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Global Viewpoint

Greek debt crisis is a European problem – with a political solution

If Greece goes bankrupt, what lies ahead is an economic and political crisis worse than that of 2008. Solutions exist. Europe is in dire need of the political courage to implement them.

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For all this, alas, it is too late. If we let Greece go bankrupt, the euro will disappear. The very principle of the European Union will be challenged. Unemployment will rise again, including in Germany, which has up to now benefited from an undervalued euro. If we let Greece go bankrupt, what lies ahead is an economic and political crisis worse than that of 2008. It is therefore necessary to change our perspective. We must stop thinking of the Greek problem, and start thinking of the problem of the European Union. Solutions exist.

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Political solutions for financial crisis

We are only in dire need of the political courage to implement the following:

1. Establishing a European Ministry of Finance;

2. Launching a “European Brady plan” (named after the American treasury secretary who negotiated Latin American’s debt restructuring in the 1980s) that would involve issuing European treasury bonds that would stretch out the debt payments of Greece, Portugal, and Ireland for 20 years and finance European investments;

3. Assessing a broad-based European Value Added Tax at a modest rate (1 percent) that would raise the necessary funds to repay the debt.

Though collectively the world’s largest economy, Europe cannot compete in a world dominated by America and China unless it proactively resolves the present crisis and acts as a unified political entity. In short, the solution to Europe’s economic challenge is political.

Jacques Attali was founding president of the European Bank for Reconstruction and Development.

© 2011 Global Viewpoint Network/Tribune Media Services. Hosted online by The Christian Science Monitor.

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