My article for Europe’s World
I’m quoted by Claire Jones in the FT in her piece on whether the ECB might pull the plug on Greece.
“This is a game of chicken. The ECB is clearly applying pressure on Greece,” said Philippe Legrain, a visiting senior fellow at the London School of Economics’ European Institute.
“I’d be very surprised if Mr Draghi wanted to put himself on the front line,” Mr Legrain said. “I very much doubt that an unelected central banker wants to be the person who risks blowing up their own currency. What’s in it for him in being the fall guy?”
I was interviewed in the Wall Street Journal by Stephen Fidler on why, contrary to what eurozone authorities claim, Greece needs debt relief
“Of course they are going to say that,” said Philippe Legrain, a former economic adviser to the European Commission.
Mr. Legrain says Greece should have been given debt relief back in 2010 instead of being forced to pay its debts in full—largely to the benefit of banks in Germany, France and elsewhere in Northern Europe—and submit to a harsh austerity program.
Now, saddled with the bleak political and economic legacy of that decision, eurozone governments are just “kicking the can down the road ad infinitum or at least until the current crop of policy makers is retired,” Mr. Legrain said.
He doubts Greece’s debt will fall as a share of its GDP in coming years, and certainly nowhere near the official eurozone projection of below 124% of GDP by 2020. That is in part because he thinks official forecasts for growth are way too optimistic. Those forecasts see nominal GDP growth—real growth plus inflation—of close to 5% from next year to 2020.
He is also skeptical of the assumption that Greece will run primary-budget surpluses—its budget balance before interest payments on debt—equivalent to 4% or more of GDP. That is politically unrealistic, he says. “No other country has done what Greece is being asked to do,” he said.
I was interviewed by The Press Project on Syriza’s economic programme for Greece. I said:
While there is much in Syriza’s programme that I don’t agree with, Alex Tsipras is right that Greece needs debt relief in order to recover and that the country should not be bled dry to pay off its foreign creditors. Where are the other voices demanding debt justice? Greece needs them. It’s a tragedy that Greece’s corrupt elites have collaborated with eurozone policymakers at the expense of ordinary Greeks who continue to suffer unnecessarily great hardship. And when new elections are called, Greeks should not be blackmailed by EU leaders into voting for Samaras again. If Angela Merkel was wise, she would make a make a virtue of a necessity and call a debt conference to write down Greece’s debts, as Germany’s were in 1953. Failing that, Greeks need to stand up for themselves and elect a government willing to threaten default on the EU loans, which were not a gesture of solidarity but a bailout of the French and German banks and investors that recklessly lent to Greece, and which are in any case unpayable.
European Spring has been selected as among the Financial Times’ Best Books of 2014.
Martin Wolf wrote:
This is a splendid book on the European malaise. Legrain argues compellingly that policy makers’ response to that crisis was and remains a disaster. He warns that the eurozone is still far from healthy and that the German example, which members are supposed to follow, is a delusion. He notes, too, that the UK’s recovery is built on sand.
I took part in a panel discussion on Tonight with Vincent Browne on Ireland’s TV3 that went out on Thursday 27 November and was recorded in Charleville on Saturday 22 November. I argued that while the injustice of eurozone institutions blackmailing the Irish government to impose the bank debt owed to foreign creditors on Irish taxpayers was flagrant, it would be a mistake to leave the EU.
I was invited by the Ballyhea Says No group of citizens protesting against the €64 billion bank debt unjustly imposed on Irish taxpayers by eurozone policymakers, whose determination to right this wrong is admirable.