George Papandreou: European Union is also guilty for Greek crisis

Sat, May 26 2012

Tue, Feb 16 2010 10:37 CET

byNick Iliev

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George Papandreou: European Union is also guilty for Greek crisis

Greece is likely to be forced to undertake steeper spending cuts than the 8.7 per cent initially proposed. Jean-Claude Juncker, chairperson of the Eurogroup - the 16 nations using the bloc's common currency - said that Greece had agreed to consider further slashes in public spending in March 2010 if needed. This was revealed after a meeting of eurozone finance ministers on February 15 2010.

George Papandreou, prime minister of Greece, said that his government had pledged to slash public deficit from 12.7 per cent of GDP last year to 8.7 per cent in 2010, but the proposed 8.7 projection might prove far from sufficient.

Juncker, who is also Luxembourg's prime minister, said that if Greece's debt reduction plans fail to meet their target by March 16, the Greek government ought to consider tightening the belt further.

"It's up to Greece to consolidate its public finances, it's up to the euro area to stand determined [in case more is required of Athens]," he said, quoted by the BBC.

Meanwhile, Papandreou has attributed a significant chunk of the guilt and responsibility to the European Union, saying that the EU is as much responsible for the crisis as Greece is.

Pointing a finger at Brussels, Papandreou accused the EU of being "timid, lacking co-ordination and of using Greece as a scapegoat to hide the 27-nation bloc’s own failings," leading Greek daily Kathimerini reported on February 16 2010.

Moreover, Papandreou implied that Brussels was responsible and thus must burden itself with the responsibility to tow the country out of its financial mess.

"Greece is not a political or economic superpower to fight this battle alone," he said. "In the last few months of this crisis, the EU gave its political support but in the battle against the impressions and the psychology of the market, it was at the very least timid," he was quoted as saying.

His country was already offered a lifeline, following the decision on February 11 in which the Eurozone's powerhouse economies, Germany and France, pledged to stand "side by side" with Greece and help alleviate the Mediterranean country's mountain of debt. However, the bailout will come at a condition and there will be "strict rules that need to be adhered to", international media reported at the time.

Herman van Rompuy, the European Council's President, was quoted as saying that the 16 Eurozone member countries "will take determined and coordinated action if needed to safeguard stability in the Eurozone as a whole". He emphasised that Greece did not ask for financial aid and said that the EU was expecting "rigorous" action from the Greek government in return for the assistance.

But speaking in Athens, Papandreou did not limit himself to accusing the EU of being responsible for the crisis.

He set his sights on the former New Democracy government, saying that they were guilty of covering up the true brutal reality of the Greek economy. The former conservative government declared that Greece was to expect a budget deficit of 3.7 per cent for 2009, from from the reality of 12.7 per cent.

Papandreou accused Europe of failing to "double check" on the country's former government but said that instead it was content to put the full blame on Greece.

"There was quite a big effort in the European Union to hide their responsibilities behind Greece," he said. "The Union, the Commission, even Eurostat had the responsibility to be vigilant and to point out to the previous government the slippery slope it was on."

Greece has accumulated about 300 billion debt with public spending spiraling out of control while taxation revenue remained low. With the cost infrastructure construction surrounding the Olympics in 2004, amongst other factors, debts have accumulated to the point where now the country spends about 11.6 per cent of its GDP to pay interest alone.

Its public deficit has reached 12.7 per cent, more than four times the three per cent budget deficit mandated by the Eurozone's Maastricht criteria.