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Victoria Mindova

Elisabetta Pique is a correspondent in Italy for the Argentinean newspaper La Nación, but because of the political turmoil in Greece, she visited Athens to closely examine the problems in the country, which is threatening the stability of the euro area. GRReporter asked her opinion about the developments in Greece in order to find parallels among the problems in the Mediterranean country now and the crisis in Argentina in 2001.

There are some pretty obvious similarities between the Greek crisis and the one in Argentina eleven years ago – big sovereign debt, lack of competitiveness and growing social discontent. Argentina defaulted, left the dollar and devalued the peso. Is this an option for Greece in your opinion? Why?

There are a lot of similarities between what Argentina experienced in 2001 and what Greece is going through right now. The main difference though is that Greece is in the euro zone. The country is a member of that political institution in a wider sense. In the heat of the crisis, Argentina was alone with the peso. This makes the situation of Greece totally different from the Argentinian situation back then.

Other than that, Argentina is a much bigger country than Greece. We have many more natural resources than Greece. You are right that there are similarities such as the high debt, the low competitiveness, the corruption. Argentina was also receiving external help in this period, as is Greece now. So, I can understand that there is a growing discontent against this kind of help that does not help in reality.

In Argentina, there was some kind of hatred against the financial help from the International Monetary Fund, because it gave a recipe that would not work. It is the same here but in combination with the lack of confidence in political parties. The case of Greece reminds me of Argentina because the politicians are totally incapable of solving the situation. The people are scared and they are withdrawing their money from the banks. The frustration of the people, the uncertainty, the agony over what will happen tomorrow was the same in my country in 2001.

What would be the consequences for Greece and the Greek people, if the country followed the Argentinian model? What are the pros and cons of this model?

There might be rapid growth because of internal devaluation and increasing local demand as well as some new investments from outside. I cannot agree that the Argentinian model is a good one. In the macro economical way, there was significant economic growth some years after the default but in fact, Argentina is still isolated from the international markets, nobody lends money to the country and although there has been such high growth in recent years, there are still a lot of poor people. There is a big gap between the rich and the poor in Argentina. There are a lot of unsolved problems in the fields of education, justice and so on.  I understand that some people here see the Argentinian solution as a model but it is a model that should not be followed. 

How do the Italians see the Greek crisis, since they have fiscal troubles themselves? Are they scared about the possibility of the ‘domino effect’?

People are really worried that the Greek crisis could trigger the domino effect, but the situation in Italy is totally deferent from the one in Greece. In Greece, there is a political vacuum in this moment. In Italy on the other hand, there is the effective government of Mario Monti, who has a lot of prestige in the European Union. He was an ex-member of the European Union Commission. Italy has a quite bigger economy and many more companies, which export really well. Its government has implemented a very effective fiscal solution and it will reach zero deficits in 2013.

A lot of politicians are using the phrase, “We don’t want to end up like Greece” and back in those days, it was “We don’t want to end up like Argentina”. So, the Italians see both Greece and Argentina as an example that should not be followed.

So, do you think that the Greek crisis can endanger the countries from the European Union periphery?

Well, I do think that the Greek crisis is dangerous for the whole of Europe, because if Greece collapsed this would have very serious consequences for the European Union. However, I do not think that there would be a default of Italy. There is a worry out there, because you never know. There are a lot of speculations about the future of the countries in the periphery of Europe and no one knows what could really happen.

Do you think that Italy will need a financial injection like Greece?

No, I do not think that Italy will need special help. But we have to admit that there are a lot of speculations regarding the future of the euro zone, which puts pressure on the price of borrowing. Nevertheless, I do not think that Italy will need an aid package.

Nouriel Roubini suggests that the easiest way for Europe to get over the crisis is to exclude five of the countries with the most severe economical and structural problems. What is your opinion?

With all my respect to Nouriel Roubini, I would say that this suggestion is totally absurd.

Do you expect a third rescue package for Greece or new debt restructuring and under what conditions?

I think it would be a suicide for Europe to let Greece out of the euro. It would be such a colossal failure for the whole European Union, so I think they have to try to do everything possible to keep the country in the euro zone. I am not sure that there would be a third financial package for Greece, but I definitely think that Brussels would take extra measures to approach the crisis in a better way than they did till now.

What is your advice to the ordinary people in Greece, if the country is about to fall into disorderly default?

The advice that I can give to the Greek people is that they have to keep calm, take decisions based on reason, not on emotions and to not forget that they have the safety net of the European Union and the euro zone. This is the advantage that Argentina did not have in 2001.