UK, Former Greek finance minister Dr. Yannis Papantoniou, the author of the Greek strategy of joining the Euro, and Dr. Alexander Mirtchev, president of Krull Corp., discussed the EU intervention in the spiraling debt crisis in Greece and the global economic recovery. In the wake of the growing concern over the threat of a Southern European sovereign debt crisis, the EU announced an unprecedented guarantee package of 750 billion euro ($1 trillion), which has generated strong market reaction.

Minister Papantoniou, who as Finance and National Economy Minister of Greece at the time steered the countrys shift to Euro, considers the expanded rescue package to be the right approach. He stressed that The great sick man of Greece is the public sector. The problems have now swollen to the extent that Greece is now out of control in terms of both the public sector and competitiveness. However, he considers that with appropriate structural reform, the crisis can be addressed for what is the last Soviet economy in Europe. Dr. Papantonious view was that the the mechanism agreed by the EU is an ad hoc mechanism and the markets will test it, but he indicated that Greece has enormous potential, which can be exploited through deregulating and privatizing the economy and liberalizing markets, and the conditions for faster recovery can be created. His contention is that Europe needs unified fiscal policy, stronger fiscal coordination and bailout mechanisms for failing states. As long as these elements are missing from the European edifice, its long term sustainability and survival are in question.

Alexander Mirtchev is of the view that the guarantee package has wider significance for the future of the European project, the underlying social contract, as well as the global economic recovery. He sees the roots of the debt crisis in some European economies and beyond in the broad set of economic arrangements that are unsustainable in the long run, which means that a deeper economic and political integration would be needed to prevent the disintegration of the eurozone. Moreover, the austerity measures and restructuring are unavoidable, but it remains to be seen to what extent they are politically palatable. In addition, the remedies should not target predominantly liquidity, but rather solvency, as, at the end of the day we are going to hit the wall of the solvency issues. The way out is aggressive growth policies, encouragement of innovation, competitiveness and entrepreneurship. The unanswered question, however, is whether the current social contract is sustainable.