The Greek patient

Article published on April 13, 2010
community published
Article published on April 13, 2010
Light and music, food and wine, ''"everything looks ideal under the Greek sun"'', a famous Greek anchorman recently said. Hocus-Pocus-Paparocus and here we go- crisis is almost at the door. __Why EU states should financially support Greece?__ The first reason might not be obvious but it is really important and described by the term "economic interdependence".

Assumingly, EU does not financially support Greece. As a result, production, which is the real economy, will be on the verge of collapse and economic growth will slow down, or even become __negative__. The main reason such a thing would happen is the extensive budgetary cuts on public expenses that the new government initiated. Consequently, Greece will not be able to import products anymore, due to the lack of money. Note that it is impossible to realize exports if there's no domestic production. Such a scenario would mostly cause harm in EU countries themselves, as transactions between EU countries and Greece are mutually significant for all European economies. Just to mention the most important figures, Greece's number one import country is __Germany__ (12, 1%), followed by Italy (11, 7%), __France__ (5, 1%) and __Netherlands__ (4, 7%). Except the last one, all the others do not have the highest development rates, let alone Italy, whose public debt reaches about 131%.

EU could also provide a significant help to Greece using __political__ means. Recently, defense officials expressed growing concern in the national media, following a string of Turkish transgressions of air space and territorial waters. Annual fees Greece pays for __defense__ and __military equipment__ are specific expenses which are hard to be avoided. The countries providing Greece with military equipment (other than then USA), especially after the country joined the euro zone, were __Germany, France__ and more recently, __Russia__. In his interview to “Makedonia” a Greek daily, Daniel Cohn-Bendit, Co-President of the European Greens, asks: ''“What the EU has done to secure Greek borders with Turkey in order to disburden Greece’s deficit so that Greek governments stop spending billions in military equipment”?'' Someone could argue that Greece acts for the sake of national interest, serving only Greek people's demands. Greek borders are on the same time borders of the EU itself though. If Greece does not guard them efficiently due to the lack of finances, they should be secured at least in a union where __solidarity__ has a meaning, in a union which has set up specific demands and standards for its member states. Nobody says EU states should guard or defend Greek borders as theirs. However, it would be fair enough to financially __support__ Greece for at least half of this annual 5% of its GDP that has -for good or bad- to be spent there. This would mean a plus 2, 5% of the Greek GDP for public investment in order to revitalize the real economy.

Finally, EU could __financially__ help Greece with not too much cost. To explain, Greek GDP is 254 billion euros, the deficit being 12, 7% of it or 30, 48 billion euros. EU budget for 2010 is estimated on 141, 5 billion euros. For example, the amount of money needed once to "finance" 1/3 of the present Greek deficit would be about 7% of 2010 EU budget. Let me remind you, the present budget is already quite __restricted__ and its not reflecting the real EU capabilities, as repeatedly stated by EU politicians, such as Jean-Claude Juncker from Luxembourg. Financial markets worldwide are persuaded that Greece will succumb to the inevitable crisis.

The economic crisis in Greece is only the start, but it should be seen as a catalyst for a change with a European character. The rest of conclusions are yours.