Ambassador of the European Union to India, Dr. Joao Cravinho, admits that the current problem is "big" and it is "about the EU project", but he also believes that "the EU has the strength to deal with Greece" and that it has come out stronger after every crisis it has been facing in the past.
Just one day after an agreement had been reached between Greece and the European negotiators on the Greek financial crisis, Dr. Joao Cravinho, Ambassador of the European Union to India, gave a first-hand assessment of the controversial deal during a discussion at Observer Research Foundation in Delhi.
While Ambassador Cravinho pointed out that "there was a tremendous desire to keep Greece inside the euro" and that "solidarity and responsibility can find a balance inside the EU even in extreme circumstances", German journalist Juergen Webermann, South Asia Bureau Chief of ARD German Radio, criticised the German media for populist "Greece bashing" and the government of Chancellor Angela Merkel for lacking a positive vision of Europe.
"What I did not hear from Mrs. Merkel is a truly big speech about European values, about the European Union and its incredible achievements, which is still the biggest, fascinating and most compelling peace and unity project in history, including the Euro", said Webermann.
Dr. Sanjaya Baru, Director for Geo-Economics and Strategy at the International Institute of Strategic Studies (IISS), gave a bird’s eye view of the situation in Europe. He pointed out that Germany "has emerged" out-off the crisis "as a geo-political power" and "is flexing its muscle" now. Baru described the financial crisis in the Eurozone as "a political failure" of the EU and its member nations to "move beyond the single market and a monetary union to create a political entity".
"Imagine an India in which a less developed state was on the verge of default and neither New Delhi nor any of the more developed States were willing to step in and help", said Baru, suggesting that Europe could learn from the Indian federal system.
While Ambassador Cravinho was ready to admit that Europe needs "a fiscal union" he also emphasised the differences between a federal system and the European Union that still consists of independent states. "The EU is not a federal system", said Cravinho, and there are different "degrees of sovereignty" within the EU. "The public tensions within the EU exist because expectations regarding support from the neighbours are enormously high. Nowhere in the world do you have this."
Ambassador Carvinho insisted that "the bailout to Greece that is now on the table is massive, around 86 billion euros". "There cannot be any talk of humiliation when there is such an enormous level of support, including for investment and growth", said the ambassador. He pointed out that "European tax payers have offered unprecedented financial assistance" to Greece. "Since 2010, 184 billion euros have been disbursed from the Greek Loan Facility and the European Financial Stability Facility".
He further explained that "the key element" of the new crisis plan for Greece is a fund worth 50 billion euros of Greek assets that will be supervised by the EU and based in Athens. It will "contribute to the recapitalisation of Greek banks and also serve as a collateral for new ECB loans for Greece".
While some of the participants in the discussion expressed concern about a possible humanitarian crisis as a result of severe austerity measures imposed on Greece over the last five years, Dr. Baru reminded the audience that debtors are generally not treated with kid-gloves. "When India defaulted, we were treated similarly", said Baru.
He also pointed out that with the Syriza party in Athens, Europe has a "communist government for the first time" after decades, which seems to be both an indicator and a result of the crisis.
"No European country went through such hard austerity measures, not even the Eastern Europeans", added Juergen Webermann, echoing a widespread opinion in British and American media that the "German fixation on austerity is an obsession that is completely irrational".
Britta Petersen, ORF Senior Fellow who chaired the session, pointed out that one of the aims of the European Union from the time of its inception after World War II was to contain German power within a larger framework. Germany’s ascent as the new dominating power in Europe therefore needs to be watched with some concern.
Dr. Jaimini Bhagwati, former Ambassador of India to Europe, raised the question why the International Monetary Fund (IMF) had been brought into the process to save Greece. While the move initially helped to mitigate internal political discord within the EU, it could now have an adverse effect.
Only one day after the compromise had been settled on July, 12 in Brussels, the IWF increased its estimate of Greece’s financing needs, suggesting that either a haircut would be required or - indeed, a Grexit. While the German government strictly refuses the idea of dept-forgiveness, Finance Minister Wolfgang Schaeuble kept on suggesting that a temporary Greek exit from the Eurozone would be a better solution than the current deal. The crisis in the Europe seems far from being over.
Nonetheless, Ambassador Cravinho remained optimistic. While he admitted that the current problem is "big" and it is "about the EU project", he also believed that "the EU has the strength to deal with Greece" and that it has come out stronger after every crisis it has been facing in the past.
(The report was prepared by Britta Petersen, Senior Fellow, Observer Research Foundation, Delhi)
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