bjbjLULU JEFFREY BROWN: So, what does it all
mean? We’re joined now by the European Union’s ambassador to the United States, Joao Vale
de Almeida, and Scheherazade Rehman, director of the European Union Research Center and
professor of international finance at George Washington University. Welcome back to both
of you. SCHEHERAZADE REHMAN, George Washington University: Thank you. JOAO VALE DE ALMEIDA,
European Union Ambassador to the United States: Thank you. JEFFREY BROWN: Mr. Ambassador,
here we are again, a new announcement, a new deal. What does this one mean? Does it signal
an end, the beginning of an end to the troubles of Greece and Europe? JOAO VALE DE ALMEIDA:
I think this is good news, in the sense that we’re trying to address a very complex and
difficult situation in Greece. We’re trying to prevent contagion to other countries of
the euro area. And we’re trying to build the conditions for sustainable growth in Greece.
This is what we’re talking about here, dealing with an urgent situation, an emergency situation,
but looking ahead to longer-term solutions for Greece competitiveness, capacity to have
sustainable growth in the future. JEFFREY BROWN: Scheherazade Rehman, still doubts,
though? We heard in that piece, we hear it all over the place still doubts about whether
Greece can grow out of this, their ability to stick to the deal, et cetera. What do you
see? SCHEHERAZADE REHMAN: I think those doubts are very, very real. And it shows up in the
plan in terms of having the troika, which is the IMF, the European Central Bank, and
the European Commission, representatives on the ground overseeing this new bailout package.
I think there is enormous distress and mistrust about what’s going to happen down the road
and if the Greeks are going to stick with the plan. There’s an election coming in April.
And we don’t know what the new government is going to do. There’s enormous pain on the
ground at this point. JEFFREY BROWN: There is a sort of extraordinary, I guess, presence
now of the European Union in Greek — in Greek government, in Greek society, a very unusual
situation. JOAO VALE DE ALMEIDA: I think we’re talking about a situation in which one needs
to find the right balance — balance between solidarity and responsibility. Solidarity
is what Europe is showing, together with the IMF, towards a country in difficulty. Responsibility
is what Greece must show, has been showing, I must say, and needs to continue to show
in order to ensure the credibility of the measures that we’re taking over there. JEFFREY
BROWN: But how worried I mean when you say there’s still these doubts, still doubt about
whether Greece will default? SCHEHERAZADE REHMAN: I think that many, many people, including
the markets, believe that Greece will default at some point. And what this 130 billion euro
bailout was, was buying time in order to have the Europeans manufacture some kind of a structured
default, as opposed to a disorderly default. To some extent, some of the debt has already
been written off. And more debt has been now added on to Greece. And, at this point, I
can’t see how they can pay this back, given the fact that growth at this point is nonexistent,
given the austerity packages. JEFFREY BROWN: Do you think default is still possible? JOAO
VALE DE ALMEIDA: Well, I’m not able to predict the future. And I don’t think any of us is.
We believe that this is the right track for Greece. By the way, I don’t see an alternative
track for Greece. Let me just point out to one point that sometimes I listen in the debate
here. For us, there is no opposition between austerity and growth. That’s the wrong choice.
