A ‘final hour’ plea for economic sanity and humanity from Thomas Piketty, Joseph Stiglitz and colleagues

They believe that the future of the EU is at stake in the negotiations between Greece and its creditor institutions.

In the Financial Times yesterday the need for both the EU and Greece to make concessions and “preserve the integrity of the Eurozone” was stressed by twenty-six concerned and experienced people, some of whom are seen below at a gathering of the OECD’s ‘High Level Experts on economic and social affairs.

stiglitz 2 etcThey are advocating forbearance and finance from the EU, to promote structural reform and economic recovery, and a “credible commitment” from Greece to show that, though it is against austerity, it is in favour of reform and wants to play a positive role in the EU.

With dismay, they have seen that a further six months of austerity is undermining Syriza’s key reforms. Instead of collaborating with the Greek government to overcome tax evasion and corruption, the EU has emphasised the need for austerity which has drastically reduced revenue from tax reform. Reduced resources have hampered the work needed to make public administration accountable and socially efficient.

Constant concessions to the EU mean that Syriza is in danger of losing political support and its ability to carry out a reform programme that will bring Greece out of the crisis.

The writers emphasise that it is wrong to ask Greece to commit itself to an old programme that has demonstrably failed, been rejected by Greek voters, and which large numbers of economists (including themselves) believe was misguided from the start.

They believe that Syriza is the only hope for legitimacy in Greece and warn that failure to reach a compromise would undermine democracy and result in much more radical and dysfunctional challenges, fundamentally hostile to the EU.

A revised, longer-term agreement with the creditor institutions is advocated, avoiding an inevitable default which would impose great risks on the economies of Europe and the world.

How Greece is treated will send a message to all its eurozone partners

Their prescription: a rapid move to a positive programme for recovery in Greece (and in the EU as a whole), using the massive financial strength of the Eurozone to promote investment, which would rescue young Europeans from mass unemployment with measures that would increase employment today and growth in the future. The writers believe that this could transform the economic performance of the EU and make it once more a source of pride for European citizens.

They end, “Like the Marshall Plan, let it be one of hope not despair”.

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