Now Is Not the Time To Bet Against Greece

by ELENA PANARITIS*

In this pressure-cooker environment, and with speculators anteing their bets that Greece will default on its debt, our government is facing an even more difficult effort to quell the crisis. The speculation is chewing away at market confidence and forcing us once again to convince lenders and investors that Greece is serious about reducing the debt. The ultimate success or failure of our effort depends on it.

Undermining market confidence, however, will only serve to prolong Greece's debt crisis. Betting that Greece will default on its debt could turn out to be a self-fulfilling prophesy, not only for Greece but for the euro.

Greece is serious about its reform effort to avoid any type of restructuring - and definitely not prior to 2013, when the loan agreement with the European Union and the International Monetary Fund expires.

I am confident the country is on a path of sustainable growth and development. We have to give this program a chance. Any discussion now about restructuring Greece's debt before 2013 is premature and unfair. Instead of talking about default way before the end, let's put some faith in the EU/IMF program.

And let's not forget that the economic crisis in Greece is also a problem of the euro.

People speculating on whether Greece will restructure its debt should consider the implications. Restructuring will be painful, not only for Greece, but for all euro zone countries. Defaulting on the Greek debt, especially prior to the end of the program, would be a tremendous shock to the euro, the European Union and to the euro zone.

We all have the euro. The markets are not only watching Greece - they're keeping a close eye on the euro and how this monetary union is handling the crisis. The program structured by the EU and the IMF to is also being put to the test. By discussing the likelihood of Greece defaulting while this program is still running, we are actually undermining the entire effort.

It has only been a year since the financing program was initiated. No country in the world, to the best of my knowledge, has ever managed a reversal in such a short period of time. So, let's hold our horses. Yes, speculators are key players in an open market, but they are not playing fair. They should remain on the sidelines while Greece is at the plate.

For now, let's limit any talk of restructuring the debt to an academic discussion. It is an interesting subject. Many countries have had voluntary restructuring prior to default. Others have had to default and then restructure. And there are various ways to restructure debt.

In the case of Greece, however, restructuring will not be an option. We are committed to our effort and expect our results to be averagely successful. This means we will be on the right track. We will be handling our indicators and working very hard to make it work.

The best way to fix the crisis in Greece is to engage everybody in a constructive conversation. This involves a number of key reforms to reduce the cost of production by reducing transaction costs, leakages, bureaucracy and confusion. This will boost productivity and efficiency and increase exports and revenues.

This is the only viable alternative. It's the only way to turn the tide. If we want it to work, we will all have to increase production. To do this, we have to repair the economies that have leakages. These are economies in which transactions, like starting a business, are too cumbersome. Transactions have to become simple and flexible.

Our challenge is to fight the cynicism and to convince the markets and our counterparts that Greece can serious about restoring confidence and creating a friendly and attractive investment environment. Our top priority is to build an economic model for a larger, vibrant and flexible economy - one that can boost the number and volume of transactions.

Greece deserves a chance to see the program through to the end.

* Elena Panaritis is a member of the Greek Parliament. Before her election in 2009, Ms. Panaritis was an economist at the World Bank, where she specialized in property rights reform. She has lectured at Insead, the Wharton School and the School for Advanced International Studies at Johns Hopkins.