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Tuesday, July 31, 2018

Pierre Moscovici Interviewed About Greece

A short article in the Ekathimerini referred to an interview which EU Commissioner Pierre Moscovici had given to the Austrian magazine Profil. Here is the original interview.

Right in his first response, Moscovici made the bold prophecy that "the Greeks will now see that their sacrifices mattered." His argument seemed to be that Greece now has more flexibility to provide for more social justice but he gave no specifics. In that same response, Moscovici described pre-crisis Greece as follows: the country's economy had been very weak, taxes were not paid, public administration was inefficient as evidenced by the fact that there was not even a nationwide real estate cadastre. A superficial reader could interpret this to mean that now, after 8 years of reforms, the economy is strong, taxes are being paid, public administration is efficient as evidenced by a nationwide real estate cadastre. Well, Moscovici didn't say that, of course. Instead, he reverted to the common phrase that "much progress has been made but there are still steps to be taken."

"The market now have confidence in Greece again. Greece has recovered the freedom to pursue its own policies. We have stopped the growth of debt" - bold statements by Moscovici.

Moscovici blames the German Finance Minister Schäuble for having been too aggressive in 2015, for having brought the idea of Grexit into play. At the same time, Moscovici believes that Schäuble's aggressiveness was in response to the unfortunate conduct of the Greek Finance Minister Yanis Varoufakis. And that brought the conversation to the subject of Varoufakis.

"Varoufakis is a brilliant and eloquent person, but he is a fake. He was the wrong person at the wrong time in the wrong place. I have had many meetings with him. At least in the beginning we had a good relationship. But he was never interested in a true compromise. He always lectured all the others. His methods were not those of a statesman but, instead, of a spy. He secretly recorded conversations and negotiations. That may perhaps help the sale of his books but one doesn't generate trust that way. Furthermore, all his talk about Plan B increased the danger of a Grexit. It's alright if you have disagreements with some of your friends but if one disagrees with everyone, then one is a lone wolf."

Moscovici praised the recent debt relief agreement, emphasizing that Greece will not have to pay any interest until 2032. Presumably, he only referred to the ESM debt here. Moscovici also mentioned that the subject of debt relief might be revisited in 2032.

Moscovici was quizzed about the figure of 50 BEUR which, at one time, was used as the target for privatizations and which now is obviously unrealistic. Moscovici sidestepped this question by saying that the EU Commission had never mentioned this figure.

Finally, Moscovici was quizzed about Greece's military expenses. The interviewer tried hard but he/she could not get Moscovici to say that Greece's military expenses were too high.

Bottom line: an uninformed reader could well come to the conclusion that Greece had been in deep trouble 8 years ago, that 8 years of EU-guided reforms had delivered positive results and that a bright future was ahead for Greece.

1 comment:

  1. I've said it before, but I'll say it again cause nothing has changed. We're stuck in a loop, and this only makes the torture more tortuous.

    Greece's external sector is now balanced, while the state is in surplus. This leaves the private sector to carry the torch, and basically the households. Households not only have negative gross saving, but it's also accelerating. When this ends (as it must when there'll be no more assets to spend or sell) the state's surpluses are going to evaporate, GDP growth is going to evaporate, Greece will be unable to rollover it's external loans, and the prospect of bankruptcy and exit from the Eurozone will reappear with a vengeance.

    That's what happens when you're part of a deeply dysfunctional monetary union: problems aren't solved, just swept under the carpet.

    It's a shame that clowns like Moscovici aren't held liable for their words and actions.

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