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Greece/Euro Area

Published on January 28, 2015
Interview given by M. Michel Sapin, Minister of Finance and Public Accounts, to the daily newspaper Libération
Brussels, January 27, 2015

Q. – What’s your analysis of Syriza’s success?

THE MINISTER – The party is clearly in tune with a people who are suffering. The Greeks have made huge efforts, whether voluntary or imposed: pensions and salaries have been massively reduced, taxes – when they’re paid – have increased considerably and the civil service has been heavily cut back. It’s clear that a country that has lost a quarter of its wealth in five years is a country that is suffering.

Q. – Aren’t the Greeks also disappointed at getting nothing in return, insofar as the traditional parties haven’t managed to reform a mercenary, inefficient, corrupt state?

THE MINISTER – A transparent, uncorrupted state where everyone pays their taxes is clearly what the majority of the Greek people want. When Syriza says, in unison with the Euro Area and the International Monetary Fund, that a fair taxation system is needed where everyone pays taxes, this reflects the feelings of some Greeks, who believe they’ve paid their due where others wouldn’t. The previous governments can’t really be said to have resolved this issue. (…)

Q. – What can the Euro Area do to help Greece ease the debt burden and austerity policies?

THE MINISTER – With or without a Syriza victory, the issue of the debt is on the table. We agreed at the end of 2012 that we’d talk about it when Greece had made progress on its reforms and had a primary budget surplus – i.e. not taking interest [payments] on the debt into account.
We’re there: expenditure has been balanced by income since 2013. The Greeks have made a gigantic effort, much greater than we have, and therefore you can’t talk about austerity in France. For all that, there’s no question of agreeing to the Greek budget being knocked off balance again and re-entering a deficit spiral. In any case, to fund such a policy the government would have to finance itself on the markets or from donors, and I don’t think anyone would be ready to lend it money unconditionally.

Q. – In practical terms, what can we do?

THE MINISTER – There are a whole series of possible technical details to discuss. But I stress we’ll do so while taking into account what reform commitments Greece makes. The most painful thing, rebalancing the budget, has already been accomplished, but the easiest thing to do on paper – the reform of the Greek state, structural reforms – is still largely on hold. A modern, efficient state must be built, as well as an independent fiscal administration capable of bringing in taxes, without anyone enjoying special treatment. These are reforms that aren’t easy to carry out, but they’re part of Syriza’s programme and we could insist on them.

Q. – Will this language be listened to, particularly in Germany?

THE MINISTER – Gaffes have been made, it’s true, particularly in Germany. While the official statements have always been civil, this hasn’t been true of anonymous quotes, which haven’t contributed to moderate language on Greece or a calm debate in that country. The fact remains that the German government, like the others, has already started thinking about what happens next. Today Greece’s debt represents 177% of GDP – GDP which has declined by a quarter since 2008. If its GDP were at the same level as in 2008, the level of the debt would be only 125%... In other words, the lack of growth is central to the issue. So Greece, which is only just returning to growth, must be helped.

Q. – Are you ruling out a “Grexit”?

THE MINISTER – Absolutely. Nobody wants an exit from the Euro Area, either in Greece or in the other Euro Area countries.

Q. – By deciding on a massive debt purchase programme, isn’t the ECB saying the Euro Area is facing an intolerable level of debt?

THE MINISTER – It’s signalling that when the inflation rate equals zero or is even negative, the debt burden is a problem for everyone./.

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