Economists sound alarm

As the country’s political parties ramp up their campaigns ahead of crucial general elections on June 17, a group of 11 eminent Greek economists from across the world have emphasized the importance of the next Greek government honoring its commitments to foreign creditors and pushing through vital reforms if it is to secure its position in the eurozone. Meanwhile, European leaders continued to express their hopes that Greek authorities will do what it takes to remain in the eurozone. European Council President Herman Van Rompuy and European Economic and Monetary Affairs Commissioner Olli Rehn repeated Monday that Brussels wants Greece to remain in the eurozone. Van Rompuy said Athens could only achieve this “while respecting its commitments,” a reference to a 130-billion-euro loan deal signed with its creditors.

Rehn, for his part, noted that “abiding by commitments remains the best option available to Greece,” adding “we want Greece in the euro and we are working toward that goal.”

French Finance Minister Pierre Moscovici, who met with Rehn Monday, was more explicit: “If the Greeks themselves do not respect their commitment, then we would find ourselves in a situation which would be infinitely more complicated,” he said.

The risks of such a prospect are the focus of an open letter by 11 eminent Greek economists published in Sunday’s Kathimerini. In the letter, the economists, who include George-Marios Angeletos of the Massachusetts Institute of Technology and Dimitris Vayanos of the London School of Economics, stress that the prospect of a Greek eurozone exit is still very real, despite reassurances by EU officials.

“The international community is monitoring our country with great concern and believes it very likely that it will default in a disorderly fashion and leave the eurozone,” the letter notes. The only hope, the writers claim, is that elections “lead to a government that will be supported by a broad range of political parties.” Such an administration must focus on confirming the country’s will to remain in the eurozone, implementing crucial structural reforms and cooperating with foreign creditors to revise aspects of the debt deal and boost investment and growth.

In a clear dig at politicians’ campaign tactics, the writers note “we would not like to see ignorance and populism lead the country to disastrous and irreversible choices.”


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