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No “plan B” to avoid Greek economic default

The European Union continues to be ready to support Greece. But Europe can only help Greece if Greece helps itself.

While this week’s Parliamentary vote is crucial to avoid immediate default, Greece and its European partners need to focus on enhancing sustainable growth. The initiative of President Barroso to use of structural funds for investment in a front-loaded manner responds to that objective. The Greek Memorandum also includes several measures to enhance growth through structural reforms in product and labour markets, and by opening up previously closed professions.

The preparation of a new programme will intensify in the coming weeks. I believe that the constructive proposals coming from different sectors of Greek society need to be listened to and taken into account. It is vital to build a broader societal consensus and cross-party agreement on the reforms needed to put Greece back on a path of growth and sustainable development.

This is also about social justice. One crucial challenge is to fight tax evasion and encourage real entrepreneurship that supports honest work. I therefore support the government’s objective of reforming and simplifying the tax system from this autumn. The reform should aim to simplify the tax code, broaden the tax base and reduce tax rates in a fiscally neutral way. If the expenditure containment objectives are achieved and surpassed, this will then pave the way for a more growth-friendly tax system.

All in all, the Greek people and their democratic representatives now face a critical choice. Reforming the economy is certainly challenging, but it remains a far better alternative than a default, which would hit the most disadvantaged and vulnerable hardest. I therefore call on Greece’s political leaders to assume this responsibility, and at the same time to look for next steps and to create a necessary political consensus, taking the whole nation forward to overcome the current challenges.

Olli Rehn is the European Union Economic and Monetary Affairs Commissioner.


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