Prime minister of Greece: 'There is real danger in global austerity'

Indeed, there is a paradox here which creates deep problems in our political systems. All of us are more and more aware of common problems, which is good, because that means that there is a sense of solidarity, an understanding of the things we need to do. But, at the same time, since these problems are on a global scale beyond the control of our national political systems, we don’t have viable tools to respond effectively. In this sense, more information can mean a result in a sense of powerlessness.

Europe, for example, is trying to move to a supra-national level. But, even as a whole, Europe can’t determine the fate of the planet’s climate. We have no true sovereign control over our financial system in the global credit markets. We don’t have effective governance concerning immigration.

Of course we have bodies which try to deal with all of these issues, but, by and large, they are not effective because the scale of governance is different than the scale of the problem. So we end up fighting over the best way to proceed. Should we be more centralized, or should we create structures of governance which allow for more decentralized control? Can democracy be as effective facing the issues thrown our way by globalization as authoritarian political systems? These are the dilemmas we will have to face as we move into the future.

'Years of mismanagement'

Skafidas: It took 20 years — ironically, the time span Homer assigned to Odysseus to sack Troy and return home — for Greece to undo the confidence of a reunified Europe born in the wake of Communism’s demise.

Papandreou: It is wrong to assume that a small country like Greece — which represents just 2 percent of Europe’s GDP — could be responsible for “undoing the confidence of a unified Europe.” The recent crisis in Greece is part of a broader sovereign debt crisis in Europe that, it is true, also reflects a deeper institutional and identity crisis. Despite its shortcomings, the EU is proof of the positive effects of multilateral cooperation — overcoming centuries of conflict to achieve shared peace and prosperity. That is an example for those parts of the world still mired in the kind of tensions that once divided this continent.

Skafidas: Economist Nouriel Roubini argues that Greece’s sovereign debt crisis is only “the tip of the iceberg.” Do you believe that Greece is a special case, or it is part and parcel of a general Western over-indebtedness — excepting Germany?

Papandreou: Unlike many countries that ran up debts to bail out their banks in 2008, Greece’s debt has come from years of economic mismanagement — wasteful government spending, an inefficient public sector, chronic tax evasion. Many other developed countries have unsustainable levels of debt that will require tough decisions in the short term to guarantee viability in the long term. But cuts alone will not be enough to safeguard the global economy. We also need measures to stimulate growth and create jobs. Instead of collective austerity, we need global responsibility.

Governments and international bodies must protect the real productive economy from excessive risk-taking, speculation, and short-term profiteering in the financial sector. Many of us have said over the years that you can’t just have a monetary union in Europe; you need to have a real political union which will coordinate not only the economic policies but social policies as well. In short, we need the coordination of overall governance. This is just a highlight of what I was saying about the globalized society.

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