George Papandreou replies to Merkel: he underestimated the crisis, did not understand her size

Merkel underestimated the crisis and did not understand its size is also argued by the former prime minister and points out that the dominant view of the EU at the time – that fiscal consolidation was enough – ignored the systemic dimension of the crisis.

In his announcement, Mr. Papandreou states:

“As always, as always Angela Merkel, even in the story of events, said 3 and half truths, which lead to three conclusions. More specifically:

First lesson:

Europe was caught unprepared- and did not understand the nature of the crisis.

The Greek crisis was not merely due to excessive expenses or borrowing. At its core it was a crisis of governance – with weak institutions, a lack of transparency (a typical example is statistics alteration), and serious deficits of democracy. Public resources were directed not to sustainable development and social cohesion, but they were exhausted through customer networks.

Unfortunately, these practices are still dominated by the ND government, which follows similar customer rationales, whether it relates to the resources of the recovery fund, agricultural subsidies, or direct assignments – undermining the credibility, prestige and future of the country and its citizens, as well as then.

This deeper dimension of the crisis was not perceived, neither by the markets, nor many European partners. Mrs Merkel herself recognizes that at first, she underestimated the crisis and did not understand her size (first truth). At the same time, there was a strong resistance to reforms from the domestic establishment. The dominant view was then that fiscal consolidation – the reduction of the deficit – was enough to restore confidence.

But this reading ignored the systemic dimension of the crisis. The European leadership – and especially Germany – initially approached the Greek case as an example for punishment, not as an opportunity for meaningful democratic reforms, as our government sought. Nevertheless, in 2010 we reduced the 5% deficit-a record performance for the OECD country. And yet the markets remained cautious. Why? Because the problem was not only Greek. It was a problem of the eurozone architecture itself.

Only when the crisis expanded to Ireland, Portugal, Cyprus – and threatened Spain and Italy – Europe began to understand its collective responsibility. What ultimately reassured the markets was not austerity, but Mario Draghi’s decisive statement: “We will do whatever we need” by supporting the member countries (second truth).

Second lesson:

– Greece became the easy scapegoat – but the crisis had deeper roots.

This was exactly what we were asking for then as a Greek government: more time, and political support for markets, not new loans, so that we can implement the structural reforms our country needed, after five years of waste, opacity and mischief. We wanted and shaped our own great change program. We demanded the support of our European partners to send a strong message of self -esteem over everyone.

But Mrs Merkel unfortunately did not realize those critical moments, that such a claim was not, as the “nothing” said, but the “always” for Greece, the fate of the EU. and the euro (that is, half the truth).

As the former Chancellor also admits, the European leadership was trapped in the then famous “non -rescue clause”, while she doubted the credibility of top European institutions. What tells us today is that the IMF’s involvement was its own choice, as a “harsh” and “independent” external observer, because exactly Europe did not have the know -how to deal with this unprecedented, systemic crisis (third truth).