"The only way you can be saved is if we lend you more"

Speaking to protothema.gr Dr Michael Fuchs, deputy chairman of the parliamentary group of the German Christian Democrats (CDU), says the state debt of Greece will not be manageable even with a haircut of 50%, that the entry of Greece in the euro was a mistake and that the exit from the common currency might be the best long term solution for the Greek economy.

Born in 1949 in Koblenz, West Germany, Dr Fuchs studied at the University of Bonn where he received his doctorate in biochemistry in 1976. The father of two girls and prominent member of the Christian Democrats, he still maintains that Greece joined the euro with forged documents.

You said that Greece has already defaulted despite financial assistance from the EU. Is there any chance to avoid default?

Greece has huge economic problems. Your debt is at 180% of the GDP. Your primary deficit amounts to 6 billion a year. The deficit from tax collection is less than 48 billion and you spend 54 billion. Even if the private sector agrees to a 50% haircut, you will end up with a debt of 280 billion euros. And if we talk about an interest rate
of 3.5% - which is very difficult to achieve - you have 16 billion more. How will you manage? It is simple mathematics. And it also raises the question whether Europe is willing to keep on paying more and more. If so, then perhaps there is hope. The second issue is competitiveness. How can Greece become competitive again? You are in a dire situation in terms of competitiveness. And if a country is not competitive it must do something, otherwise it gets stuck in a rut.

How do you see the negotiations for the PSI;

I am waiting to see the results. I am a little unsure at the moment. Do you think that even a haircut of 70% is enough? Again, it is simple mathematics. Currently, your debt amounts to 380 billion. Even with a 70% haircut you will still be 266 billion euros in debt. Can you manage that?

Do you think there is potential for the Greek economy to recover with continued austerity measures?

First you need to do something with public expenses. This situation can not continue. But if we calculate the haircut at 50%, it might not be enough. Everything is a competitiveness issue and unfortunately you do not have export capacity because of your prices. It is an issue that needs to be solved by Greece itself. It is a question of
wages, hours, vacations, retirement age. Germany now has a pension limit of 67 years of age because we had no other option, otherwise all our pension institutions would collapse. Do you think it's easy to say to a German "you have to work until you’re 67, while there are cases of Greeks who receive their pension at 57?"

Must Greece leave the euro?

It will be a disaster at first, but in the end it might be a solution. I cannot be sure right now.

For Greece or the Eurozone?

For Greece. This way you will revert to a normal situation of competitiveness. What did you do before the crisis? Before the euro? You devalued your currency. I hope Greece will remain in the euro if you can regain your competitiveness. I'm not saying that you should leave. But you must find ways to become competitive once again. I do not know the best or the easiest way. I love your country and your people, but I do not have proposals that will give you back your competitiveness. Is a matter for Greece itself to decide upon. It is not the European Union that will decide. And if I'm not mistaken there are Greek MPs who have openly argued that Greece should leave the
Eurozone.

Was Greece’s entrance in the euro a mistake?

I think it was. You entered the euro with fake documents and numbers.

Many argue that Germany is the "big winner" of the crisis. What’s your answer to this?

But we are also those who pay the most for Europe. No other country has invested as much money in Europe as Germany. People should not blame Germany because it has a competitive economy. We have implemented austerity measures for many years, we are willing to give money to Europe and we are doing it. What will happen
if Germany does not pay? But again I am telling you we need to find a solution to all this, and it will not be easy. I think all countries have made mistakes. Even Germany has made mistakes in the past and now we must pay for them.

Was Greece’s entrance to the euro one of these mistakes?

Perhaps it was.

Is Greece a "special case", or are its problems associated with structural problems in the Eurozone?

Italy is in a much better situation. Look at the Italian industry. It has excellent figures. The Italian north is as dynamic as Germany. If they solve some management problems, then they will soon regain their competitiveness. Your industry is not good.

In fact there is no particular industry in Greece. You need an important and long-term solution.

Are you optimistic about the euro?

Yes.

With Greece as its member?

Hard to say. I do not know whether to say yes or no. It is not my decision, it is Greece's decision.