Gloom at Greek economic conference

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Published Jul 3, 2012

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It is not every day that the opinions of a top-flight financial economist begin to echo those of Greece's new opposition leader, one of the world's top leftist voices at the moment.

But as Athens stares into an economic abyss in spite of billions in EU-IMF aid, both economist Megan Greene and Syriza party chief Alexis Tsipras are warning that austerity sacrifices are leading nowhere.

The Economist magazine, the free-market pushing newsweekly, was holding Monday and Tuesday a conference in Athens, the ancient city that has become the crisis-weary capital of the eurozone's seemingly never-ending problems.

The seminar held in the ballroom of the posh Intercontinental Hotel was well attended, especially at lunch, when guests who paid 1,200 euros a head sat down to listen to Tsipras, the 37-year-old leftist leader whose Syriza party came within a whisker of winning Greek elections last month.

The morning began in far more sombre fashion with an address by Joerg Asmussen, a onetime close advisor to German Chancellor Angela Merkel, who is now an executive board member at the European Central Bank where he defends an economically hawkish line.

True to expectations, Asmussen quietly pressed Greeks to avoid distractions and just continue on with tough reforms.

“The programme is the best option for Greece,” he said, referring to the austerity measures that are required in return for rescue loans that are keeping the Greek economy afloat.

And besides, he said, Greeks would only have it worse if they pulled away from the European bloc to face their dire debt problems alone.

Adjustments, especially to the labour market, were paramount, he said, to finally make Greece a solvent and streamlined member of the world economy after five painful years of recession.

Mission impossible, economist Greene told the same audience a few moments later, adding matter-of-factly that Greece's future is most likely not in the eurozone.

Greene, based in London, is director of economic research on the eurozone at Roubini Global Economics, the consultancy run by Nouriel Roubini who is credited for having predicted the financial crisis of 2008 and all the damage since.

“We see 85 percent probability to have Greece and Portugal to exit the eurozone,” she said in her short presentation.

“In my view, Greece will be the first country to leave the eurozone,” she said, and it “will happen as early as the beginning of next year.”

Tough words, the host from the Economist observed when Greene stepped away from the microphone. Greek businessmen in the audience slumped quietly into their chairs.

Off the stage Greene's analysis remained as cool.

“I do not think this government will have any more luck than the last one to implement reforms,” she told AFP.

The country has had enough, she said.

Tsipras, who addressed participants as they sat down for salmon at lunch, echoed a similar warning.

“An economy in freefall cannot balance its budget, and have growth, and pay 110 billion euros in interest by 2020. It is an equation without a solution,” he said.

For Tsipras, the “internal devaluation” demanded by creditors like Asmussen is too painful for the Greek people and inefficient besides.

The troika programme is leading to “humanitarian disaster”, he warned.

In the gilded dining hall, bankers, lobbyists and businessmen took the leftist's debunking of Greek austerity in stride.

An hour later, as waiters began folding up tablecloths, Tsipras, who is also Greece's new opposition leader, had yet to leave, still talking with fans and guests. - Sapa-AFP

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