Banks should contribute into solving EU financial crisis – professor

Germany’s Chancellor Merkel has made no secret of her skepticism towards the EU leaders’ meeting in Brussels. Officials gathered on Thursday to discuss a second bail-out for Greece. There still seems no consensus on the bank levy.

­Merkel said that the Thursday meeting in Brussels, which is to focus on the financial issues in the eurozone, will not bring anything “spectacular.”

The leader of Europe's biggest economy said the conference must produce agreement on a “controlled process of successive steps aiming at finally getting to the cause of the problem: the issue of reducing Greece's debt and the issue of raising its competitiveness.

Germany’s Chancellor Merkel and French President Nicolas Sarkozy are expected to present their joint position towards Greece’s financial disaster. The details of their plan have not been yet disclosed, but the prime minister of Luxembourg said it was unlikely to include a tax on banks to help pay for the second rescue package.

"I have the impression that there is no agreement on a banking tax," said Jean-Claude Juncker, chairman of Eurogroupe, upon his arrival in Brussels, as reported by the Associated Press.

The Germans, unlike the French, are reluctant to involve private banks to assist the EU’s hampered economy, says Professor Pierre Guerlain from the department of political science at the Paris West University. But he believes banks should contribute.

After all, the banks are partly responsible for this crisis,” the professor told RT. “The Greeks were advised by American banks when the former government was cheating with the size of the debt. So they [the banks] should take part of responsibility and pay for their own mistakes. The question is now: will political authorities have the power to confront the markets even minimally? Because what they are proposing now is a minimal contribution to the banks. If the contribution is voluntary, I do not think it will work.” 

One of Greece’s major problems, Guerlain points out, is information deficit among the general population.

When the banks advised the Greek to go deeper and deeper into debt, the populations of Greece, of Germany were not informed. Now there is an effort being made in order to inform the population. Maybe, this idea of a collective European fund to save Greece independently of the markets is not such a bad idea,” contemplates the professor.

At the very least, the EU now cannot afford a third rescue plan in two years to save struggling countries, believes Guerlain.

­Meanwhile, financial writer Peter Bild says it is not wise to lend Greece more money, but there is no alternative because otherwise Athens will not be able to pay back its debts and it will lead to a total meltdown for the entire EU. Thus, Bild said, all compromises that have been made between France and Germany are for the strength of all 17 member states.

“Of course this is a political agreement and this is a political situation, and the two biggest are simply France and Germany,” Bild said. “To be honest, I think the other 15 are going to be greatly relieved if France and Germany have genially sorted out their differences. France did not want the banks involved, Germany did. Various compromises have been made, and that is going to be for the strength of all 17.”