Greece crisis: Ex-Greek ministers urge eurozone action

By Edwin Lane
Business reporter, BBC News

Image caption,
'IMF go home' posters have reflected public dissatisfaction at the bail-out plans

Europe must act now to prevent a Greek collapse that could shake the rest of the eurozone, a former senior Greek minister has warned.

Yannos Papantoniou, the former Greek economy minister, urged Europe to act to stop Greece becoming "the Lehman Brothers of the sovereign debt crisis".

He called Greece's current economic situation "very dangerous".

The Lehman Brothers investment bank collapsed in late 2008, sparking a crisis in the banking sector.

In an interview with the BBC, Mr Papantoniou, who is credited as the chief architect of Greece's entry into the euro, criticised European countries for moving too slowly in reacting to the crisis.

No euro exit

"We have lost a lot of time," he said. "The Europeans have moved extremely slowly in getting themselves together - particularly Germany."

He added that the eurozone faced real challenges to reform the way it handles economic crises in its member states.

"When you have a union of 20 states that you intend to survive together for decades or centuries, it is irrational to expect that nobody will ever show irresponsible behaviour or that nobody will ever need the assistance of a bail-out," he said.

Despite Greece's problems, Mr Papantoniou rejected the suggestion that leaving the eurozone was now a possibility.

"Greece could not survive outside the euro. It is not an option for Greece or anyone else."

Image caption,
Yannos Papantoniou engineered Greece's entry into the euro

His comments were echoed by another former minister, George Alogoskoufis, who served as Greek finance minister until last year.

"We are in uncharted territories," Mr Alogoskoufis admitted, but insisted that Greece would not consider defaulting on its huge debts, or leave the single European currency.

The former minister has been accused of contributing to the crisis by failing to do enough to reduce Greece's massive budget deficit, as well as failing to report the country's economic statistics accurately enough.

"The government should have been more alert to the risks," he admitted to the BBC, but said his own warnings went unheeded by a government unwilling to impose cuts on a resistant public.

Mr Alogoskoufis also said that running such a large fiscal deficit was not uncommon.

Bloodthirsty markets

"For 20 years we serviced that debt with no problem," he said.

Image caption,
George Alogoskoufis ran Greece's finances until 2009

"The understanding was that as long as your debt was not increasing, you could go on servicing it forever. This was a normal situation."

He added that Greece must try and borrow money on the money markets "as soon as possible", and view any bail-out as "a short-term interim measure".

Both ministers said "speculative attacks" by investors were at least partly to blame for worsening the crisis.

"Markets have spotted a weakness," Mr Papantoniou said. "Being bloodthirsty, they want to exploit this weakness and punish it."

Both men played down suggestions that the big cuts in public spending could lead to civil unrest in Greece, where there have already been demonstrations against the government's handling of the crisis and the involvement of the IMF.

"The good thing is that the public have now realised that there is a crisis," said Mr Alogoskoufis.

"This makes it relatively easier to take [cost-cutting] measures that would have been unthinkable even a year ago."

Related Internet Links

The BBC is not responsible for the content of external sites.