Can Europe Make It?

A solution for Greece is a solution for the Eurozone

The Eurozone has entered into the most perilous period since its establishment, and so the solution for the Greek case has to be crystal-clear. December’s Eurogroup should deliver a message of unity and collaboration.

Dimitris Papadimoulis
1 December 2016

Dimitris Papadimoulis, vice-president of the European Parliament and head of the Syriza party delegation.

The Eurogroup of December 5 deals with the second review of the Greek bailout program and debt relief measures. The Greek government has brought about significant reforms under a strict timeframe, implementing all requirements stemming from the bailout deal.

Now it is time for the creditors and the institutions to abide by their commitments - something the European Commission, the European Stability Mechanism and the European Central Bank have many times repeated and pledged to do.

Fiscal targets have been reached

The Greek economy is doing well. Growth rate advances, unemployment steadily falls, public income is increasing and expenditures are better managed towards supporting vulnerable groups, the healthcare sector, and the massive refugee inflows.

The European Commission foresees 2.7% growth for 2017 and 3.1% for 2018%, whereas unemployment is expected to fall and reach 20.3% during the next couple of years. In this respect, the lowering of primary surplus targets from 2018 onwards will improve economic and business climate and help re-define the current policy mix, focusing on the decrease of tax rates to boost competitiveness.

In the meantime, the Greek government intends to implement the Social Solidarity Income (SSI) by the beginning of 2017. SSI might affect up to 700,000 citizens that have financial difficulties, a good part of them living below the poverty line.  

The pension system, the healthcare sector, the labour reforms

The previous governments have left behind a dismantled, fully corrupted bureaucratic system. The pension system was on the brink of collapse, whereas around 2.5 million people had no access to the primary healthcare services. While problems remain, due to decades of mismanagement and excessive spending, both issues have been addressed efficiently by the Tsipras government in a very short period of time. Emphasis was also given to a more equivalent sharing of tax burdens and the relief of low income taxpayers.

On the labour reforms - one of the major issues of the current bailout review - the Greek government is negotiating within the context of the European law and the acquis communautaire. The European institutions have agreed to negotiate reforms within this context, acknowledging the need to reinstate collective bargaining and avoid any discussion on massive layoffs.

It is to be noted that while Greece is under financial surveillance, this does not mean that the labour market should be de-regulated or the unions and the labour force should be deprived of fundamental labour rights. 

Debt relief and competiveness of the Greek economy

Debt relief was agreed by the Greek government and the creditors in July 2015, with the issue being also re-addressed during last May’s Eurogroup. Essentially, Greece’s debt regulation can lead to the decrease of primary surpluses and the smoother achievement of fiscal targets.

The positive outlook of the Greek economy so far needs to be capitalized in a way that taxpayers and investors feel that economic uncertainty has passed. Reduction of tax rates, increase of investments, empowerment of the social state, are all vital elements that contribute to sustainable growth levels.

Most European leaders and economic experts have recognized that austerity politics have failed, leaving behind recession, poverty, social unrest.

In this respect, and as Eurozone has entered into the most perilous and unsteady period since its establishment, the solution for the Greek case has to be crystal-clear. December’s Eurogroup should deliver a message of unity and collaboration. A solution for Greece is a solution for the Eurozone.

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