ECONOMY

Europe must learn from Greek crisis errors, say Poles

Poland’s finance minister raised doubts on Saturday about Europe’s handling of the Greek debt crisis, pointing to too much emphasis on austerity, too little focus on growth and a short-sightedness in some nations.

The comments by Jacek Rostowski, a British-born economist and academic, have added resonance as Poland took over the six-month presidency of the European Union on Friday. Rostowski will now chair meetings of EU finance ministers and hopes to take part in critical talks among euro-zone finance ministers.

Speaking to the foreign media in Warsaw, Rostowski suggested several missteps had been made in trying to restabilise Greece, saying he was concerned that not enough was being done to bolster Greek gross domestic product and that there had been too much attention focused on cutting spending and raising taxes.

“It’s clear that everybody has made mistakes over the past year and a half,» he said. «We’ve all been behind the curve.

“The International Monetary Fund has a huge amount of experience in how to run these things (rescue programmes). There are lots of things still that we can learn from the way the IMF does things,» he said, without going into specifics.

“In Greece, you need consolidation and growth. You address the debt-to-GDP ratio either in the nominator or the denominator, and really you need to introduce it in both.»

Rostowski’s comments reflect growing concern among EU officials that the strictures being imposed on Greece, including 28 billion euros of austerity measures between now and 2015, are too harsh and may inflict fatal damage on its ailing economy.

The EU and IMF lent Greece 110 billion euros of emergency loans in May 2010, with the next installment due in the coming weeks to stave off the imminent threat of default, but Athens now needs another package of a similar size.

Support for the Greek, Irish and Portuguese bailouts has deteriorated sharply in some euro zone states, most notably the Netherlands and Finland, creating domestic political problems and deepening a north-south divide in the currency area.

Without naming names, Rostowski said some opposition parties had shown a «breathtaking short-sightedness» when it came to taking decisions to support Greece, a position he said had threatened the stability of the entire 17-country eurozone.

“We really do need to start thinking in terms of our common European interest, which would be massively threatened if we failed to take this action,» he said.

“There is a growing estrangement between the north and the south and we have to be very careful that this does not continue amplifying, it’s got to be politically brought under control.

“It’s about defending the common interest, not allowing the common interest to go down the drain because of excessive particularism,» he said.

Poland, a powerhouse economy in central and eastern Europe, with steady growth of around 4.0 percent and a growing stock market, is expected to fulfil the fiscal criteria for joining the euro as early as next year.

But Prime Minister Donald Tusk has made clear Warsaw will not be joining until the euro zone has restabilised and has put in place new mechanisms for assuring its long-term stability, a date Rostowski said could be more than five years away.

In the meantime, he said Europe needed to focus hard on passing the stricter debt- and deficit-monitoring procedures contained in legislation now before the European Parliament, and had to reexamine the crisis-control measures it is adopting.

“The key element of the difference between the European approach and the IMF approach is that the IMF has been more proactive, has tailored programmes more, bringing in programmes that are not seen as the first step towards bankruptcy.

“In the case of our European programmes, that has not been fully achieved. They must change their character and by doing that, change the way they are perceived,» he said.

Drawing on his education at a fee-paying British school, Rostowski said the charged political atmosphere in Europe might lead to a breakthrough if only leaders could see that solidarity was also part of «enlightened self-interest».

“What we want to do is to say, this is a common problem for all of us, we all benefit if we resolve it and we’re all going to lose dramatically if we don’t resolve it.

“It’s the self-interest of being in the team and working together to achieve what only a team can achieve, as opposed to the self-interest of everyone pulling their own way or direction. That’s something they teach you at British public schools and it’s something that Europe could benefit from.»

[Reuters]