Eurozone doubts Greece’s debt strategy

Stephen Beard Feb 16, 2010
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Eurozone doubts Greece’s debt strategy

Stephen Beard Feb 16, 2010
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TEXT OF INTERVIEW

Bill Radke: European finance ministers meeting in Brussels are turning up the heat on Greece to put its public finances in order. Meantime, there’s word the Greek government is getting financial advice
from an unusual source. For more, let’s bring in Marketplace’s Stephen Beard, who joins us live from London. Hello, Stephen.

Stephen Beard: Hello, Bill.

Radke: Who’s offering the Greek prime minister advice?

Beard: The Russian President Dmitry Medvedev, of all people. He’s told the Greeks to turn to the IMF for help. Russia of course has had its own problems with sovereign debt — it actually defaulted in the late 1990s. But this advice won’t be particularly welcome in Greece. The IMF is famous for taking a very tough line indeed with detonations.

Radke: Well what about the eurozone members? Weren’t they suppose to offer Greece a hand at this Brussels meeting?

Beard: Yes, but they seem to be rather doubtful that Greece is doing enough to cut its deficit by the required amount. The Greek government has pledged to reduce the deficit from 13 [percent] to 3 percent in three years. The eurozone has said, you’re not going to make it using the measures planned. You’ll have to make deeper cuts in public spending and raise more tax. A Greek academic here in London, professor Mario Levis of the Cass Business School, says the government in Athens has got to tackle tax evasion — if it just cuts the wages of low-paid public servants, there’s going to be trouble:

Mario Levis: If they don’t do anything else, people will be out in the streets — they are already in the streets — but there will be massive strikes and everything will come to a halt. They have to demonstrate, once for all, that they do mean business and they are serious about the tax evasion.

The Greek finance minister last night acknowledged the scale of the challenge he faces. He said, in a rather unfortunate phrase, “We’re trying to change the course of the Titantic.”

Radke: Haha. Marketplace’s Stephen Beard in London. Thank you very much.

Beard: OK, Bill.

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