Merkies: Greek debt annulment unavoidable

18 November 2012

Merkies: Greek debt annulment unavoidable

The government must abandon its resistance to annulment of the Greek debt. Postponement would only mean still more damage to both the Greek and the Dutch economy, argues SP Member of Parliament and economics spokesman Arnold Merkies in the run-up to the debate on his initiative on Greece. ‘Spending cuts are not going to reverse the current economic shrinkage,’ says Merkies. 'Such cuts will even work in the opposite direction. At the same time EU governments have only saddled Greece with more debts. A one-off total solution is needed so that confidence in the Greek economy is restored. Otherwise, the danger is that later costs will be still higher.’

Arnold MerkiesAs long as two-and-a-half years ago the SP was already urging a fiscal write-down of the debts which at that time were for the most part still in private hands. The hundreds of millions of euros in aid to which the European governments have committed themselves have mainly been to the advantage of the banks and other private investors. 'Greece itself has gained little,’ says Merkies. 'The Greek economy is in worse shape than ever and sovereign debt is, at 177% of GDP, higher than at any time. By not rescheduling the debt two-and-a-half years ago we have landed ourselves now with problems that are going to cost us a great deal of money. Now we can only salvage what there remains to salvage.’

Merkies advocates a complete write-off of remaining private debts. Only then, he argues, can further steps be considered aimed at working towards a manageable Greek debt. This cannot be achieved through half-hearted measures, such as those we have seen in the last two-and-a-half years, but by putting things right in one fell swoop.

'Moreover, a realistic scenario needs to be worked out,’ says Merkies. 'To date the troika (European Commission, IMF and ECB) has constantly created unrealistic expectations, which are continually overtaken by reality. There’s a limit to what you can ask of the ordinary Greek. If we don’t recognise that, then things will get completely out of hand there. Unrest is growing enormously. Ever more people are losing their jobs, and more and more often we hear tales of hospitals being deprived of medicines. At the same time Greeks who are extremely rich are being spared any pain. For a lot of people it simply sticks in the throat that these people can salt their money away in tax havens. The troika seems to have little to say about this.'

On Tuesday the Eurozone Finance Ministers will meet to discuss possible new support measures for Greece. 'I want the Minister of Finance to let us know what he will be bringing to these talks,’ says Merkies. ‘What will he agree to and what conditions will he impose? We must now at last get things right once and or all, so that we don’t have to meet again in another six months. And not by sending still more money, but by means of a credible debt restructuring.’

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