing stand-off. They don't deserve panic stories by leading German politicians about the installation of a "technical government" in Greece, or a Grexit accompanied by the re-introduction of the drachma. Such alarmists should know they cause harm to our economies and they should think twice before opening their mouths."

He then outlines, in turn, what Greece and the EU should do:

"The Greek government now needs to map out how they will bring about profound and structural reform. How they will make sure everybody pays their fair share of taxes; how they will rid health services of corruption; how they will end the clientelistic system and the political nomenclature controlling that system; how they will open up the labour market and give young Greeks a fair shot at a job; how they will dramatically downsize the public sector and reduce the overweight of public banks…

"… We claim we have saved Greece by handing it a multi-billion euro rescue package. In reality, we have burdened the country with a lot of unsustainable debt. We need to use this crisis to create a structural solution, one that eliminates the risk that erodes the stability of our European economy, day after day. A debt redemption fund can do that: It pools the refinancing needs of our 18 euro-economies in return for reforms that spur growth. It anchors the principle of reform into the eurozone and drastically brings down the servicing costs of our public debt at the same time. Win-win instead of lose-lose.

"Next to such a redemption fund, we need to introduce so called "automatic stabilizers" at a European level. All developed economies have them: They kick in from the moment the economy takes a hit and soften the worst effect of a crisis, thus bridging the most difficult moments."

You can read the whole article here.