Guy Verhofstadt: Never again: Europe must have its own treasury

While the deal is far from perfect, it’s important we now draw lessons. Never again should the pensions and savings of millions of people across Europe be left to hang in the balance of an all-night emergency meeting, with EU governments pitted against each other. Never again should the future of our currency be jeopardised in this way.

If we are to safeguard the euro, the eurozone must no longer be held hostage by nationalists and populists on left or right, whether Finland’s far-right Finns party, or Greece’s far-left Syriza. The reality is the system we have created left Europe paralysed. If the European Central Bank had not been there to provide emergency support to the Greek banking system, Greece would have had to leave the euro weeks ago, with catastrophic consequences for all of us.

We must also now accept that we brought this crisis upon ourselves. A currency union, with 19 different national vetoes, is simply unworkable. The byzantine eurozone architecture we have created is incomplete. As long as this remains the case we will continue to pay a high price. A currency union with no monetary union and political union behind it is doomed to failure.

If Europe is to exit this crisis, the eurozone must act now to implement radical reform that will deliver a genuine political and economic union, to ensure this kind of crisis is never repeated. This means we must go further and do it faster. It means a sharing of sovereignty among the EU countries that have the euro as their currency. It means a common debt management system and a European treasury. European leaders know what needs to be done, but as of yet have lacked the courage to make the case domestically for the reforms that are needed. It will require leadership, but we have just been given a stark reminder of what is at stake.

• Guy Verhofstadt is a former prime minister of Belgium





Josef Joffe: The Greeks may have the last laugh

Who won the 22-hour war? At first sight it was the Teutonic bloc centred on Berlin with a veritable diktat: no debt relief for Greece, no “haircut”. In return for some €80bn, the Greeks will have to repent and reform, changing their laws and extravagant habits. They must cut pensions. They must “adopt more ambitious market reforms”, opening up protected sectors to competition.

Athens must take on privileged interests, above all public sector unions. It must make firing easier. It must “depoliticise” the administration, diplo-speak for attacking cronyism and overstaffing.

Greece must submit to a kind of occupying force: a trust fund that will privatise to the tune of €50bn

And Greece must submit to a kind of occupying force: a trust fund that will privatise to the tune of €50bn. Managed by the Greeks, the fund is to be “under the supervision of the European institutions”.

“The deal is hard,” sighed Alexis Tsipras. Indeed, it demands a domestic revolution that will overturn entrenched privileges and power relationships.

But did the Germans really win? Compare the “summit statement” with previous pledges of virtue that were neither meant nor honoured. Assume that the Greek parliament ratifies on Wednesday and Tsipras, mortally weakened, stays in power. How will he garner the political capital to undo the bad habits accumulated by all his predecessors? There are simply not enough public assets to make €50bn in sales. How will he curb strategically placed vested interests? And erase corruption in a cash-based economy?

So the Greeks may have the last laugh. A third bailout has come on top of two previous ones worth €216bn from Europe alone. Greeks now know that Herr Schäuble’s Grexit threat was hollow. And that mighty Frau Merkel was in the end intimidated by France, Italy and even the IMF pleading for forgive-and-forget. For the third time, the Greeks have learned that weakness is strength because Europe dares not pull the trigger. Athens foreign debt will continue to rise. So “haircut” next, and a fourth bailout waiting in the wings.

• Josef Joffe is publisher-editor of Die Zeit

‘Cutting wages and pensions – without outlining any investment strategy – is doomed to fail.’ Photograph: Panayiotis Tzamaros/Demotix/Corbis

Mariana Mazzucato: Monetary union is impossible in an area of this size

More than anything now we need the kind of big thinking we saw after the second world war – not the hypocritical, short-termist and economically illiterate deal that has been forced on Greece. The tough financial discipline being meted out to Athens will not lead to growth. Grexit may have been averted but it is a short-term, and short-sighted solution.

A lack of overall demand in Greece, and an absence of investment in areas that increase future productivity and innovation will only make the country weaker and more dangerous to its creditors. Indeed, during Syriza’s first four months the Greek treasury massively reduced the deficit and had a budget surplus (not including debt interest payments) of €2.16bn (£1.5bn), which far exceeded its initial target of a €287m deficit. Yes, more reforms are needed, but focusing only on reforms that produce a surplus and “liberalise” the Greek economy, cutting wages and pensions – without outlining any investment strategy – is doomed to fail.

At the end of the 90s Germany also faced a problem of demand that had to be found externally. Excess cash in German banks was lent to foreign banks – among them Greek banks, which lent to Greek business to buy German goods – thus increasing German exports. This raised the level of Greek private debt massively. Indeed, as is well known, German banks own a large share of Greek debt (€21bn).

