Tassos Belessiotis made international economic problems tangible for Greek Yale students.
Belessiotis, the MacMillan Center’s European Union visiting fellow, gave a lecture titled “A Perspective on Greece’s Sovereign Debt Crisis” in Luce Hall on Tuesday. Belessiotisshared opinions on and predictionsaboutthe current Greek economic situation. As a former economic adviser for the European Commission and a member of the European Bureau of Economic Advisers, Belessiotishas advised economic policy for over twenty years.
Speaking to group of 25 attendees —undergraduates, graduate students, and alumni —Belessiotis noted how the current crisis particularly concerns the younger generation, including Greek students at Yale. The crisis affects employment for the younger generation and future Greek economic growth.
“What we see today is a continent that is awash in debt that cannot function unless its issues are resolved,” Belessiotis said. “The population is aging fast, and consequently, pension and social security cannot be honored,” he said, adding thatthis change is one primary cause of the current recession.
Belessiotis also raised two other sources of problems:governmentinefficiency and failure to reform. Complicated government bureaucracy is instrumental in preventing growth, he said, noting that government debt is projected to reach 90 percentof Gross Domestic Product (GDP) by 2011.Belessiotissaidthat the situation is frightening.
And if Belessiotis is correct, there may be no easysolution.
“It’s a scary situation. Solving this crisis is essential to ensuring a positive future — especially for our generation,” said Sharon Qian’14, who is considering a career abroad.
Belessiotis said no one knows how to resolve the crisis despite the large number of proposed fixes.Currently, each European country’s fiscal situation is monitored by five entities: the European Commission, Council of Ministers, European Parliament, European Union Counciland respective member states. Belessiotis said he was unsure how the economy spiraled out of control despite these buffers.
“It is difficult to see how this [crisis] could have happened when there are several checkpoints to prevent such a situation,” George Syrimis, professor of Hellenic studies at Yale, who introduced Belessiotis, said. The European Commissionreviews each nation’s fiscal policiesand can recommend changes, Syrimis added.
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During the 1990s, Belessiotis noted, Greek government debt slightly increased. But in the past year, the country’s deficit surged from 2.5 percentto 6.5 percentof its GDP. Greece is not the only European country to struggle with rising debt. Countries from Belgium to Irelandhave also reached a 60 percentratio of debt to GDP. Greece is projected to top these countries with the highest ratio by 2011.
“An orderly adjustment based on stabilization is what the country needs,” Belessiotis added. The European Financial Stability Facility, launched in May 2010, is a three-year measure to prevent further damages. Belessiotis said he hopes the 750 billion euro stabilization fund will help stabilize the economy for future growth.
China has invested large sums of capital in the Greek economy which Belessiotis said he believes is advantageous to both parties.
“Investing in Greece is not only cheap, but it gives [China] access to the EUas well,” he said.
Several Greek students raised concerns about the future of their home country and questioned if solving the debt crisis was possible.
“The situation is very difficult and fragile. It is difficult to know what will happen because only one shock has the power to destabilize everyone,” Belessiotis responded to student concerns.
Tassos Belessiotis will be teaching through the MacMillan Center for the rest of the 2010-2011 school year.