We need both. We need austerity now in Greece, because there is no other alternative to restore
credibility to the public finances of Greece. But we need growth. So, at the same time,
what we’re doing in Greece, what the Greeks are doing is implementing structural reforms,
you know, looking at the labor market, at the pension system, opening up the economy,
breaking down barriers to competition. All these are the conditions for hopefully sustainable
growth in Greece. We don’t want bubbles of growth. We want to create the conditions for
Greece to be able to recover its place in the world economy . . . JEFFREY BROWN: But
is there more discussion about whether there has been too much focus on austerity? I mean,
there is more discussion certainly about it. I’m wondering whether, in high official circles,
there is more discussion now about whether there is too much focus on austerity, making
it impossible for these countries to grow. JOAO VALE DE ALMEIDA: Again, one thing is
not opposed to the other. Austerity is not opposed to growth. And if you look at the
last European Union summit in January in Brussels, it was all about growth. It was all about
creating the path towards sustainable growth in Europe, and reforming our economies and
reforming labor markets, pension system. All this needs to be done. And it’s not only in
Europe. All industrialized countries have these kinds of problems, I believe, including
the United States. JEFFREY BROWN: What do you think about this austerity-vs.-growth
balance? SCHEHERAZADE REHMAN: Well, I think on the topic of Greece having no option, the
ambassador is absolutely right. At this stage of the game, they have no option other than
to instill these packages to get — regain credibility. But I do believe that the austerity
packages being put into place again in Greece and in other countries in 2012 will definitely
curtail the growth. I can’t fathom how you can do such severe austerity packages, yet
say that we’re going to stimulate growth and create jobs. The only reliance on that is
if foreign money comes in. JEFFREY BROWN: So when they talk about a new firewall, which
was a big part of the discussion in Brussels the last couple of days, there’s still a potential
— that’s a firewall against the possibility of more countries falling into trouble? SCHEHERAZADE
REHMAN: Well, the bailout was a firewall to keep Greece solvent right now, but there is
a fund, the European stabilization mechanism, which is in place for almost about a trillion
dollars if you add in all the money. It’s a firewall for Italy and Spain. Unfortunately,
I don’t believe that’s enough money if Italy does have some severe problems. JOAO VALE
DE ALMEIDA: I would like to add to what Scheherazade said. She’s absolutely right. We are talking
about different kinds of firewalls. We need now to address the more global firewall. And
I’m sure our leaders will be able to increase substantially what is foreseen in order to
create the critical mass. But let me give you a couple of examples of more positive
ones. JEFFREY BROWN: Okay. JOAO VALE DE ALMEIDA: If I take the case of Latvia, one of our member
states, that went through a very painful, rigorous program, in 2009, they had a contraction
of the economy of 17 percent. In 2012, last year, they had a growth of 5 percent. So,
in a couple of years, they were able, through major sacrifice — I recognize that, but they
were able to restore the credibility of their economy. If you look at Ireland, for instance,
in the last three years, they came from negative growth to a minor, but still relevant positive
growth in 2011. JEFFREY BROWN: But, to play devil’s advocate, in your country, in Portugal,
the growth is very — is way down. JOAO VALE DE ALMEIDA: Well, Portugal has started a program
last year. They’re doing whatever is needed. JEFFREY BROWN: In Spain, the unemployment
is very high, big problems. JOAO VALE DE ALMEIDA: I’m not saying — I’m not complacent about
the difficulties. And I have enormous respect for the sacrifices that the populations of
these countries have to go through. But there is no alternative to an effort now in order
to create conditions for future growth. How long it will take, I cannot predict. I hope
it’s sooner than later. But these are necessary steps in order to get to that level. JEFFREY
BROWN: Do you worry — I will start with you, Scheherazade — about a kind of — a cultural
rift that we’re seeing, in Germany, Germans feeling like they’re — and Margaret Warner
found this in her reporting for us — feeling like they’re being asked to pay too much,
Greeks now feeling rather humiliated in some cases about what is being imposed on them?
SCHEHERAZADE REHMAN: Well, you know, I think there is some truth to all of this. And the
ambassador is absolutely right. There is no other alternative, other than the structural
reforms that have to be put into place. The question is moving forward. And we know, the
last two years, there have been some mangling off of how this was all handled. This is not
just a structural reform happening. This is a crisis happening. And there was very little
crisis management. And what my biggest fear is that they still have not got the tools
in place to manage the markets. It seems to me that the market is a secondary thought
in — at least from the outside, looking at some of these policies and these summit measures
that do come out, that the market needs to be managed in a very clear, precise way, so
that the anxiety and the confusion and the confidence is rebuilt. But none of that is
taking place in a manner which I think would be much more effective. JEFFREY BROWN: Very
brief last word? JOAO VALE DE ALMEIDA: The last few weeks were encouraging from that
point of view. And I agree with you. It’s very difficult to manage the market. Neither
Europeans, nor Americans seem to be able to do that. And maybe that’s not the purpose.
But if I look at the last few weeks, after we have agreed on a new treaty, after the
ECB has provided very ambitious and courageous interventions in the market, what I see in
the stock exchanges, what I see on sovereign debt spreads points to the right direction.
I hope this trend will continue. . . JEFFREY BROWN: All right, Ambassador Joao Vale de
Almeida and Scheherazade Rehman, thank you both very much. JOAO VALE DE ALMEIDA: Thank
you. SCHEHERAZADE REHMAN: Thank you. urn:schemas-microsoft-com:office:smarttags PlaceType urn:schemas-microsoft-com:office:smarttags
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place JEFFREY BROWN: So, what does it all mean Normal Microsoft Office Word JEFFREY
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