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12 Απρ 2012

A framework of an orderly exit of Greece from the European Monetary Union


                                                       What we do
  • Exit the euro zone and return to the national currency, the drachma, initially devalued at a level of 30-40% and  issued by the Bank of Greece,
  • The new drachma will be loosely linked with a basket of currencies which will contain the euro, the dollar and soft currencies of neighborhood countries that antagonize main Greek industries such as tourism, agricultural production, food industry.
  • During an initial period of 16 months, both, the drachma and the euro will be used for international and domestic transactions. This period may be extended in accordance with economic and market conditions and needs.
  • Under the provisions of controlled bankruptcy, foreign debts should be restructured, (after proper negotiations and preferably under a bilateral agreement), by expanding the total repayment period, establishing a two years grace period and cuting its total value to 30-40%.



  • Restructure legal and institutional implications and provisions of state guarantees for loan payments, in accordance with the new agreement. State guarantees should be provided for the payments of debts, in accordance with the new deal and other provisions.
  • Enforce state directions upon the stock market, the banking system, but without nationalization of banks, with a partial guarantee of deposits and debt obligations of citizens and enterprises. In the initial period of 3-6 months, citizens will be allowed to draw no more than a basic sum from their bank deposits. Enterprises will be allowed to draw a certain sum in accordance to their particular case. This provision will be loosening eventually in accordance with economic conditions.
  • Impose state controls on speculative and inflationary developments, coupled with proper interventions and strict sanctions in the market and the stock market.
  • Promote state measures for the adequacy of market essentials commodities, food, medicine, fuel, etc., especially in the first period of the exit from the euro zone.  (After the initial period of about six months, the market is expected to begin normalizing to a sufficiency of goods, while the improvement of the country's competitiveness and the strengthening of domestic demand, will lead to a restart of unutilized economic capacity, with beneficial effects for employment growth, the economy in general).
  • Establish concrete measures and sanctions against tax fraud and evasion, as well as for the simplification, objectification and modernization of the tax system and reduce VAT. In order to lower the cost of internal production and services.
  • Restrict public expenditure, rationalize public administration, the systems of health care, social security, social benefits and reconstruct  the debts of public hospitals and social security organizations
  • Develop zero-base budgeting, coupled with rational allocation of personnel and modern human recourse management in the public sector and local government, compete bureaucracy and corruption by simplifying and modernizing procedures and strict penalties by strengthening control mechanisms and retaliation.
  • Take effective measures to speed up justice procedures, especially those concerned with economic transactions.
  • The country will remain a member of the European Union, like many other countries, but will also seek loans under the best possible conditions in world international markets and countries.
  • Develop political and economic support and alliances with the U.S.A, Russia, China, Israel and the European countries mainly of the south, as a bulwark against the Germanization of Europe.
  • Seek international development assistance (a new Marshall plan), promote a faster absorption of EU and international development funds and assert war reparations from Germany.
  • Promote programs of subsidized employment, support career guidance entrepreneurship, domestic demand and production.
  • Strengthen the regional development and decentralization, while avoiding extreme phenomena of regionalism.
  • Establish incentives to prevent exclusion of early retirement, and avoid state measures for further compression of income, which lead to a contraction in domestic demand and social explosion, political uncertainty that paralyze social cohesion, economic consolidation and growth.
  • Ensure the national identity of the country within the European Union, with support of the country’s historical culture, traditions, and the arts, strengthen ties with the Greek diaspora and provide incentives for the repatriation of Greek capital from abroad.
  • Take effective measures to attract investment and capital, which is expected to flow into the country and it’s banks, after the restoration of confidence in the Greek economy.
  •  Strengthen the social and economic cohesion of the native population and legal immigrants; avoid the development of a multicultural society that leads to altered ethnic composition, to tribal conflicts, to social and economic dead-ends.
  • Take measures to prevent the exodus of young Greeks abroad and at the same time develop desired choice of immigration influxes, zero tolerance for illegal immigration, securing borders and combating trafficking in human beings and crime.
  • Under the provision that Europe guarantee reduce defense expenditure, without loosing its power effectiveness by introducing modern and rational infrastructure and methods, and at the same time strengthen the country’s defense industry.
  • Take measures to help the massive influx of tourists from non-Sengen countries, such as China and Russia.
  • Establish active development program to support domestic production and services, especially concerning healthy industrial and construction units and innovating business projects.
  • Urgently promote the exploitation of the country’s energy and mineral wealth in accordance with the establishment of the exclusive economic see zone between Greece, Cyprus and Israel and providing its exploitation to big international companies based in powerful countries.
  • Support strategic economic sectors in industry and construction, tourism, alternative energy, shipping, shipbuilding, modern and alternative crops, aquaculture, food industry and fertilizers, defense products, the pharmaceutical industry, transport and logistics, financial services, new technologies, education, research and innovation.

Theodore Katsanevas Ph.D. ( L.S.E.), Professor of Economics, University of Piraeus

Athens, 5 March, 2012