Former Greek Finance Minister Warns of Trouble in Europe

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Last week, the former Greek Minister of Finance, George Papaconstantinou, offered some insight on economic and political crises to SAIS students. His visit came less than a month before the Italian Constitutional Referendum, an event which has many parallels to the Greek crisis.

Papaconstantinou briefly discussed his book, “Game Over: The Inside Story of the Greek Crisis,” a political thriller about his experiences as a finance minister during the Greek debt crisis. Though his book is specific to Greece, Papaconstantinou emphasized that “this is a broader story about Europe and its future.”

In addition, two economists from the University of Bologna, Paolo Manasse and Luigi Marattin, joined Papaconstantinou to discuss the economics of the Greek crisis and its implications for the rest of Europe, especially in regard to the populism dominating European politics today. “Not everything can be fixed when you make the wrong choices in fiscal policy,” Marattin explained. “It takes a moment to derail fiscal stability, but it takes much longer to consolidate it.”

Recent polls show that the “no” camp maintains a fairly strong lead ahead of the upcoming Italian Constitutional Referendum on Dec. 4. Following populist victories such as Brexit in the U.K. and Donald Trump’s election in the U.S., political turmoil in Italy is certainly a possibility.

In Greece’s case, it is particularly difficult for the government to stave off populism and political crises while being constrained by austerity measures.

Konstantinos Koutsantonis, a SAIS MA student from Lesbos, Greece, asked about Greek tax policy and reforms as he was “not convinced” about the progress made by the Greek government. “I’m willing to argue that a lot has been done to combat tax evasion, but the results take a long time,” Papaconstantinou explained.

Papaconstantinou emphasized his pessimism about the crisis, as the both the economy and the political system in Greece have been turned upside down. Since 2009, there have been three bailouts, four elections and a referendum. Unemployment remains near 25 percent, with youth unemployment close to 50 percent, and the debt-to-GDP ratio is 170 percent.

The Greek crisis has raised some important questions that SAIS students need to answer and be aware of as we enter the field of international relations. Was this a Greek crisis or a European crisis? Was Greece made an example that Europe should follow? Could the bailouts have been avoided? What are the effects of financial crises on democracy?

“We live in the age of populism,” said Papaconstantinou. “We’re seeing it across Europe; we have an increasing suspicion of democratic institutions.”

Colin Nickells is a MA student concentrating in International Political Economy at SAIS Bologna.


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