Ifo Institute for Economic Research: Germans are interested in investments in Greece

Germans are interested in investments in Greece, Dr. Gabriel Felbermayr, Director of the Ifo Center for International Economics at the Ifo Institute for Economic Research in Munich, Germany, said in an interview with the Athens-Macedonian News Agency adding that the stable political situation contributes to this.

“As long as Greece is not on the front page of German newspapers, this has a positive impact on economic relations,” he underlined and added: “A lot of people take for granted the possibility of cooperation with the current left government. The fact that the political situation is stable, of course, is significant, it helps, but it is not enough by itself.”

Asked what Greece can do to attract investments, he said that “the indices of the World Bank show that in recent months there is an upward trend,” but “Greece needs to increase its productivity in order to prosper. For this reason, a number of measures, such as changes in labour relations, are required.”

He estimated that the current difficult situation is “a result of the wrong decision taken in 2010” and wondered whether “the decision to stay in the eurozone was a good one or it had better leave.” As he said, himself and the Ifo believe that it would probably be better for everyone, the creditors, the German banks and Greece, to leave the eurozone provided that this was followed by a debt write off, as it was the case with Argentina.”

The Professor stressed that what Greece needs is a real viable model so that it can tell Europe: “This is our plan for a new Greece and we are asking for your support.”

Greece should say “we will return provisionally to our national currency, our debt will be written off unconditionally, and we will implement a viable growth plan.”

He also considered that the austerity policy imposed on Greece is not incompatible to growth.

According to Felbermayr, those that insist on Greece remaining in the eurozone, they are doing so because “the real problem is not Greece, but Italy, Spain and maybe France. The situation is not exactly the same, but it is similar. The euro is not the proper currency for them, and the same applies to Germany as well.”

However, he is not in favour of abolishing the euro, but “the eurozone should be a free union which a member state, under specific conditions, can provisionally abandon and return to its national currency and then come back again.”

In order for that to succeed, Felbermayr underlined that the withdrawal should be coordinated and the process be monitored, so that a country can return to the eurozone only when the needed structural reforms have been implemented.