An Expert Weighs in on the Greek Election

In the wake of a shock re-election of Alexis Tsipras and Syriza, Thomas Piketty discusses the need for a more active approach from European leaders when it comes to the Greek question – as well as for a Eurozone parliament to be established.

The Tsipras triumph has come as a surprise with a. What has changed for A holiday in greece?

Normally, we would expect some stability in the coming years. Above all, Greece and Europe need to make up for lost time. So far, Europe has obstinately refused to speak seriously about restructuring Greece’utes debt. That was what triggered the downfall of the last federal government.

Europe had in effect implied that it would reconsider the debt when the Greeks managed to balance their budget with a small primary spending budget surplus – which meant Greece would have more revenues compared to public spending. However, once the Greeks appealed for help in Dec 2014, Europe said “no”. That is what ultimately opened the path for Alexis Tsipras.

In add-on, the situation continued. Between January and July 2015, Europe declined to reopen talks. Now it’s September and the brand new support package discussed come july 1st has led to the further postponement of debt negotiations. If Europe insists upon repayment, there will be fresh crises and the problem will not be solved.

Why does the dialogue between European countries and Greece need to alter?

Europe has other problems to tackle. There is the migrant crisis and the broader economic situation. Europe, Germany as well as France cannot exist in a permanent state of crisis. Europeans need to adjust their position. Moreover, for that to happen, Portugal needs to have more courage – others too. Perhaps the elections in Spain after this year will change things. All these elements can combine to help majority politics in Europe when it comes to the Greek question.

What should Tsipras’s economic focal points be from now on?

Modernising the taxes system is clearly the concern. It needs to be fairer and more efficient. However, that can only be done with Europe’s cooperation – and if Europe sets an example.

We need to remember that the biggest businesses within Europe often pay less tax than small- and medium-sized businesses. That is because governments do offers that will lead to favourable conditions for their own national industry. That’s without even considering that the Western Commission has a president that, as prime minister of Sweden, signed deals with multinational companies that allowed them to pay just 1% to 2% tax.

Europe cannot just hand out advice without itself committing to fiscal transparency. That goes to the heart of the system – German and French banking institutions are very happy to handle the actual funds of rich Greeks.

What ought to French president François Hollande do regarding Greece?

This summer, François Hollande started to make suggestions about making the Eurozone much more democratic. In particular, he spoke about establishing a parliament for Eurozone countries. Nevertheless, that is still too timid and too vague. If he wants to do something to save his second term, and most importantly improve the governance of the Eurozone, he needs to make proposals that are more precise.

I believe there would have been less austerity in Greece, and more solutions would have surfaced if there had been public, democratic discussions in a Eurozone parliament, populated with reps from each national parliament.

The trouble is that a technocracy currently governs the Eurozone. The heads of state meet behind closed doors. They send out incredible proposals in the middle of the night – like privatising 50 billion pounds of Greek assets – whilst everyone knows it will be a veritable fireplace sale. As if, the Greek economy could sell it’s assets under these problems!

This happened without legal deliberation and without interrogating the reasons behind the decision. We need to stop this Europe and start again with a Eurozone parliament that allows everyone’s motives to be public. What is important now is that France – and all the countries that want to make progress – set out clear proposals to restructure the Eurozone democratically.

Should we still concern a Grexit?

Yes. The risk is that within delaying discussions about restructuring the debt, we realise in a single or two years that the the bailout package will not get regard.

We want Greece to keep an enormous primary budget surplus for 25 to 30 years, which will imply setting aside an enormous budget for payments.

How do you justify that in order to young Greeks? It would be reasonable to state that until the Greek economy rebuilds, a reduced primary spending budget surplus, around the level of GDP, will have to do. That is normal and not excessively punitive.

I be concerned that some people continue to wager on a Grexit, setting objectives which are impossible to meet so that whenever Greece fails, it can be pressed towards the exit. That is still a risk, which is why we need clearness and realistic objectives – as well as quickly.

Q&A: Thomas Piketty responds to surprise Greek election result is republished with permission in the Conversation