The European Commission Vice President Neelie Kroes has told a Dutch newspaper that the Euro would survive a Greek exit from the currency. The announcement comes during a strike endorsed by two of Greek’s largest public sector unions. The Greek government has been seeking foreign investment and additional funds from the IMF, EU and the ECB. These institutions have made spending cuts a prerequisite for additional funds, and it is looking increasingly unlikely that there is the political will in Greece to implement the necessary cuts.
It is refreshing to see Ms. Kroes say what many having been saying for some time. The Greek government has proven itself incapable of taking the necessary decisions that it needs to make in order to keep itself in the single currency. Ms. Kroes expressed the sentiments of many on the continent during the interview:
“The Greeks have to realize that we Dutch and we Germans can only sell emergency Greek aid to our taxpayers if there’s evidence of good will.”
It is well known that numbers were fudged and excuses made in order for Greece to join the euro in the first place, and it is only recently that the full ramification of that decision has been felt.
There is no reason to think that given another bailout the fiscal situation in Greece will improve. There is an opportunity now for some politicians to show that it is possible for the single currency to suffer one casualty. For too long European politicians have tried to keep Greece in the euro. Now it seems that all of the measures taken in Europe have been completely ineffective in getting the Greek government to pass the necessary austerity measures. Even with a Greek default, which will be disastrous for Greece, the sovereign debt crisis in Europe will be far from over.
I hope the realization that the European Commission finally seems comfortable with some countries defaulting will be a wake up call to other countries in the euro. If tough austerity measures are not taken soon the recession in Europe will deepen. All that is needed is more political will.