Simon Bensasson (’63) on Greek crisis
Posted on: July 19, 2013
You may have glimpsed him wandering around the campus this past year, tall, bearded, looking more like an ancient philosopher than an expert in European integration.
Simon Bensasson, Anatolia Class of 1963, recently retired from a senior position at the European Commission, has spent 2012-13 as the Dukakis Visiting Professor in Public Policy, responsible for teaching senior seminars in advanced journalism and European politics, and representing ACT and the Dukakis Center at public functions.
One of the Dukakis Center interns for spring 2013, study abroad student Nikki Kapogiannis, interviewed Simon Bensasson in March 2013 on the sovereign debt crisis in Greece for Politis, the blog of the Dukakis Center. We publish excerpts from that interview below.
Q: Mr Bensasson, what is the crisis all about?
Α: The Euro crisis is a global crisis and this is because the world economy is so interconnected. The euro crisis has three dimensions to it. Firstly, it is part of a crisis of the economies of the West. The countries of the West consume more than they produce. The US being a single country with a huge economy and a single currency is able to cope with this better than anybody else – especially as world trade is mostly carried out with US Dollars. This is not the case with Europe and the EU.
Q: What are some of the other dimensions of the crisis?
A: Joining the Eurozone implied a number of conditions of entry and a number of obligations once a country became a member. The obligations included undertakings never to overspend above certain limits. With the introduction of the euro, the availability to borrow money from the European Central Bank was too high for the richer countries and too low for the poorer ones. In the poorer countries this resulted in a spending spree that made private and public debt rocket sky-high without being noticed early enough to prevent.
Q: As an American I am curious to understand whether there are implications for the American economy in this crisis.
A: Of course there is. The financial crisis began in the US with the sub-prime mortgages and later with the demise of Lehman Brothers, making everybody more conscious of the risks involved in the financial system and put in question sovereign debt. The rating houses started downgrading countries such as Greece and later Ireland, Portugal and Spain, making it impossible for them to raise money from the markets to pay for their current expenses and to service past debts. As a lender of last resorts, the European Central Bank had to intervene. The current situation is that the intervention of the European Central Bank has resulted in considerable social upheaval due to the strict austerity measures. This social upheaval makes it increasingly difficult to comply with the conditions and at the same time, the EU itself is not acting fast enough to reform the weaknesses of the Eurozone.
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