Eurozone is unbreakable: Belgian foreign minister

Many economists say Europe is almost broke and that a break-up of the eurozone is imminent.

But Belgian Foreign Minister Steven Vanackere believes that a default by Greece, Portugal, Italy or Spain will not happen; neither will a break-up of the eurozone.

“The decisions that have been taken within the EU, created an environment that will control the current crisis and will make sure that these events will not reoccur,” he told The Korea Herald.

Vanackere admits, however, that it “will not be a walk in the park.”

“That is something that is feasible, but the logic of default will send a very destabilizing message to the world. It means that we don’t mean business ― and we mean business,” he said.

Asian and European markets took huge tumbles this week after fresh worries about the eurozone debt crisis and the dim outlook for global economic growth. Coupled with those events came the news from Athens that it will miss its deficit target this year.

Due to this, many market watchers say Greece is getting closer to defaulting on its loans. Some say it is just a matter of time.

“When it comes to Greece, it is clear that they are going to have to make sacrifices that will probably create some level of social unrest, but the decisions are taken and if you look at what the Greeks decided, it is clear they are determined to solve the problem,” he said.

Vanackere pointed out that there are other economies, “on the other side of the ocean,” that are worse off due to the high indebtedness of the government and its people and a double digit deficit.

“If you look at the assets of the households in Belgium, the assets of the Belgian citizens are about 3-4 times the total amount of the debt of the Belgian government.”

He added that the fundamentals of the European Union are sound compared to other countries.

“We are not sending money to Greece; we are making sure that the system does not fail. It’s about financial institutions outside of Greece having lent money and making sure that the system stays stable,” he said.

For Greece to emerge from its difficult situation, the country will have to re-establish a level of competitiveness that will allow it to regain its position within the economic framework of the European Union and Vanackere admits that it will take time.

“It’s not about subsidizing the Greeks, it’s about making sure that the speculators get the clear message that as they speculate, they will lose money,” Vanackere said.

Vanackere does see a rosy future ahead, albeit in the far distance, where trade imbalances and the capacity to enhance Belgium and the European Union’s presence to the rest of the world will be motives for growth.

“We still are the place where approximately 22 percent of the wealth of the world is created,” he noted. “It’s a very big market with huge potential.”

For that to happen, the “old continent” will have to adapt and become more competitive by increasing the working hours of the average European Union citizen.

“But once this is done, I think the fundamentals of our highly skilled labor force will re-establish the balance that is needed,” he said. “The eurozone is unbreakable, it is clear we will have to manage within the logic of the monetary union; we will have to manage with economic disciplines, and this economic discipline is not going to be easy but it will be done.”

By Yoav Cerralbo (yoav@heraldcorp.com)