Today Germany must invest in its own workforce to build internal demand for German goods, and allow policies in other EU countries, including Greece, that will allow them to achieve real competitiveness and export as well. This requires exactly the type of industrial and investment strategy that has benefited Germany in the past. The fact that this is not understood by the Eurogroup reveals both short-termism and economic ignorance: after all, who will buy German goods when austerity chokes demand elsewhere?

The crux of the matter is that monetary union is impossible in an area the size of the eurozone, with such large divergences in competitiveness. The EU needs a common innovation and investment policy, not a common (and idiosyncratic) austerity policy as it does now.

• Mariana Mazzucato is economics professor at Sussex University





Dan O’Brien: Ireland recovered, but Greece could never catch up



In 2010 Greece and Ireland were, respectively, the first and second eurozone countries to be bailed out. Five years on, Greece is about to enter its third bailout and will be a ward of the international community for, at best, another three years. Ireland will mark the third anniversary of its exit from bailout later this year.

Both experienced grinding austerity, but Ireland recovered and Greece continues to flounder. Why? Much lies in the nature of the two countries’ pre-crisis experiences. In Ireland the private sector hugely over-borrowed in the five years from 2002. In Greece, the public sector massively over-borrowed over a similar timeframe.

When bubbles burst, resources must to be redeployed from the collapsed sectors to those with growth potential. In Ireland, the bloated construction and property sectors downsized and many who worked in them found alternative jobs. Ireland’s export sector – one of the largest in the world relative to the size of the economy – picked up a lot of the slack. A flexible labour market and a long tradition of emigrating to find work facilitated the transition – net outward migration since 2008 has been greater proportionately in Ireland than in Greece despite unemployment being much higher in the Aegean state. In Greece, those who either worked for the bloated public sector or depended on its largesse have had a much harder time shifting into alternative work. And the absence of an export sector made the transition all the harder – Greece’s exports as a share of GDP are among the lowest in the developed world.

Politics matters too. Irish governance failings are many, but the institutions of state function, particularly when faced with a clear challenge. State capacity in Greece is notoriously weak. With an inefficient state and inefficient markets, Greece has the worst of both worlds. Its road to stability and durable prosperity will be long, no matter what route it takes.

• Dan O’Brien is chief economist at Ireland’s Institute for International and European Affairs





‘A lack of preparation, the absence of a clear plan, pervasive amateurism and unwise personnel choices undermined Alexis Tsipras’ efforts at home and abroad.’ Photograph: Jonathan Raa/Pacific Press

Nick Malkoutzis: Tsipras had one chance, and he failed on all counts



Alexis Tsipras had a chance to make a difference. He could have made a clean break, dispensing with previous Greek governments’ cronyism and lack of vision. He had an opportunity to galvanise eurozone leaders to push for a change in economic policy. He could have led a chorus arguing that the eurozone was undermining itself by allowing problems such as Greece’s to be seen as national rather than European.

Only over the past few weeks did Tsipras realise his options were running out

He failed on all counts. A lack of preparation, the absence of a clear plan, pervasive amateurism and unwise personnel choices undermined his efforts at home and abroad. He ambled aimlessly through his first few months in government and only over the past few weeks realised his options were running out, prompting a furious flurry of activity to avoid the Grexit – which he, at least, had the self-awareness to realise Greece could not handle.

Tsipras now faces an immense task if he is to oversee further fiscal adjustment and the implementation of structural reforms in a country that socially and economically has been brought to its knees by its own failings and those of its lenders.



The Greek leader’s gamble with the referendum has at least made him stronger in domestic political terms. This gives him the chance to clean up Greek politics, tackle corruption and overhaul the public administration – as he has promised. But it won’t be easy.

• Nick Malkoutzis is deputy editor of the Athens daily Kathimerini and editor of economic analysis site MacroPolis





Costas Lapavitsas: Forget the euro, Greece needs a new currency

When Greece joined the eurozone in 2001, entry happened without an adequate public debate, without anyone explaining that the EMU came with a severe institutional framework and a rigid logic based on austerity and neoliberal ideology.

As a monetary union, the EMU has already failed. The reason is that Germany has been keeping its wage costs too low, thus running huge trade surpluses and becoming the biggest lender and most powerful state in Europe. Greece has been devastated by its policies, and it is only a matter of time until we see their devastating effects in large countries of the EMU centre, such as France and Italy. But until recently, the ideology of “Europe” had been allowed to cover up the harsh reality of what the EMU has actually meant for European economies and societies. Now Greece has destroyed any illusions in “Europe”. The insistence of the Greek political system to keep the country in a failed monetary union come what may and whatever that means for the Greek people, is now approaching the limits of tragedy.

What Greece needs now is a detailed exit plan, drawn up with the help of a wide range of economists. Of course a new national currency is not a magic wand. But it would liberate the country from the trap it currently finds itself. It would also allow the government to finally get started on a productive reconstruction of the economy.

