For years Georgios Papakonstantinou needed bodyguards to move around Greece. The former technocrat, who worked at the OECD for a long time, found himself propelled into one of the worst economic crises when he became Greece’s finance minister between 2009 and 2011. It was he who revealed that the deficit his country’s budget had been disguised in October 2009. He again who had to negotiate the first of three rescue plans for Greece, of 110 billion euros, to avoid the bankruptcy of his country. The conditions imposed by the donors – the International Monetary Fund and the European Union -, with very harsh austerity, earned him the resentment of the Greeks.
Twenty years after the euro was launched as a fiat currency – banknotes and coins entered into circulation on 1is January 2002 – the one who is now a professor at the European University Institute takes stock of the single currency.
Twenty years after the launch of the euro banknotes and coins, what is your assessment?
It is a success, in the sense that the euro is used more and more and its existence is not in doubt. But the single currency crisis (2010-2015) highlighted its construction flaws. Economists had spoken about it when it was created, but until then we had pretended to ignore them.
When you reveal that the Greek deficit is bigger than stated in the statistics, do you expect to trigger a major crisis?
Absolutely not. We thought we were going to have an adjustment of just a few years. We had not understood that the fiscal crisis was hiding a deep crisis in Greek institutions.
Has the reaction of the rest of the European Union not made the crisis worse?
There were structural problems in Greece and a recession was inevitable. But we were very frustrated to see that the donors did not give us time to redress the country and that they did not want to see the responsibility of the euro zone. The structural adjustment program could have been spread over a longer period to reduce austerity. Our debt could have been restructured more quickly, to reduce the cost.
During the first six months of the crisis, Europe saw this only as a Greek problem, not as a eurozone problem. The Germans refused to say that they would not let us go bankrupt when, on the contrary, the “bazooka” would have had to be released by guaranteeing that there would be no exit from the euro zone, in order to curb the contagion. of the crisis. Lowering wages and pensions in Greece was not enough …
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