Greek Sovereign Debt Crisis - ZEW President Fuest: "Tsipras Has No Plan for Economic Recovery in Greece"

The next summit of eurozone leaders takes place in Brussels today. The question whether Greece will be allowed new credit is at the centre of the meeting - and ultimately depends on the country's reform efforts. The Greek government offered a new reform package just ahead of today's Brussels summit. Professor Clemens Fuest, president of the Centre for European Economic Research (ZEW), comments on Greece's reform proposals:

"The latest Greek proposal is no basis on which the country may be granted new credit lines. In reality, giving Greece additional loans means offering a transfer paid by the tax payers of other eurozone nations. Today's summit should only decide the introduction of capital controls in Greece as of tomorrow. Currently, people in Greece are withdrawing their money from banks, and ECB aids are maintaining the bank's liquidity. As a result, liability risks for tax payers in the euro area are increasing every day, while the bargaining power of the Greek government is growing.

Alexis Tsipras has no plan for economic recovery in Greece. His only plan is to employ more government officials, to nationalize companies, and to make the citizens of other countries fund his policy. His government is failing to collect taxes at home, for example the taxes from illicit accounts in Switzerland.

In order to ratchet up the pressure on the rest of the eurozone, the Greek government accepted a crash of the country's economy in the past few months - and has wrecked the other member states' confidence with its negotiating strategy and its way of communication.

"Without new credit and with capital controls in operation, money withdrawals from banks will be restricted, and salaries in the public sector as well as pensions will have to be reduced. But then it is the population of Greece who must decide if there will be a new currency."

For further information please contact

Prof. Dr. Clemens Fuest, Phone 0621/1235-100, E-mail fuest@zew.de