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Coronavirus: more financial protection needed from EU says Greece’s former finance chief

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File - July 5, 2010, then Greek Finance Minister George Papaconstantinou speaks during a news conference in Athens
File - July 5, 2010, then Greek Finance Minister George Papaconstantinou speaks during a news conference in Athens   -   Copyright  AP Photo/Thanassis Stavrakis
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Is the EU doing enough to support its member states in the face of the coronavirus pandemic? That remains up for debate, and the EU apologised on Thursday for not being at Italy’s side from the start of its deadly outbreak.

Now another country that felt let down by Brussels in the past is hoping it will rise to the challenge and help with the economic fallout from the crisis: Greece.

The EU must show it’s not just there to help countries weather the storm today, but that it will be there to prop up their economic recovery tomorrow, former Greek Finance Minister George Papaconstantinou told Euronews.

"We know that part of the recovery will depend on the health determinants themselves – the testing, the vaccines, the treatments – but also the economic support," he said, adding there needed to be "confidence" from consumers and businesses that they will recover from this crisis.

"What’s still missing to accompany the uptick of the economies is some fiscal support at the EU level, beyond what has already been announced," Papaconstantinou, who was Greece’s finance minister at the height of its debt crisis in 2009-2011, told Euronews in a live interview.

"Because what has been announced so far has to do with dealing with the crisis (…) but less so with financing the recovery. That’s where we’re looking for more action on behalf of the EU. Hopefully next week we will have some news from the European Council in this respect," he said.

EU finance ministers agreed last week on a €500-billion package to limit the impact of the coronavirus pandemic on the European economy. But the deal does not include using joint debt, or so-called "corona bonds" to help the hardest-hit member states. EU heads of state and government will meet by videoconference on April 23 to further discuss what their common response can be.

No respite for Greece

After years of austerity, recession and stagnation, Greece’s GDP was expected to grow between 2 and 3 percent this year before the coronavirus crisis hit. Now “we’re expecting a very bad 2020 and the hope now is that 2021 will see a recovery,” Papaconstantinou said.

According to the IMF’s latest forecasts, Greece’s GDP is expected to drop by 10 percent this year. This would make the Greek economy the hardest hit across the Eurozone.

“This is terrible for a country that has gone through a very, very difficult period, and which was seeing better days,” said Papaconstantinou, who is also a professor at the European University Institute.

“Part of the problem is of course that we’re very reliant on tourism. And that’s a broader European problem, because yes we’re coming out of lockdown, but will the internal market function? Will transport links be there? Will people be allowed to move around? That’s an issue, because even if restrictions are lifted people will be reluctant to do so – and they will be reluctant until the health picture becomes clearer,” he said.

Italy, Spain and France are also particularly exposed to the huge toll the pandemic is taking on the global tourism industry.

"Very deep recession" ahead

Greece imposed strict social distancing rules at a much earlier stage of the epidemic than other southern European countries. So far, its swift reaction has averted the health care crisis that Spain, Italy or France have been facing – and has earned Athens flattering news coverage.

The government has also rolled out a number of measures to help the economy early on. Mid-March, it said it was ready to inject €10 billion to support the Greek economy.

“The problem is that even those measures are not going to be able to avoid a very deep recession, and the question is how much fiscal space the government will have to continue these measures even in 2021,” Papaconstantinou said.

“And that’s where European help will become very, very important: to allow that in 2021 we have a robust recovery, even in Greece.”