Guy Verhofstadt tells it to Greece and the EU like it is

Guy Verhofstadt, leader of the liberal ALDE group in the European Parliament, has set out a potential solution to the Greek crisis in an article for Politico. He makes it clear that there are faults on both sides and both sides need to take constructive action to resolve the crisis fairly for everyone.

We are in this mess because the Greeks never made a real reform package, or a clear break with their mistakes from the past. But also because Europe has followed wrong policies — policies of pure accountancy that slowly but steadily choked the Greek economy. Everybody can make the wrong policy choices, but we have been clinging on to them far too long.

He implores people to stop the scaremongering:

The European people, both in the North and in the South, deserve better than what we have seen up until today. They deserve a stable eurozone: to work in, to invest in, to live in. What they do not deserve are bickering politicians in a paralyzing stand-off. They don’t deserve panic stories by leading German politicians about the installation of a “technical government” in Greece, or a Grexit accompanied by the re-introduction of the drachma. Such alarmists should know they cause harm to our economies and they should think twice before opening their mouths.

He then outlines, in turn, what Greece and the EU should do:

The Greek government now needs to map out how they will bring about profound and structural reform. How they will make sure everybody pays their fair share of taxes; how they will rid health services of corruption; how they will end the clientelistic system and the political nomenclature controlling that system; how they will open up the labour market and give young Greeks a fair shot at a job; how they will dramatically downsize the public sector and reduce the overweight of public banks…

… We claim we have saved Greece by handing it a multi-billion euro rescue package. In reality, we have burdened the country with a lot of unsustainable debt. We need to use this crisis to create a structural solution, one that eliminates the risk that erodes the stability of our European economy, day after day. A debt redemption fund can do that: It pools the refinancing needs of our 18 euro-economies in return for reforms that spur growth. It anchors the principle of reform into the eurozone and drastically brings down the servicing costs of our public debt at the same time. Win-win instead of lose-lose.

Next to such a redemption fund, we need to introduce so called “automatic stabilizers” at a European level. All developed economies have them: They kick in from the moment the economy takes a hit and soften the worst effect of a crisis, thus bridging the most difficult moments.

You can read the whole article here.

Not only that, but he told Alexis Tsipras some uncomfortable home truths to his face with some style at the European Parliament on Tuesday. Enjoy.

I got angry this morning at Mr Tsipras, because we need to see concrete proposals coming from him. We can only avoid a #Grexit if he takes his responsibility. Watch my speech again here

Posted by Guy Verhofstadt on Wednesday, 8 July 2015

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16 Comments

  • Tells it like HE thinks it is. Maybe, Grexit is avoidable but maybe some people don’t want to avoid it. The assumption here is that everyone wants the EURO to succeed along with a sort of internationalist approach, but not everyone does want that.

  • John Tilley 9th Jul '15 - 1:24pm

    I saw a clip of Guy speaking passionately in the EP yesterday. He was on brilliant form.

    I actually did not agree with everything he said – but his speech and delivery were fantastic and inspiring.

    It was a reminder why some people are fitted to political leadership and the big occasion whilst others are fitted to chair committees.

  • Joe Otten posted about this today on Facebook. The Lib Dems are desperate for a strong voice that can explain to its ‘soft’ Left voters why the party has to be seen to be tough on Greece and demand that it sorts its affairs out. Any chance Joe can be used more in the media to explain the partys stance on Greece – more voices like Joe Otten in the Lib Dems right now is the way forward.

  • So Guy thinks that,..” A debt redemption fund can do that”
    And so,..Guy thinks the money to ‘fund’ that fund,.. will come from,……………..???
    Seriously,… this kind of ethereal EU thinking is the very reason the UK needs to *Get out of Dodge*, and as soon as possible,.. before the shooting starts. The EU projekt is well overcooked, and someone needs to put a fork in it.

  • With Respect to Greece Verhofstadt’s comments fall into two groups. Firstly, when he says that Greece must purge its governance of corruption, clientalism etc. Well, yes, I agree with that and I’m sure Tsipras does as well, but how? Such attitudes are deeply ingrained in national culture and not easily or quickly changed. Moreover, it’s a bit rich coming from an EU whose power-brokers are not exactly paragons of virtue themselves.

    The second group of things Verhofstadt tell the Greeks to do is how to run their country – what policies to pursue. Irrespective of their merits or otherwise, he is out of order here; that’s something for the Greeks to decide and they have spoken clearly through the ballot box.

    With respect to the EU Verhofstadt says there should be “automatic stabilisers” and a “redemption fund” created by the EU at the federal level. What he is talking about here is creating a transfer union (see post from this last Wednesday). Fat chance. John Dunn is right to call this “ethereal EU thinking”.

  • Gorden: re

    “Greece must purge its governance of corruption, clientalism etc. Well, yes, I agree with that and I’m sure Tsipras does as well, but how?”

    How? What makes you “sure”. As Guy says: “a few weeks ago, thirteen directors in the Ministry of Education had to be nominated and by accident there were twelve of the Syriza party. And only one they don’t know what his affiliation really is.”

    That’s how! In fact, I read elsewhere that the thirteenth was form another party in Syriza’s coalition.

  • Martin – There is an element of hope I this I admit but not unreasonably so. Months after he was elected Tsipras continued to live in a modest flat in a working class district. I don’t know if he still does but that doesn’t sound like the actions of someone wholly on the make. Also I assume that appointments in the ministry of education would be made by the minister of education – I very much doubt that the PM, up to his eyeballs in debt negotiations as he is, personally approves such – especially with the sensitivities inherent in running a coalition.

