Siim Kallas: Those Who Destroy Euro Should Leave Or Receive Tough Punishment

Former Vice-President and Transport Commissioner of the European Commission, Siim Kallas published a scathing opinion piece on the handling of the Greek crisis on Eesti Päevaleht website today, 9 July. He is also an adviser to Valdis Dombrovskis, Vice-President for the euro at the current Commission. English translation below and mine:

Siim Kallas Photo: Andres Putting/Delfi.ee

The topic of Greece is becoming more and more worrying. Mumbling, mumbling and mumbling all around. A summit every other day. Now it is final chance for Greece. Now it is truly final opportunity. This is the last straw-string for the Greek government.

Greek government will make new proposals by Sunday. Nothing will be made. The electorate is being manipulated by lies. Like in Venezuela and Zimbabwe.

Leftist and populist leadership of Greece is mocking the EU. Mocking politically. And this is much more serious than the financial question.

Isolated problem

In financial view the Greek problem is isolated. Defaults happen for both countries and companies. Solution is in a responsible and well planned reorganisation. This must ensure that default does not happen in the future. These are the reforms that are so much spoken about. Debt reduction is usually part of reorganisation, but only in case it ensures a balance future and sustainable economy. Greece has two working and acceptable solutions. One is to freeze debt at current level and implement reforms that will not increase the burden and bring about a chance to reduce this step-by-step. The cost of servicing their loans is already almost non-existent.

This is what EU and the IMF wish for. The other way would be to declare the country bankrupt and issue national currency. And through this implement necessary reforms like increasing competitiveness and reduce spending on parasitic part of the public administration as well as welfare expenditure that is clearly beyond means. After a certain period of time it will become possible to restore sustainable economy. Details would take too long to describe, but examples are there — Russia in 1998, California in 2009.

Leave or be punished

Greek crisis is often shown like crisis of the euro, weakening of euro. Euro will weaken only when this mumbling continues. If Greece should for example go its own way and issue national currency, it would be good for euro.

/___/The strength of euro is backed by a system of rules that all member states need to adhere to. Those who destroy the system need either to leave or be handed a serious punishment.

Former Vice President is not happy with the handling of Greek question. Photo: Eero Vabamäe/Delfi.ee

The Prime Minister of Greece accused Europe of creating divisions. Strange — those who are creating the biggest divisions blame it usually to others. But the political situation is serious. Every day spent on mumbling strengthens the positions of Greek political leadership. And they are not alone.

Dancing of joy

Both the far right and the far left are dancing of joy. And their camp is quite big. It is thanks to the leadership of Greece that all those who hate private ownership, market economy and entrepreneurship will be emboldened. First there will be chaos. And then somebody will pick up power that is lying on ground.

It seems to me that the Estonian government has no thoughts about the Greek question. At least nothing has been said publicly. But it should have.

Every day spent on mumbling makes thing both financially and politically worse. It should not be hoped that Germany would just fix this. It is not granted. Germany has its own radical left. And those who want to restore the deutschmark in order to avoid trouble with the Greek (and the Eastern-Europeans!).

Standing for the euro as it is today, we are also standing for our decision to join the EU and euro area. This is not a thing to be observed comfortably from the side-lines, which the Estonian government seems to be doing.