Grappling with Greece

Anchor: Let’s go back to Greece now. While it may not be attending the G-8 Summit in the U.S. this weekend, its financial crisis will figure prominently in the talks. So let’s take a deeper look at Greece’s debt problems now with a man who knows the country well. Daniel Speckhard was the U.S. Ambassador to Greece for three years, beginning in 2007. He joins us now live from Washington. Mr. Speckhard, we’ve used the word ‘optimistic,’ oh it feels like forever now, when we talk about Greece, but how optimistic are you that these G-8 leaders could possibly reach some kind of a consensus on how to deal with the Euro debt crisis?

Daniel Speckhard: I think that, like many people, I had been optimistic, but I am turning more pessimistic. What’s happening now is that there is a dispersion of the political events with the economic events, meaning that the concern what’s happening on the political side in countries is no longer matching the needs on the economic front. So in the United States, we have elections coming up, so the United States is a bit tied in terms of what it can do in terms of putting more resources towards this problem. And in Germany, you heard earlier about the challenges they face with their political electorate and devoting any more resources to a situation like Greece. At the same time, the economic situation seems to be spiraling a little bit in a dangerous downward trend. And in particular, it’s not just Greece, but it’s the concerns what’s going to happen if this moves into Spain and Italy.

Anchor: And you know, the political instability. And then there’s talk about its cost cutting, but now more critics say there needs to be spending. You’ve been the U.S. Ambassador to Greece, what’s your take on what direction this should be going in?

D. Speckhard: Well I think that’s right and I think it’s a little late in the context, which is five years of austerity and recession for Greece. They have made significant cuts in their budgets. Wages have been cut both in the public and the private sector. Pensions have been cut. The people are really hurting in that country and it’s been going on for quite some time. The problem has been with each new bailout and with each new measure, because of the austerity, the growth gets less each time that the targets keep getting missed and they have to cut more. So I think Greeks are starting to feel that this isn’t working and whether that’s a fair assessment or not, it’s their reality and so what you see is people in Europe talking about the importance of growth. The challenge is when they talk about growth, they’re talking about investment in infrastructure, and investments in the broader economy. Those take a little time to work their way into the system and the challenge is, on the political side, we don’t have a lot of time.

Anchor: And trying to understand the reality, what are the chances of Greece leaving the Euro Zone?

D. Speckhard: Well, I think that’s become a real serious possibility. Some put it as high as 75 percent. I’d still put it in the 50-50 range, partly because I believe the European leaders, as we move forward over the coming weeks, are going to see the tremendous cost to their countries and to the global economy and the European economy of the departure of Greece and try to do a lot more to make something work both for them and for Greece to be able to stay in the Euro Zone. But again, politics are working against us again here. As you’ve seen in Greece, the radical left is moving very forward in the polls, and if you can’t get a government together that is willing to work constructively with the Germans on this, you’re going to have a very difficult time finding a solution.

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