Dr. Yannis Papantoniou, former Finance Minister of Greece and Dr. Alexander Mirtchev, president of Krull Corp., analyzed the impact of the unfolding European guarantee plan to address Greece's debt problems on the future of the single European currency. The main question underlying the discussion was the impact of the guarantee fund, worth over 750 billion Euro (about $1 trillion) that the European Union member countries and IMF agreed upon in the wake of the Greek debt crisis.
Dr. Papantoniou considers that, despite the expressed doubts regarding the ability of Greece to implement the austerity measures, remaining in the Euro is significant for the future economic health of the country. According to him, "it would be an economic disaster if Greece was to leave the Euro, and Greece would be formally bankrupt. If Greece was able to recover from 12% deficit in 1993, we could make use of the stability conditions of the Euro and do it again. The economy recovered by 7% then." He indicated that the EU actions would instil confidence "and confidence can help the economy." However, "what we require is a permanent institutional mechanism on the fiscal side and the bailout side, so as to convince the markets that Europe has the will to survive."
Dr. Mirtchev indicated that the EU guarantees have significance for the development of the whole European project, which in turn makes them globally relevant, in particular for broader financial security. "Even the way in which they are introduced is signifying not only the economic, but also the political considerations." The bold, decisive and, despite opinions to the contrary, relatively prompt measures could smooth the waters over the mid-term for the weaker European economies, and provide a platform for the further transformation of the eurozone. Subsequent developments could be "jittery, it is going to be up and down." Despite the speculations, it does not look like the Euro countries would reintroduce their own currencies, even though important questions for the eurozone remain to be addressed.
The unprecedented commitments of the EU members, according to Minister Papantoniou, are highlighting the questions regarding the new dimensions of European integration. "Monetary union is not a political union. You cannot sustain monetary union just by having a Central Bank, without mechanisms for failing states." But he indicated that instituting such mechanisms "would take a great leap forward in European integration. It will be a great struggle in the months and years ahead as to what extent the eurozone can evolve into a fully-fledged economic and political unit. If it does, it will survive. If it does not, it will face the danger of dissolution or breakup."
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