The economic crisis which has engulfed Greece could be the tip of the iceberg according to French economist, writer and thinker Jacques Attali.
The former chief of the European Bank for Reconstruction and Development has long advocated a single tax and fiscal policy within the Eurozone, and warns failure to do so could be catastrophic.
In his latest book, he asks whether “we will all be ruined in 10 years?”
With regards to Greece, Attali argues the European Union should have intervened several months ago.
He’s also dismissive of this week’s 16-nation Eurogroup summit.
“This summit comes far too late. If two or three weeks ago we had said we will put 40 billion on the table that would have been enough but that didn’t happen, there was hesitation, then we said we would do it which is the wost case scenario, to say no and then say yes.”
“Secondly, the mecanism which is in place is not credible, the figures mentioned are very high but the austerity measures imposed on the Greeks are unsustainable, and on top of that we are not asking them to make cuts to their defence budget, despite the fact that is one of their biggest expenditures.”
“Therefore the markets are going to ask what will happen in other countries, they will be concerned and will want to be sure that other states are taking this seriously, from Portugal to Spain, Italy and England because Great Britain is also in a very difficult position.”
*“As a result we are likely to see other speculative attacks, well perhaps not attacks but certainly clarifications of how genuinely serious states are…although I don’t think they are serious.”
“Because today European governments are not making THE only decision which will be imposed, that is to say creating European treasury bonds, an instrument which could allow Europe to borrow in its own name. Everything we are doing at the moment is wasting money.”
Question from Euronews journalist Laura Davidescu:
“ So if I understand correctly, you are saying that to move forward from a crisis of this magnitude, the only solution is to consolidate truly European response mechanisms?”
Jacques Atali response:
“Of course…it’s not the solution per se, because there is no other solution except growth to reduce the debt, that’s the only solution. In the meantime, in wating to make necesary economies, we have to avoid a catastrophy and to avoid a catastrophy we need to borrow credibly and the ONLY player who could borrow in a credible way is the European Union.”
“But we are a long way from a decision of this scale…”
“For the past two years, in any case, we have done nothing.”
“We are paying lip service to G20, which achieves nothing, we announce things which are never put in place, we are so scared to make the smallest decsiion that nothing gets done and meanwhile, the spiral continues.”
“The crisis started out being a small American subprimes which should have cost 10 billion dollars, but nothing was done and it became a global banking crisis which could have cost 500 billion dollars….but again nothing was done except passing it onto the tax payers. It has become a national debt crisis which now totals between 7 and 8 trillion dollars.”
“Banks are continuing to speculate exactly as they did before, immoral actions are still going on, NOTHING, absolutely NOTHING has changed in a system which is entirely in the hands of international finance.”
“Except that now we have discovered that it has evolved from a crisis within private finance to a crisis of public finance…”
“No we haven’t just discovered that, if i may, along with many others I have been warning for three years that private debt would be passed onto the public.”
“From the moment of the Lehman crisis, we CHOSE to transfer private debt to public debt, and because we chose to do so we accepted to finance all the losses of the various banks. Apart from Lehman none were allowed to collapse. Thus we accepted that the taxpayers of tomorrow should pay, in addition to debts from other mistakes made in other areas.”
“One of the many reasons for hesitation in the past three months was the role of the International Monetary Fund. Germany was reluctant for Europe to assume sole responsibility for the Greek bailout plan. Why did you say in a recent article that the decision to call upon the IMF was dishonourable?
“In the words of Churchill after the Munich agreement, You had the choice between war and dishonour, you chose dishonour and you will have war.”
“Unfortunately this applies today. We chose dishonour because although the IMF is a respectable institution, it is not a European structure. Therefore we have basically handed over control of European affairs to the US and other non Europeans.”
“As a result we have chosen a strategy which will destroy our european identity.”
“In addition Europe will have to cary the bulk of the burden because at any rate its the Europeans who will have to pay the price for this crisis.”
“Could all of this happened because of a fundamental flaw in the origional European structure? ….For instance the euro has never been supported by a common european policy, neither fiscal nor economic. Do we have the structure in place to get out of this crisis?”
“I said ten years ago that the euro would disppear if we were not capeable of implementing a common European policy.”
“In the same way we have always progressed like that in Europe, we created the single market because the common market wasn’t enough on its own, we created the single currency because the single market wasn’t enough and each time crises have preceeded this.”
“Today we see that the single currency CAN NOT CONTINUE TO EXIST without a common fiscal and economic policy. It’s not possible.”
“So, will we have the courage to do it. We wil see. But for the moment we are faced with politicians who are from the 20th century, who are a century behind.”
“Is there, among the European leaders, anyone who seems to understand this reality?”
“Unfortunately the only person who seems to take it seriously and understand the situation is European Central Bank president Jean Claude Trichet, but he is not a politician.”
“He is the only one in Europe as far as I know, as well as perhaps Jean Claude Junker, who as President of the Euro Group is well aware of the endgame. They understand that much greater integration is needed but they are not in a position to impose it.”
“So according to you, where are we heading?”
“I’m afraid we are heading towards the worst case scenario, that is to say in two or three years, perhaps less, the erosion of Europe. The only question remains whether those politicians who have not had the courage to make decisions during a period of calm will now make decisions during the storm.”
“So the storm is only just getting started?”
“Of course, the crisis is only just beginning. Everyone who has been saying for months that the ‘crisis is finished, we are over the worst of it,” is talking rubbish. Because national debt is increasing, because the recession is here. Of course there isn’t a crisis in China, in India, in Asia or elsewhere. But the crisis is here in Europe, the crisis is in the US, in Japan, the crisis is in all the OECD countries. So-called rich countries are tired, they chose to live on credit and now they have to pay.
“What are the consequences for Europe, it seems if Europe comes out of this crisis it will be weaker than ever?”
“First of all it is not finished. On the contrary, it could be the moment, as we saw in the crisis of 92-3 or the crisis in Europe in the early eighties, this could be the moment to become stronger, to do better. I have not given up hope that Europe will understand that today, the only way forward is to make Europe STRONGER and not WEAKER.”
“At the 24th hour…”
“Hopefully not the 25th hour, as a great Romanian writer said.”
“Portugal? Is there an imminent threat there? And how about Spain?”
“ Yes, of course, the markets will show that the politicians who didn’t do their jobs in time to help Greece will have their work cut out with Portugal. So we will see the credit default swap of Portugal increase, then that of Spain, then that of Great Britain and then we will see what the governments will do. “
“The worst case scenario.”
“The worst case scenario is without doubt what we will have to reach in order to WAKE UP the political classes.”