J. Dijsselbloem at Indicator: The Italian choices may become a hazard for Greece

Former Eurogroup President and former Dutch Finance Minister Jeroen Dijsselbloem in an interview to indicator.gr and political editor Nikos Kosmopoulos refers to European developments, the Italian crisis and the hot issues that concern Greece.

In particular, being questioned about why Greece did not come out of the «memorandum» regime as early as other countries, Jeroen Dijsselbloem severely criticizes the country’s political system, stressing that there has been an unprecedented political mismanagement for decades, huge deficits and debt.

Regarding the possibility of renegotiating primary surpluses, the former Eurogroup President believes that lenders will not be open to such a possibility.

Talking about the «hot» issue of pensions, the former Dutch Finance Minister explains that in case of implementation of pension cuts, the measure will not have a long-term positive effect on the Greek pension system.

At the same time, he is concerned about the government’s intention to raise the minimum wage, pointing out that priority should be given to efforts to attract foreign investment to Greece.

Mr. Dijsselbloem is invited to respond to the worrying rise of the extreme right in Europe and whether it is due to the economic policy followed by European governments in recent years.

Finally, he comments in a caustic way the view that Greece and other countries have been functioning as frightening and experimental animals for other economies, such as those in Italy and Spain.

The interview:


1)What, to your opinion, is the reason Greece did not come out of the “memorandum” regime as early as other countries? Do you think that the first two programs did not contain the appropriate «measures» or the delay was a matter of wrong application of them?

The main reason is the seriousness of the problems at the start. No other member states had come out of the good period before 2008 in such a terrible state. A budget with a huge deficit, a national debt far over 100%, complete loss of competitiveness, an unprecedented political mismanagement of decades. Until today there are Greek politicians who are denying this uncomfortable truth.

The second reason was in mistakes in the reaction to the crisis. Saving the investors in banks at the cost of the taxpayers, as it happened all over Europe, was a major mistake. Trying to fix the budget in only a few years time during the first program was another mistake. And later, too many structural reforms were undertaken all at the same time, leading to poor implementation.

2) Given that so far, all Greek economic indicators are positive, do you think that the level of surpluses agreed (3.5% by 2021) could be renegotiated?

I don’t think the creditors that have provided all the soft loans to Greece will be open to that. The primary surplus is in fact also a contribution from the Greek budget to reduce debt. I do believe that the Eurozone countries will be stick to the promise to help Greece with the debt burden in the coming years, if the Greek government maintains a sound budget.

3) During November, the very important for the Greek society issue of pensions will be discussed in a Eurogroup meeting. What is your prediction for the decision that will be taken and what would be your suggestion to the members of the group, if you were present, participating in that meeting?

All I can say is that this particular measure has no long term positive effect on the pension system. Whether it is necessary to create fiscal space in the short run, is up to the institutions to see.

 4) How do you assess government plans to alleviate weak social groups in Greece? Do you think there is really enough fiscal space for their implementation?

It is clear that if the pensions measures are not taken, there will be less extra fiscal space and there for less scope for social measures. In general, the costs of the pension system need to be controlled to allow for other social spending more directed towards families and young unemployed.

5) When you presented your book «The Euro Crisis» a few days ago in Athens, you referred to the government’s intention to raise the minimum wage, calling it a «unrealistic strategy». Why do you believe this?

If the minimum wage is raised before the economic recovery is well of the ground, the competitiveness is again lost. Much more attention should be given to the question how outside investors can be brought back to Greece.

6) Europe is experiencing a difficult period as the extreme right throws its shadow in several countries of the continent. How do you think progressive political forces must react? Should the EU have to cease to insist so much on its neo-liberal doctrine?

Europe has a unique social model. In which governments play a large role in regulating the economy and a large part of the collective wealth is redistributed through social systems. The Scandinavian countries have perfected this system. But the economy must have breathing space; you can’t let the politicians and government smother any entrepreneurial initiative. You can only redistribute wealth, if you have created it first.

Having said that, it is clear that jointly we have to make sure that “big business” start paying their fair share in taxes.

7) Executives of the present government claim that countries such as Greece have been used as a scarecrows – experimental animals, with recipients economies such as Spain and Italy. Recent developments with Italy seem to confirm this position. What is your point of view?

I think this kind of conspiracy theories are a wast of time. Greek politicians should concentrate on rebuilding trust inside and outside the country. This requires sound policies to balance the economy and the welfare state, attracting new investments to create new jobs. The Italian choices may become a hazard for Greece. The best way to protect Greece from that is by taking sounds steps forward.

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