    And that rather illustrates my point. The culture of clientalism is so ingrained that it will take hard pounding over many years to root it out and a bit of grandstanding by Verhofstadt really doesn’t cut it. The EU knew what Greece was like from the outset; to pretend surprise when they discover that awkward fact and demand they turn into cultural Germans or Dutch overnight is merely to blame the victims – ordinary Greeks who would almost certainly also wish to have a more responsible governing class but find it impossible to hold it to account.

    Let me once again recommend this fine summary of the situation.

    http://www.interfluidity.com/v2/5965.html

  • Little Jackie Paper 9th Jul '15 - 6:46pm

    Gordon – ‘The second group of things Verhofstadt tell the Greeks to do is how to run their country – what policies to pursue. Irrespective of their merits or otherwise, he is out of order here; that’s something for the Greeks to decide and they have spoken clearly through the ballot box.’

    This seems to me to be a fundamental misunderstanding. Greeks can no more, ‘run their country,’ than any other EZ member. When you signed up to the euro, you signed up to its strictures and its institutions. The ECB is the lender of last resort. Greece does not run its own currency. The Euro is not there for the Greeks, it is there for the European project and the EZ citizen at large. For as long as they are in the Euro it is NOT for them alone to decide and they can vote on it all they like. If they wish to leave the Euro, then that’s another matter of course. But let’s be clear – from the standpoint of electoral majoritarian democracy they signed up to this with eyes open. What exactly did they think the ECB, the Stability and Growth pact and the rest meant for their domestic policy-making options? The euro is a political project at least as much as it is an economic one. What you think of that is a matter of value judgment.

    I note in passing that Greece’s attitude to the Republic of Macedonia over the past decades leaves me with rather limited sympathy for many Greek protestations at the moment.

  • David Blake 9th Jul '15 - 7:07pm

    Former Yugoslav Republic of Macedinia

  • Little Jackie Paper 9th Jul '15 - 7:24pm

    David Blake –

    ‘Former Yugoslav Republic of Macedinia’

    Well if you are going to go around insulting people at least get the spelling right.

  • LJP – What you refer to are the Maastricht Treaty’s institutions and financial aspects – the obligation to stay within specified bounds on government debt, deficit and so on. That wasn’t what I was referring to.

    Verhofstadt says (in the Politico article): ” …how [the Greek government] will dramatically downsize the public sector and reduce the overweight of public banks.” and “Structural reform for Greece does not entail what we have read in most of the proposals of the last few weeks: more taxes for companies and households. These proposals were job killers instead of job creators. Real reform creates jobs. Tsipras has to open up the markets and privatize the corrupt state enterprises.”

    It seems that those in Brussels start with a predetermined idea of what the Greeks must do in terms of their internal policies. This is nothing to do with Maastricht whatsoever. Now it might well be that some or all of these are sensible policies but that’s beside the point. That’s for Greeks to decide. If Brussels is using the excuse of an entirely predictable crisis to seize control of national agenda and political programmes then we really have arrived at the centralised superstate that UKIP warns of.

    As it happens neoliberal policies – the stable from which Verhofstadt’s suggestions appear to come – have been spectacularly unsuccessful in promoting widespread prosperity in Europe or globally – hence the +/- 50% youth unemployed in multiple European countries. Many observers have noted that the 1950s and 60s when tax rates were sky high by current standards was actually a time of faster growth and greater equality. So what will sound sensible to many ears may not be so well considered as first appears.

  • David Blake 9th Jul '15 - 10:57pm

    Little Jackie Paper – I did realise, but couldn’t find a way of editing it.

  • Katerina Porter 10th Jul '15 - 9:38am

    A comment I had from a (German) professor was that the same mistakes are being made vis a vis Greece and debt as those of the Versailles treaty vis a vis Gemany and the Weimar republic. We know where that led to – to Hitler. We now do have a growth of extreme parties in the Europe of austerity and neoliberal economics.

  • Richard Underhill 10th Jul '15 - 7:50pm

    After WW1 John Maynard Keynes and David Lloyd George said that Germany could not afford to pay reparations, but France insisted anyway and invaded Germany to enforce payment.

    After WW2 the USA provided Marshall Aid.

  • Richard Underhill 11th Jul '15 - 4:32pm

    We should not forget that Srebrenica is in Europe, but not in the European Union.

    The unarmed victims were attacked by a hostile force which was numerically larger than the United Nations force responsible for defence, but the UN soldiers were not attacked, they were pressurised. The political and diplomatic What-If? questions remain. Would a disply of air power have caused the attacking force to refer military decisions to their political masters? What if the defending force had been Ghurkas?

    A survivor was on BBC Radio 4 Today Programme on 11/7/2015. He had been shot in the body, in one arm and in one leg. His father had been killed. He lives in Srebrenica.

    A look at a map shows that the western Balkans, the former Yugoslavia and the Republic of Albania, are surrounded by EU member states and may all join eventually.

    The biggest irony is that there was fighting in the former Yugoslavia, which did not contain Soviet troops. There was a violent revolution in Romania, which did not contain Soviet troops.

    A cultural problem is a regional history of vendettas, which probably derives in part from a lack of effective police forces in some of the states.
    https://en.wikipedia.org/wiki/Srebrenica_massacre

  • Richard Underhill 11th Jul '15 - 4:34pm

    Greece should not argue about the name of its northerly neighbour. Greece has more important things to worry about .
    The former Yugoslav republic of Macedonia could, as an independent state, simply be called Macedonia.

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