Syriza formed a government with a very successful electoral strategy, but its strategy has collapsed miserably in governance. The agreement that emerged on Monday will not solve the country’s problems and is likely to prove totally unworkable. The prospect of leaving EMU will be raised again very soon.

• Costas Lapavitsas is an economist and Syriza MP





Ivan Mikloš: Greece’s leaders don’t believe in reforms – this won’t work

To offer Greece a new bailout after everything that has happened doesn’t make much sense. A big group of countries (including Germany) would have preferred Grexit, but France, Italy and others blocked it. Yet the bailout, I am afraid, will not work.

The main reason is not the structure of the Greek economy with its high indebtedness, inefficient public administration and rampant corruption. These things can, in due course, be reformed. But real reform is impossible without leadership, ownership and communication – so this is much more a political problem than a technocratic one.

Greece would need to have political leaders who are convinced of the necessity, importance and usefulness of reforms, and who are committed to them despite the political risk involved. And Greek politicians would have to tirelessly and permanently communicate the necessity of reform. But Greece is unfortunately the textbook example of how none of this will happen.

• Ivan Mikloš is the former finance minister of Slovakia





Pierre Haski: I’m relieved, but these terms are offensive and arrogant



What initially looked like a “victory” leaves me with a bitter taste. François Hollande’s political gamble of taking the lead on keeping Greece in the euro paid off. Not only was the Grexit option defeated, but it was in the end a Franco-German compromise that did it, despite all the tensions of the previous days and hours, which the former president Nicolas Sarkozy too quickly blamed on his successor. French socialists, who have few reasons to celebrate, were quick to hammer home the message: “Hollande saved Greece, saved Europe, saved France”. Nothing pleases the French public more than seeing their president play the superhero, a role that’s not been often been offered to Hollande.

On the French left, however, where Greece had become recently a cause celebre and Alexis Tsipras a romantic hero, bitter comments quickly emerged. The new austerity, as well as the tight control European institutions will exert on Athens’ management of the reforms, were seen as a humiliation and a sign of German influence – as Jean-Luc Mélenchon, the maverick leader of the “left of the left”, quickly pointed out.

I’m relieved that Greece remains in the eurozone, but I still find the terms of the agreement offensive and full of the arrogance the rich and successful often have towards their poorer relations. This will not help to get the deal accepted in Greece, and will not make Europe more popular among Europeans.

• Pierre Haski runs the Paris-based website Rue89

Marina Prentoulis: The austerity measures imposed on Greece are destined to fail

On Sunday night, the German government and its political allies made it clear that they don’t want to recognise the structural problems of the eurozone and the failure of their austerity programme. They would have preferred to dismantle the eurozone rather than change path.

Economically, they sent a message to the markets that eurozone integration is now no longer irreversible. I believe that we will see the costs of this strategy soon. Politically, they made it clear that democracy means nothing to them and neoliberalism is the only acceptable political paradigm. Any EU country and any government which opposes the neoliberal policies of austerity will be brought to its knees.



The decisions of the Greek government were taken after five months of threats and blackmail

Their original proposals neither respected the Greek government nor the Greek people; it came as a shock to anyone who still has hope for democracy within the EU and the eurozone. The currency union as it has presented itself over the last few days is not one that the citizens of this continent have signed up to. The political consequences of this will be huge.



The decisions of the Greek government were taken after five months of threats and blackmail, but we managed to avoid the collapse of the banking system in Greece and the country’s political isolation. The austerity measures imposed on Greece will cause more suffering and they are destined to fail. Syriza is still the only political force in our country that will drive for a fair and just distribution of the agreed measures, and that will guarantee that the most vulnerable members of society won’t have to pay the price.

• Marina Prentoulis is a senior lecturer in politics and media at the University of East Anglia and a member of Syriza London

Pablo Iglesias: Europe’s social democrats have crumbled in the face of barbarism

I’ll be frank: I do not like the agreement signed between the Eurogroup and Greece. I am sure that Syriza and Alexis Tsipras do not like it either. But one thing is certain, Angela Merkel and the troika hawks have failed in their objectives. And what were they? The overthrow of the Greek government so that (German finance minister Wolfgang) Schaüble could claim Tsipras’s head as a trophy. That has not happened. The wish of Merkel’s government to exercise power over Europe has proved capable of endangering the entire European project. If one thing really saddens me, it is that once again European social democrats, with the Germans in the lead, have backed down completely in resisting the authoritarian rule of financial institutions over the people. It reminds me of the terrible reparations imposed on Germany after the first world war. No democrat could stomach this humiliation, but one thing is clear: the hawks have lost a few feathers along the way and are a bit more defensive today than yesterday. We are facing a historical crossroads in Europe. Democracy or barbarism. We must put our faith in the former.



• Pablo Iglesias is the leader of Spain’s Podemos party