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Daily View: Can the eurozone carry on?

Clare Spencer | 10:22 UK time, Wednesday, 22 June 2011

The Greek prime minister has survived a confidence vote, a requirement put forward by eurozone foreign ministers before considering what to do about Greek debt. It spurs commentators on to suggest how they think eurozone ministers should react.

Martin Wolf says in the Financial Times common sense is needed on Greek debt:

"The principal requirement now is to recognise unpleasant reality. One cannot make the incredible credible by endless delay. One can only make the recognition of reality more painful when it finally comes. The time has surely come to recognise the reality of the Greek predicament and act at once on the wider ramifications for its partners."

The former Chancellor of the Exchequer Alistair Darling says in the Times the crisis has brought out in the open the problem of running a single currency for 27 countries with very different policies. Now it has a choice:

"It can carry on treating Greece, Portugal and Ireland as bad boys, imposing tough conditions on them that will never work and that will result in further bailouts. Alternatively it must 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, so strengthening their economies."

Simon Jenkins says in the Guardian that it is clear the eurozone doesn't work, but that doesn't mean it will be dismantled:

"Everyone seems to agree that what should happen will not happen - that is a shrinking of the eurozone, a devaluation of Europe's peripheral "currencies" and a corresponding cut in their indebtedness. Germany and France, the joint custodians of 'Europe', are not ready for such a step. A union is a potent thing. It usually takes a war to break one up, and Europe is not at war."

In the Independent Sean O'Grady suggests there is little sympathy for Greece among Northern Europeans:

"The principal weakness for Greece, however, seems to be the inability of the state to collect its taxes, especially among the middle classes and its elite, traditionally associated with the shipping trade.
 
"...In the good years, under the euro, Greece was able to borrow at cheap "German" rates of interest, which was easier than bothering to collect taxes; that option no longer exists and a decade of lost taxes has to be recouped."

Professor of European integration at the University of Athens Loukas Tsoukalis says in the New York Times a key decision eurozone ministers have to decide is who will pick up the bill for Greece:

"The sovereign debt problem in several European countries, including Greece, raises the question of who should pay for the accumulated mistakes of the past - taxpayers or private creditors - and how much of the burden each country should bear. We need a political agreement on these questions, instead of piecemeal measures that leave politicians two steps behind the bond markets."

The former governor of Argentina's national bank Alfonso Prat-Gay gives some advice in the Financial Times to the eurozone about getting out of a currency crisis:

"There is a more efficient way of buying time - akin to a bank restructuring agency, applied to sovereigns under stress. Turn EFSF into a European sovereign debt restructuring agency (Esdra) in charge of fiscal harmonisation and sustainability within the eurozone. Esdra should offer bonds to buy back all existing Greek sovereign bonds in a market auction: a par, rather long, Esdra bond alongside a shorter, discount bond, both bearing a low coupon and a five-year grace period on principal and capital. No default clause is triggered, since bondholders get a better-rated bond at a higher market value."

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