Daily Digest: Could a “geuro” save Greece from exiting the euro?

The newly elected president of Serbia, Tomislav Nikolic said after the election on Sunday that “Serbia would not stray from its EU path”. Nikolic was deputiy prime minister under the former president of Serbia and Yugoslavia, Slobodan Milosevic, who was charged with war crimes. Mr. Nikolic distances himself from his past, especially his days in the ultra-nationalist Radical Party which he left in 2008 and the leader of this party, Vojislav Seselj, who was his mentor and who is now on trial in The Hague for war crimes. Despite previous statements of wanting a Greater Serbia for Serbs and promising to downgrade diplomatic ties with countries that recognize the breakaway province of Kosovo, Tomislav Nikolic now says that EU membership is the “only acceptable solution” for Serbia. The EU also urges the new Serbian president to stay on the path of EU integration. In a joint statement yesterday, President of the Commission Jose Manuel Barroso and President of the European Council Herman Van Rompuy said that Belgrade should move quickly on European integration, in part by improving relations with Kosovo.

The Greek political counterparts of ‘pro-eurozone’ vs. ‘anti-austerity’ are keen on building support for their respective views prior to new elections in Greece on June 17. Leader of the radical left Syriza, Alexis Tsipras is trying to ally with like-minded parties across Europe in advocating a growth strategy in the eurozone, hoping that a strong common ground will help pressure the EU to back down on its austerity demands on Greece. In Athens, leader of the conservative New Democracy party, Antonis Samaras secured cooperation yesterday with the liberal grouping, Democratic Alliance, led by Dora Bakoyannis who is an old conservative rival of Tsipras. The two will run in the election on a joint platform with the chief goal of securing Greece’s position in the eurozone and “fight the forces of populism”, Mr. Tsipras said.

Should Syriza win the election and refuse austerity measures for bailouts, the German bank, Deutsche Bank might have a solution for keeping Greece in the eurozone. In a study published yesterday, Deutsche Bank suggests the idea of a “geuro” – a parallel currency allowing Greece to devaluate while staying in the eurozone. This way, Greece would be able to buy themselves some more time to carry out reforms and pass budget cuts. With such a geuro currency devaluated against the euro, Greece would be able to lower its wages and boost exports. The geuro would consist of promissory notes, a form of government debt that can be sold on. In this scenario, however, Greece would still need aid form other eurozone countries and the International Monetary Fund.

Prior to taking over the EU presidency from Denmark on July 1, the president of Cyprus, Demetris Christofias criticised Turkey yesterday for refusing to recognise Cyprus. Mr. Christofias said that Turkey’s positions “lean towards threats”. Turkey is alone in recognising the government in the northern sector, which goes by the name Turkish Republic of Northern Cyprus, while Christofias said his goal was a unified Cyprus despite Turkey’s “unacceptable attitude”. Turkey wants to join the EU, but this issue remains a major obstacles for doing so.

The EU has condemned the terrorist attack in Yemen yesterday, where a soldier blew himself up in the middle of an army battalion, killing 96 troops – an attack which Al-Qaeda has claimed responsibility for. EU foreign policy chief Catherine Ashton said in a statement yesterday that she “expresses her total condemnation of today’s terrible and brutal attack on Yemeni soldiers”, and that the EU was “fully committed” to assist President Abdrabuh Mansur Hadi in “exploring all available options to ensure compliance from any individuals who persist in undermining or opposing the political transition in Yemen.”

 

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