After this week's EU Summit, “uncontrolled default is very unlikely to happen for at least the next 1-1,5 years", thinks Vasilis Tsaprounis. But the debt is a serious topic that the society will have to work on. The necessary reforms could provoke a great change in the Greek society which is “fed up with all the irrational and unfair practices” of a small part of the society.
Vasilis is Greek and he gives us his views about his country's situation, the debt, the necessary reforms, the public opinion but also the EU and its management and future: “Perhaps, the crisis will give the opportunity to incubate the Eurozone leaders of tomorrow.”
Now Head Analyst and Institutional Relations Manager at Zulutrade, he has a long experience in financial projections mainly in the area of global capital markets. He has also been presenting seminars in topics related to Forex, Stocks, Portfolio Management and the Banking Sector.
Do you see the possibility of Greek default occurring despite the 50% haircut agreed upon at the Wednesday EU summit?
The decisions taken on Wednesday regarding the future of the Greek debt are of intense importance. Before this E.U. summit it was more than obvious that markets were moving in the pace of a 90-95% probability of Greek default . Therefore, everyone wished that the Greek default would be, so as to avoid devastating results. My belief is that an uncontrolled default is very unlikely to happen, after these decisions, for at least the next 1-1,5 years. The decisions that took place in Berlin were strictly made for the Greek debt to become sustainable (that is 120% of GDP for the year 2020, compared to 190% now). It is evident that sufficient time will be given to examine the feasibility of the debt target.
Do you consider Greece capable of implementing all the budgetary reforms required by the Troika, despite the citizens strong opposition?
It is absolutely true that reforms that have to be made in Greece in order to meet the debt/GDP targets by 2020 are of great difficulty. The harsh truth is that a small - but of great influence - portion of society is used to squander public money. The above-mentioned small group of society are of high connections and will try to destroy any corrective attempt, so as to continue to live an over-luxurious life, full of corruption and wasting of public financial assets.
And do you think that vices can be eliminated?
My personal point of view is that the Greek society has not only realized the parasitic existence of these small groups, but is also fed up with all these irrational and unfair practices. Therefore it is high time Greek citizens found determination to put them aside. Of course, it is harsh to erase attitudes that have been well established for over three decades. We will need enough time and organization but mostly, it is something that will not ‘disappear’ out of the blue. I consider that by the easy or the hard way, targets as well as behavior changes will be met. After all, the message that is dominant in the Greek society right now, is ‘We welcome the change, or we get back to drachmas’.
What are, in your opinion, the next steps Greece should follow to restore its financial stability?
Even with great delay, Greece should proceed to the necessary fiscal reforms, in order to strengthen the private sector. It is of great importance that the Greek senior officials acknowledge that the problem has been routed in the huge, bureaucratic public sector and make an effort to focus on this. Furthermore it is an obvious fact that implementing tactics which lead to deep recession and an extinguished private sector will burden the probabilities of returning to growth.
What do you thing the EU should do to shore up Greece?
The EU is expected to support Greek entrepreneurship by offering appropriate liquidity to the bank system and the necessary development funds.
Do you see the current crisis as the end of the EU or at the contrary that it will come out of stronger this situation?
The crisis we are tasting nowadays is without a doubt setting under question the evolution and the integration of the EU vision. After all it may become an opportunity of getting the EU back in track. It is a great truth that only within a major crisis would be possible for so many different people, countries and cultures to accept being directed and maybe (why not, later) lead by people of different nations. It is my belief that a federal implementation policy is a kind of one-way path for the EU vision and maybe the best for the weaker members of it.
What do you expect from the ECB new President Mario Draghi?
Despite his conservative “German-French’ background, Mr Trichet has been a vivid supporter of the peripheral Eurozone members - an attitude that brought him several times in opposition to Ms Merkel and Mr Sarkozy. Due to his Italian origin, Mr Draghi is supposed to provide further assistance to the EU peripheral zone members.
How do you think Draghi will drive the ECB compared to Trichet?
I consider that Mr Draghi’s US professional background will lead to a more flexible monetary policy on behalf of the EU. It is widely known that Mr Trichet’s rigid monetary policy, accompanied by the single mandate of ‘price stability over growth’, created many dangers for the EU economy. Mr Draghi’s US expertise makes him familiar with the dual mandate of FED (price stability and growth). Therefore he might not be stacked only by inflation issues, but with growth as well.
Merkel, Berlusconi, Sarkozy, Zapatero, Papandreou, Trichet, Passos Coelho, Barroso... too many people on charge of too many citizens with too many voices, opinions and no real resolutions, do you see any lack of leadership in the heart of the European Union?
Unfortunately, the crisis deficit in EU seems to be bigger in terms of political leadership, than in terms of financial debt. The EU political leaders are being proved to be good enough for their own countries but incapable of incarnating EU vision. Perhaps, the crisis will give the opportunity to incubate the Eurozone leaders of tomorrow.