EU to help get Greece out of tough spot
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TEXT OF INTERVIEW
Kai Ryssdal: The Greek government got some rare positive news from the financial markets today. The ratings agency Standard & Poors gave its budget-cutting program the thumbs up. S&P said it’s taking Athens off its credit watch list. And Greece appears to have finally gotten the backing of its partners in the European single currency. Last night, European finance ministers came up with a plan to help the Greeks avoid default, if it comes to that. Our European correspondent Stephen Beard on the line with us from London. Hello, Stephen.
STEPHEN BEARD: Hello, Kai.
Ryssdal: So there is a plan to save the Greeks, but they’re not really telling us what it is. Do I have that right?
BEARD: That’s right. We don’t really know how much money is involved. We don’t know what would trigger the deployment of this rescue plan. We don’t know which countries in the eurozone would be picking up the tab. All we know is what the finance minister’s chairman said last night. And he said we have a plan.
Ryssdal: Why all the mystery. I mean, one would think that if there is a plan they would want the financial community to know, to be soothed by that, right?
BEARD: Well, there are two schools of thought here. Some say this is actually a very clever way of keeping the speculators guessing so they’re nervous about speculating against Greek government bonds or the euro because they don’t know what lies in store. At the same time, this sort of keeps the pressure on the Greeks to get their finances in order. But there’s another theory and that is that there isn’t a plan. That’s why they’ve been so vague about the details. And the German finance minister lent some credence to this theory when he told the German parliament today, “No decisions have been made about emergency help for Greece.”
Ryssdal: Because, of course, it would be the Germans really, the biggest economy in Europe, that would have to foot the bill.
BEARD: That’s right. The Germans feel the Greeks have been feckless, and they should deal with the problem themselves.
Ryssdal: Are we do you think reaching the end of the great Greek debt crisis of 2010, Stephen?
BEARD: No, I don’t think so. I think there’s a lot more coming. And a lot more strains as well within the eurozone over this. I mean, the other day we had this extraordinary thing, France, critical partner of Germany, rounded on the Germans, and rather suggested that Germany was the major source of the problems in the eurozone, the major source of imbalances, because they weren’t doing enough to stimulate consumer demand within Germany and creating a sort of massive export market for Germany’s eurozone neighbors. Now that’s an old refrain, but Germans don’t like it at all. When I was in Berlin recently this was the response of analyst Heinz Schulte.
Heinz Schulte: Are the Germans going to have the third bathroom in Italian marble? Are we going to buy more Greek statues? I mean, how on earth if you look at German society are you going to improve spending, a fourh car?
BEARD: There’s no doubt that the Germans really don’t like being criticized when in their view they’ve done absolutely everything right economically. Neil Mackinnon, a currency strategist with the VTB Group here in London, thinks there’s a possibility that this could lead in the long term to the breakup of the eurozone into something a bit smaller and more dependable.
Neil Mackinnon: Germany might say well we’ll go our own way with likeminded countries. We’re not going to be the country that writes out a blank check for other countries who are not taking the reforms that are required to get their budget deficits back on track.
BEARD: But we should say the breakup of the eurozone still does remain a pretty distant possibility.
Ryssdal: One hates to profit from the misfortunes of others, Stephen, but is there an upside to the dollar and the United States in this?
BEARD: Well, this is potential turmoil, and turmoil in America’s biggest, one of America’s biggest export markets is not going to be good for U.S. exporters. But we could say one thing, the euro was supposed to rival the U.S. dollar. I mean, when they launched this thing a decade ago the hope was this was going to topple the green back from its position of global dominance. Well, that now seems a very distant dream.
Ryssdal: Stephen Beard in London with the latest on the Greek debt crisis. Thank you, Stephen.
BEARD: OK, Kai.
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