FEPS Fresh Thinking

Give Greece a chance!

The John Lennon song “Give peace a chance” is an appeal for staying together and being strong when times are difficult. At the moment, we are in such a situation in Europe.

Nobody knows exactly what it means if by Sunday no deal is reached between the European Union and Greece. We are in the same situation as 2008 when the US government decided not to assist Lehman Brothers. Today, it is obvious that rescuing Lehman Brothers back then would have been far less costly and less harmful for the world. We still suffer from the consequences of that harmful decision.

Yesterday night Greece presented its final plan to the institutions. We should analyse this more than carefully. Apart from the formal negotiations and talks that are on-going, world famous economists Joseph Stiglitz and Thomas Piketty together with Stephany Griffith-Jones, Mary Kaldor and Hilary Wainwright published today an appeal to the European leaders in the Financial Times.They call for a simple formula: Commitment of Greece to a moderate primary budget surplus and commitment of Europe to not asking more of Greece, as long as the country is not back to a robust growth trajectory as compared to the 2007 level.

This can give Greece some much-required breathing space, which the country has then to use in order to really implement reforms this time, aiming at boosting growth and employment. This can also help to promote a shared understanding both within Greece and across Europe that speaking of reforms is not an equivalent to demanding austerity measures. Alternative structural reforms mean more transparency, more public participation and a better functioning of the public sector.

Let us hope that Europe will not allow a Grexit to occur and that, instead, it gives Greece a chance to achieve a better and more prosperous future. Such a future will also be beneficial for Europe as a whole; it will act as an opportunity for a closer and more united way forward.

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