DW-TV: Ansgar Belke from the German Institute for Economic Research. What's your opinion? Have the Greeks actually been saved from tragedy?
Ansgar Belke: I think the summit got quite stuck in the middle. They bought some time with their conclusions, but seen on the whole, we have expected much more in terms of the haircut, the reduction of Greek debt. This especially means that Greece has not been alleviated with respect to the total debt burden. What we expect is another haircut, necessary to be in around 2013.
DW-TV: Last year, the European Union footed the bulk of the bill. 80-Bbillion euros. Another 30-Bbillion came from the International Monetary Fund.. to make up 110-Billion in all. In the new bailout, more than a third comes from private investors, like commercial banks and insurers. We're talking about the same amount of money, but what sort of a difference will this make coming from private creditors?
Ansgar Belke: In principle, this should serve for a fair sharing of the debt burden, because all the investors from the finance industry should have known that debt beyond sixty percentage points of GDP is not reasonable and not sustainable. This is a kind of punishment, but if you look closer to the results, there is no punishment for the banks at all, because everything is guaranteed. They earn very much by the technical enactment of the debt restructuring, they earn very much from the interest rate spreads, so the haircut is too small, and there's zero additional burden -- and you do not have hedge funds in, by the way.
DW-TV: Last time you were here, you said new rescue packages wouldn't settle the markets – is that still the case?
Ansgar Belke: I think the markets realise that some time has been borrowed, so the markets are quite calm, but they immediately will see in the future that Italy, for instance, will be a case in point. And this is just implying that the rescue fund is too small to serve the needs of Italy, even if it defaults only partly. So there's much to do in the future and this does not seem to be ready.
DW-TV: As far as Greece goes, is it back to square one?
Ansgar Belke: Greece is not really back on the tracks. What we guess is that they need to go down to a public debt share, to GDP of ninety percentage points. What this package arrives at will be 125 percentage points of public debt as a share of GDP, so it's not enough, and not sustainable.
DW-TV: Ireland is still bogged down in debt. Is it too soon to be optimistic about the Irish economy?
Ansgar Belke: I think you should be quite optimistic with respect to the recovery of the Irish economy. There are huge differences with respect to the other eurozone countries -- for instance, Greece. Look at the starting point of the crisis. Ireland suffered very much from low interest rates. This looks funny, but this has blown up a huge real estate bubble, and combined with very weak financial supervision, they started from high growth rates and went back into recession and were very much hit. A totally different case is Greece. So Ireland very much has recovered with respect to exports, and we are very optimistic with respect to growth rates.
DW-TV: But even though they're totally different, can Athens learn something from Dublin, do you think?
Ansgar Belke: Yes, of course. They should lower their domestic demand, they should go much more for exports on a variety of goods, and this is what it should learn. And another respect is to go more not for foreign debt, but for domestic debt. This is what Ireland is. There's much less foreign debt.
DW-TV: Could Athens be holding out its hands for another rescue package in another year from now?
Ansgar Belke: I think that a new rescue package will have to be tailored after two years, in 2013, because we then will have the new rescue fund in 2013, which will make it much easier to go for debt restructuring. Right now we have to go a Greek court in order to get your money back, and this will be different afterwards. So the new package will be tailored, I guess, at least not earlier than within two years, or we will see huge transfer programmes.
DW-TV: The ratings agency, Moody's, said this week that default status in Greece is almost certain, as the eurozone rescue will only provide "limited" relief. What do you think?´
Ansgar Belke: I cannot quite follow this advice by Moody's. And all the other rating agencies put Greece just four steps before default -- that is to say, in a much better place. And this is justified, because Ireland looks forward to receiving some help from the so-called European Financial Stability Fund, the current rescue fund which we have. And this is the most remarkable part of the result of the last summit, that the EFSF has new competencies in helping countries, and among them Ireland, at lower interest rates than before.
DW-TV: Well just briefly on that, what's the way forward for eurozone then?
Ansgar Belke: I think we cannot prevent a transfer union from coming. By the way, we already have it, via the European Central Bank, which has bought Greek bonds, Irish bonds and Portuguese bonds. And if there had not been such a summit, the ECB would have even had to go for a quantitative easing like the US did, that is, to go for buying all the bonds of all euro area member countries, and this be at the damage of the reputation of our most important asset, the ECB.
(Interview: Ben Fajzullin)