Liberal MEP: You can never guarantee that default is ‘orderly’


The United Kingdom is the third-largest lender to Greece and must accept its responsibilities by supporting the country's bailout, says British Liberal Democrat MEP Graham Watson, adding that any solution linked to an 'orderly default' is too risky.

Graham Watson is the former leader of the liberal ALDE group in the European Parliament, which during his term managed to substantially increase its number of MEPs.

He was speaking to EURACTIV's Georgi Gotev.

What is UK Prime Minister David Cameron trying to achieve at this summit?

I think what David Cameron is trying to do is to reassure taxpayers at a time of great national financial trouble that they won't have to pay too much more into the European Union budget.

I think what he fails to recognise is that normally when spending at European level we make savings at national level. If instead of 27 different armies and navies and air forces we combine our forces, then we save money on defence spending. If we invest jointly in electricity distribution networks and broadband distribution networks, then we save national taxpayers' money, which they would otherwise spend more of nationally.

In the case of Greece, if Britain is not on board with the rescue plan, what are the risks? If there are problems for the euro zone, obviously there will be also problems for the United States, China and the UK as well…

In the case of Greece, the United Kingdom is clearly involved in the rescue package through its membership of the IMF, and it may well be involved in the rescue package both through private bond holders and public subscription to renew Greece's loans.

There is no way that the United Kingdom can escape from its responsibility to help another member state, even if it is not a member of the euro zone.

Do you think that this strategy of saving Greece by the EU/IMF plan is better than, say, an orderly default with the Greeks taking responsibility for their own destiny? They are a proud people and maybe this is a better solution. At least some Greeks say so.

The problem with any default is you cannot guarantee it will be orderly. And what people are worried about is a run on certain banks, particularly three French banks, one Belgian bank, possibly even one or two British banks, which are heavily exposed to Greece.

The United Kingdom is the third-largest lender to Greece and must bear its responsibility in that. But my view is that a rescue package for Greece has to be a joint effort of all the member states and those who currently hold Greek obligations: that has to give the country hope of a better future. It must include an investment package to relaunch the private sector in Greece.

In fact that's a big problem. Guy Verhofstadt, the leader of your political group, was pointing out the fact that the Greek economy is at a standstill. Do you think that the EU package as such will make the Greek economy work again?

I think the problem with the EU package at the moment is that it does not give any hope to the Greeks that they can have economic growth that will allow them to pay off their debts in future.

And what Guy Verhofstadt and President Barroso are arguing is that we should be putting together an investment package for Greece to make sure that in future they will have the strength in their economy to service their needs.

Do you believe in plans to sort of run Greece as a Third World country?

I welcome the rather belated move towards economic governance that will allow us through the pressure of all member states and the United Kingdom to take control of the economy of any country which irresponsibly fails to abide by its commitments in the treaties to running balanced budgets.

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