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Business Daily: Don't Bail Out Greece

02/02/2010

Don't Bail Out Greece

BBC World Service - Business Daily, Don't Bail Out Greece

Architect of the Euro, Otmar Issing warns against any bailout for Greece.

Dr.Otmar Issing, one of the architects of the European single currency, warns against any bailout for debt-laden Greece. He says Greece must undergo reforms which will bring 'blood and tears'.

The dire public finances of Greece have implications beyond its borders, on the  exchange rate of the Euro, and on confidence in Europe's single currency system. 

Doom-merchants conjure up scenarios where Greece defaults on its debts and destabilises the Euro, or even abandons the Euro.

However the Greek government has managed to raise money on the bond market, and it has come up with a series of austerity measures which the European Commission is to judge later this week. There has also been speculation about a possible financial bailout by the European authorities. 

Nations which join the Euro are meant to prove their worth by sticking to rules on the size of their budget deficit and national debt.  

But as the BBC's Ed Butler reports from Athens, it is clear that Greek statistics have been unreliable for years. 

So should Greece have been refused entry to the Euro back in 2001? Lesley Curwen talks to one of the Euro's principal architects, Dr. Otmar Issing, founding member of the Executive Board of the European Central Bank, who wrote a book about the 'Birth of the Euro.'  

He says the jury is still out on whether Greece should have been allowed to join the single currency. And he warns against any bailout, saying that Greece must undergo economic reforms that bring 'blood and tears'. 

Plus Otto Fricke, the Chief Whip of Germany's Free Democratic Party explains his party's support for the idea of tax cuts, even when the public finances are depleted.

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