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Debate on whether Greece should default and leave euro held in Athens

27. February 2012. | 11:00

Source: Emg.rs, AMNA

Intelligence Squared (IQ2)Greece, in cooperation with BBC World News, organised a debate in Athens on Tuesday evening on the motion "Greece should default on its debt and leave the euro".The debate was moderated by BBC World News journalist Zeinab Badawi.

Intelligence Squared (IQ2)Greece, in cooperation with BBC World News, organised a debate in Athens on Tuesday evening on the motion "Greece should default on its debt and leave the euro", with professor of economics and international business at New York University's Stern Business School Nouriel Roubini and professor of economics and finance at the University of London's School of Oriental and African Studies (SOAS) Costas Lapavitsas speaking for the motion, and IMF former alternate executive director Miranda Xafa and UK former minister of state for Europe Denis MacShane speaking against the motion.

Roubini warned that the bailout packages imposed on Greece were leading to bigger recession, whereas Greece needs growth and regaining its competitiveness, He said that in order for Greece to exit the crisis, a devaluation of the euro would be needed -- which is not provided for in the EU treaties -- and reforms, which take time, and consequently the only solution left is its exodus from the euro and return to the drachma. He added that such an option would not be easy, but it could be manageable.

Lapavitsas also spoke in favour of default, acknowledging that such a move would not be without reverberations in the short-term, chiefly in banks and trade, but with the proper preparation these could be dealt with.

MacShane spoke against default and exit from the euro, noting that a devaluation via the drachma is not a solution, citing the example of the devaluation of the British pound in the last three years, which he said did not result in a spectacular increase either of exports or tourism, nor improved the external trade balance overall. He said a change of economic policy, and not the currency, is needed, adding that today's European leadership lacks vision. European solidarity is also needed, MacShane said, adding that the EU is for the tough times. He concluded with the phrase "no to the drachma, yes to the euro", delivered in Greek.

Xafa, in turn, said that the new economic programme for Greece brings much austerity but "enables a smooth landing", and posed the question of "how can a post-soviet economy, such as the Greek economy, be devaluated?". She warned of the disastrous consequences of an exit from the euro, chiefly to the country's supply of staple goods and fuel from abroad, stressing that "with or without the euro, recession is inevitable". Xafa further rejected any comparison of Greece with Argentina, the currency of which was devaluated, stressing that Argentina is a country with the biggest exports of products in the world, while this is not the case with Greece.

The debate was moderated by BBC World News journalist Zeinab Badawi.


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27. February - 04. March 2012.