Sustainable economic reconstruction holds the ‘key’ to Europe’s future

  • May 4th, 2017
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As our world slides down the slippery road of demagoguery and hate-driven politics, now is the time for Europe to rise from its own deep crisis and be the global leader we all need,writes Demetres Karavellas.

Demetres Karavellas is the director of WWF Greece.

In Europe, the public disbelief in the promises of its leaders for sustainable solutions and fresh air to its suffocating economy is obvious: people’s trust in the EU, now at around 33%, has plummeted during the years of the economic crisis. Recurring parts of this unprecedented European crisis, such as Greece’s debt overhang and prolonged austerity nightmare, can only deepen citizens’ distrust in their leaders.

The EU’s response to the eurozone crisis has created divisions in identity among member states, particularly between the North and the South, the “rich” and the “poor”. So here’s the question: in these challenging times of crisis, does it make sense to reduce the union of Europe to fiscal indicators and austerity policies?

Greece is not the only EU economy in deep debt troubles: according to the 2016 “Debt Sustainability Monitor”, 11 member states, other than Greece, are in high debt sustainability risk.

The country’s public debt, currently at around 177% of GDP, can hardly be considered sustainable. At the same time, the harsh fiscal adjustment programs now running in their seventh year are already having a huge impact on society, environment and the prospects of the economy itself.

Greece’s finances at present are clearly poor. Ecologically, however, Greece is a very wealthy country. Greece’s natural heritage is the European Union’s natural heritage. This valuable heritage has sadly paid the price of three fiscal adjustment agreements and now requires urgent collective action. Could this task not be undertaken as a specific initiative requiring joint execution with the European Union?

At WWF we know there are truly sustainable ways out of this crisis. Europe needs a robust and credible unifying narrative that restores people’s trust in the union: the environment can be the starting point for brave and innovative political decisions that offer Europe the sustainable economic reconstruction it so badly needs.

In a discussion paper presented in November 2016, WWF builds the case for “debt relief for a living economy in Greece”. In a nutshell, we propose that on the basis of a specific environmental agreement, substantial debt relief be approved for Greece, thus restarting the country’s battered economy towards a more sustainable direction, while at the same time conserving globally significant biodiversity and contributing towards the achievement of key global sustainable development goals (SDGs).

Here are the basic building blocks of the proposal:

Sustainable reconstruction: The Sustainable Development Goals offer the best available policy umbrella for all encompassing and inclusive economic reconstruction, worldwide. In the case of Greece, an agreement for debt relief on a sustainability policy agenda would cover the conservation of Europe’s natural wealth found in Greece and would necessarily include measures that will harness Greece’s huge and untapped potential for green economic development. Specific measures on good governance, which will ensure the development of a clear, transparent and coherent regulatory environment are also part of WWF’s proposal, as the basis of a healthy and attractive environment for social development, entrepreneurship and investments.

Meaningful debt relief: The aim of debt relief should be to significantly reduce Greece’s debt stockpile and allow Greece’s economy to breathe from the suffocating debt overhang. The conditionality to be developed and agreed will aim to revitalise Greece’s economy and restart it along with a truly sustainable pathway.

No more austerity: The impact of the austerity measures on Greek society is already dramatic: non-monetary social exclusion indicators have acutely deteriorated, unemployment soars at 23.2% from 12.6% in September 2010, and the percentage of households making ends meet with great difficulty has doubled since 2007 and remains the highest in the EU28.

One may legitimately ask why creditors would forgive the excessive debt. The answer is actually quite simple: as excessive debt is money that will hardly ever be fully repaid, its burden on economy, society, and environment will remain very high. Linking meaningful debt relief with measures that stimulate a living economy can strengthen the debtor’s midterm payback ability, while also setting the foundations for long-term sustainability and improved servicing of the remaining debt stock.

Environment and our common natural wealth are undoubtedly a unifying cause for Europe’s people. This is not simply the result of all EU opinion polls, but also the outcome of massive movements defending Europe’s nature, such as the Nature Alert campaign to save EU nature laws from the rollback. In the case of the ongoing deep European crisis, EU leaders need to reclaim populism, by being true to their promise to serve the people’s want for good jobs, living economies, and healthy livelihoods.

This article was published in EurActiv.com on 

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