Eurozone Crisis: Does An Exit From Euro Exist? – Interview

By Yekaterina Kudashkina

Interview with Matthieu Meulle – economic advisor at the Foundation for European Progressive Studies.

I’m saying that more or less this Summit is by definition following the views and that is going definitely in the same direction and we are contesting this direction. From our point of view it is a wrong direction and we have good chances to have the opposite result, so it means, we have the feeling that this measure is going to strengthen the crisis in stead of giving some breath to some countries if I could say so. We are thinking that only the austerity measures and fiscal public balance, if I could say, just to speak on the suspect is counterproductive and you can see it for the last three years, that sort has been increasing for the three years and in fact the debt at the GDP ratio increased instead of decreasing because in fact when you get in public expenses you also have decrease and the ratio is in fact increasing. So, it does exactly the counter effect.

Do I get it right that still the IMF and the World Bank seem to be insisting on austerity measures?

I think the IMF is now changing because I think if you are doing austerity everywhere, which is a good and basic economic policy, you can’t expect any growth at all, I mean it’s just as simple as that. If nobody is consuming, if nobody is investing – it’s difficult to imagine that you can grow. So, I think the IMF is now seeing this and I would say it is not too late because as I have already seen this for the strict rules adjustment program they used to have 20 years ago, and now it is exactly the same trouble – when you ask austerity everywhere then you have recession.

So, what would be the alternative?

I think there would be a good deal austerity in Greece for example because there was some fiscal irresponsibility but I think that this should be counterbalanced. We saw more expansionary policy in the trade surplus countries, namely Germany mainly. And it should be also complemented with some EU accurate investment strategy going through financial transaction tax for raising money and through Eurobonds for investing in some pure European project structural investment.

Do you still expect Greece to default?

We can still expect Greece to default but I think Europe has been quite clear that they are not going to lower accuracy, and it for sure defaults because they are already defaulting in a way. When you accept that some private business is not going to be repaid it is defaulting. So, in a way I think as the European leaders don’t want Greece to default but I can understand now the Greek people are wondering whether it shouldn’t be better to default, and now I’m saying it should be wrong to default and to go out of the European Union because it will be even worse than what Greece is now experiencing. So, I totally understand the Greek people but not saying to the – you should go out but you should continue your fight because you are right, it’s the wrong policy but it is going to be even worse if you are going out of the Eurozone.

You were saying about expanding investment. Is Europe still counting on investment from China?

I think it would be a mistake from my point of view. I think Europe has all the tools, I mean we are the richest region in the world, we have all the funds for building such a strategy and I think from the political point of view it would be a mistake.

Do you think that expansion as an alternative to austerity measures, does it require any structural changes, structural reforms?

Yes. I don’t know if I could say so concerning the texts. I don’t know whether it would require some changing in the treaties or in constitution and stuff like that but at least on the philosophical point of view, I mean this requires definitely federal move if I could say. So, it does have a federal philosophy. Again I’m coming back to my example on Greece – the problem in Europe is not only Greece but it is Greece together with the rest of Europe. So, we can’t expect of Greece to cure its problem on its own. A much as Germany got powerful in the last ten years they needed Greece and some countries like that to consume, Greece to recover needs Germany to act in a complementary way.