METRO: Mr. Piketty along with some well-known economists, recently sent an open letter to Mrs. Merkel, asking her to stop dishing out the medicine of austerity, as it “bled the patient, not cured the disease. Is there a possibility that that was the aim of Mrs Merkel, to bleed, not to cure the economies of Southern European countries, and if so, why?
Piketty: I think the primary objective of European leaders was to save German and French banks, not to save Greece. Since the elections of january 2015, the primary objective is clearly to expel Syriza from the government, even if it means to expel Greece from Europe, and in effect to destroy Europe. My only hope is simply that France and Italy will put their veto on this.
METRO: You have often said that Europe needs to restructure and reduce the Greek debt. The IMF proposed a haircut of 30% of GDP. What is in your opinion the exact percentage reduction to be made in order to make the debt sustainable? What other measures should be taken to relaunch our economy?
Piketty: I think we need an overall restructuring of all European debts, just like what happened after World War 2. But in the next few days we urgently need to find a simple, practical solution. I think that an agreement between Greece and the other European countries could take the following form. Greece commits a moderate primary budget surplus for the future, say 1% of GDP or less. European countries commit not to ask more than this as long as the GDP of Greece is not back to its 2007 level, and ideally as long as the GDP of Greece is not back to a robust growth trajectory as compared to the 2007 level (say, 2% per year in real terms). In exchange, Greece agrees to discuss and implement reforms to boost growth. My feeling is that if Greece was proposing such a plan and explain it well to the European public opinion, then it will be difficult for the other European leaders to refuse it.