Greek crisis: Ex Chancellor Alistair Darling aid plea

 
Protests in Athens There have been protests in Athens against austerity measures

Former chancellor Alistair Darling has said the eurozone's strongest economies need to do more to help out Greece, as it struggles with its debt crisis.

The Labour MP told the Times that the current "patch and mend" approach was "doomed to fail".

On Monday his former Labour cabinet colleague Jack Straw predicted the collapse of the euro.

The Greek government is struggling to win support for austerity measures as it seeks to avoid a debt default.

The Greek government won a critical confidence vote on Tuesday night, as thousands of people staged protest outside the Parliament building in Athens.

'Patch and mend'

It now has to persuade its MPs to back 28bn euros (£25bn) of cuts, tax rises, fiscal reforms and privatisation plans - Eurozone ministers say a 12bn euro loan, which Greece needs to pay its debts, is conditional on the legislation going through.

Mr Darling, who was UK chancellor between 2007 and 2010, told the Times it would serve no-one's interests if Greece was forced out of the euro but added: "If the eurozone carries on with its patch-and-mend approach, it is doomed to fail."

Start Quote

The richer, stronger economies who have benefited from the euro should help out their weaker neighbours”

End Quote Alistair Darling Former UK chancellor

He said the eurozone could not survive in its present form if its members continued with the same approach.

It could "carry on treating Greece, Portugal and Ireland as bad boys" imposing "punitive" conditions that would not work - or it could "face the fact that, as with any other single currency, the stronger parts of the economy have to help the weaker parts to make the reforms they need".

While Greece had to do its bit, "a reparation-style austerity programme" would not work, he said.

If Greece defaults on its debts it would mean "massive losses for many of Europe's banks" and if it were forced out of the Eurozone there was a risk of "chaos in the markets".

He added: "Instead the richer, stronger economies who have benefited from the euro should help out their weaker neighbours. After all, that's the approach that the IMF has applied to other countries in distress.

"That means making the political argument; If they want a single currency, they've got to make it work. The consequences of failure would be profound for years to come."

'Slow death'

The Conservative backbencher John Redwood also said the richer eurozone countries should do more to help Greece - or should allow it to leave the euro.

He told the BBC: "A single currency can only work if you have a single country to back it up. The rule is that when a part struggles you send them more money, you pay their benefits bill or you send them more money for their council or whatever.

"That's what we do within the sterling currency zone within the United Kingdom. The rich parts help the poor parts. The rich parts have got to help the poor parts in the euro area and they're trying to do it on the cheap and they're causing a lot of pain and suffering as a result."

Earlier this week, former foreign secretary Jack Straw told a Commons debate the euro was facing a "slow death" and the 17 member eurozone "cannot last" in its current form.

On Tuesday Prime Minister David Cameron said the eurozone would not be allowed to collapse - but stressed the UK would not take part directly in any EU rescue package for Greece, as it is not a member of the single currency.

However, as a member of the International Monetary Fund, the UK could be liable for a share of loan guarantees to Greece and UK banks have an estimated £2.4bn in investments tied up there.

 

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  • rate this
    0

    Comment number 97.

    The wealthy parts of the UK Sterling area have to provide financial assistance to those other parts of the UK in need. There is nothing new in such action. The Eurocrats wanted a single currency. Now that they have it, I cannot see the problem in wealthy parts of the Euro area subsidising their poorer regions. But, maybe when the EU signed up to the Euro, they did not realise the consequences.

  • rate this
    +3

    Comment number 91.

    Britain, having been forced out of the ERM long before the Euro became a currency, should limit her financial support of Eurozone countries to the amount they paid to keep Britain in the ERM, i.e. precisely nothing.
    Isn't it strange that we're a key member when they need our money, but a second class player in a 2 speed Europe at all other times?

  • rate this
    +3

    Comment number 82.

    The mindset of a lot of posters is hilarious. Punish them for their irresponsibility! Its all their own fault. LOL

    This is no more than the inevitable outcome of allowing the financial sector to dictate the terms of the world economy. What else can happen but credit bubbles and eventual collapse? All the while those responsible walk away with millions. We just point fingers at each other...

  • rate this
    +3

    Comment number 47.

    I think England should not help out with Greece, England are in a deficit as it is and some of the people in England are struggling already. Every country should help each other out. In Greece's situation, the rich EU Countries can help out Greece and help the economy in Europe. Get things back on track and tackle Deficits in different countries in Europe. England was right not to use Euro's.

  • rate this
    -4

    Comment number 16.

    Whilst I hate agreeing with Darling, I think he's been right a few times since he left office, and this is one of them.

    I'm not convinced it should be us contributing yet, but in terms of default or bailout mark 2, I think even the extra time bought by a bailout might be worth it even if a default is inevitable at some point.

 

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