This is perhaps the most crucial point of making a decision on the crisis of Euro Zone. Dating back to the history does not help us to fascinate about the reason as to why Euro Zone was formed and the motive behind that. We live in the present, and leave the past.
However, the point I would strengthen at this time period can be summarized as this part-
Greece should exit the Euro Zone within the next 6 months in a phased out manner.
The rationale and thinking in this is provided below:
Phase I – Greece introduces its old currency as before, but the Greek banks do not lower the cash reserves of the Euro deposits. This is to ensure that the Euro does not dilute at the first call, but its entity is reserved, along with its valuation. Yet, Greece receives 33% of the third stimulus for its new government to work on its sovereign debt, accurately 1/3 rd. The police and the army are made more vigilant, and special reforms are made to take care of the expected unrest. Greece uses its old forte of tourism through international games held in Greece and the natural habitat it has for tourism. Creation of jobs internally for internal consumption through the shipping barons should be the point of focus, mainly the industries in tourism, energy, food and food products, agricultural products, and medicinal products. Stronger Laws and Actions should be put into place, to curb any social unrest. This is to work immediately on the next 1-2 years.
Phase II – Zero tax haven at this point to work on the internal sustainability like the Dubai Business Model, so that the international investors do actually invest with a lot of interest. Promoting this will create jobs important to the country’s health, and wealth. Outsourcing certain jobs as accounting practices, legal offices and medical set-ups in the country will actually work wonders and produce a sustainable strength for the next 4-5 years. Please note that Greece is not only for tourism alone. The international community should help Greece in internal growth rather than the push of aid which does not help in the sovereign debt. This is for the next 4-5 year timeline.
Phase III – Revamp the bank system for a better and transparent credit system. Lending for entrepreneurship will never help, until the Greece bank, ECB and IMF are in tandem. There might be better financial instruments other than the derivatives in the market that offer secured debt instruments. At this point of time, the exports should be the main motto, rather than just the internal consumption. Divide the key tradeable goods as high quality exports, exports and internal consumption. More emphasis should be done on the exports. After a certain amount of exports are made to reach a healthy sum, Greece can think of joining back the EU after 6-8 years. But till then, the internal growth should be phased out in an orderly manner. This is for the 8-10 year time line.
I just hope that this brings joy and mirth for Greece at the end of the decade- 2020. The question is, how can the world help now?