Legal Challenge to Greece Aid
'The Greeks Would Be Well Advised to Exit the Euro Zone'
Germany's high court on Tuesday began hearing a legal challenge to the 110-billion-euro aid package provided to debt-stricken Greece in 2010. Retired economics professor Joachim Starbatty is one of those behind the case -- and he expects the court to prove him right.
SPIEGEL ONLINE: Mr. Starbatty, the Greek parliament last week passed a €78 billion
package of austerity measures in return for billions more in aid from the European Union.
Starbatty: By approving the package, the parliament decided against the will of the people. But only because it was blackmailed by Greece's
partners in the euro zone.
SPIEGEL ONLINE: Is it not legitimate for governments in Europe's
common currency zone to want to see a Greek contribution to solving the problem before releasing billions in aid money?
Starbatty: The financial assistance is only there to save the European banking industry. The EU is throwing massive amounts of good money after bad. But it is the Greek people who must endure the brutal belt-tightening measures. I don't consider that to be legitimate.
SPIEGEL ONLINE: Should the German high court side with your view and no longer allow Germany to participate in providing financial assistance to debt-stricken euro-zone countries,
Greece would likely become insolvent in a hurry. The monetary union as a whole would also be endangered.
Starbatty: Greece is already broke. The country needs to be given a chance to get back on its feet economically. I expect the court will establish parameters in order to limit the economic nonsense.
SPIEGEL ONLINE: Some representatives from Chancellor Merkel's conservative Christian Democrats and from her coalition partners, the business-friendly Free Democrats, are demanding the same thing. But is the idea at all practicable? Such a requirement wouldn't exactly strengthen faith in the euro zone within the financial markets.
Starbatty: It is much more important that citizens regain their faith in the political process and in the common currency. If the political process is reliable, the financial markets will also react positively.
SPIEGEL ONLINE: Is there an alternative to providing financial assistance to Greece, Portugal and Ireland?
Starbatty: The euro backstop only buys time -- time which is not being used. The Greeks would be well advised to exit the currency union of their own volition and to devalue their national currency, the drachma. That way, they could forcibly reduce their debt. If we continue down the path we are on, billions and billions more will become necessary. That is also true of Portugal and Ireland -- and maybe even for Spain.
SPIEGEL ONLINE: Were Greece to exit the euro zone, wouldn't the financial markets take aim at other deeply indebted countries and trigger a collapse of the entire currency union?
"domino theory" only exists to mislead people. Will Finland or the Netherlands fall too? Only those countries that are already deeply in debt are affected. Any further delay will merely drive up the costs.