November 7, 2011
Economist Hans-Werner Sinn is the president of the Institute for Economic Research (ifo), a leading German think tank in Munich. He spoke to SPIEGEL about the euro crisis, the growing uselessness of a bailout and a possible way back to the drachma for Greece.
SPIEGEL: Mr. Sinn, the Greeks have decided not to hold their referendum. They want to keep the euro and allow themselves to be rescued by Europe. Can we all breathe a sigh of relief?
Sinn: What politicians refer to as a "rescue" will not actually save Greece. The Greeks won't ever return to health under the euro. The country just isn't competitive. Wages and prices are far too high, and the bailout plan will only freeze this situation in place. So it's in Greece's interest to leave the euro and reintroduce the drachma.
SPIEGEL: How would that work?
Sinn: It must happen quickly. Greek banks will have to close for one week. All accounts, all balances and all government debt would have to be converted into drachmas. Then the drachma would depreciate.
SPIEGEL: In that case, Greek citizens would try to empty all their bank accounts as quickly as possible. There would be chaos.
Sinn: One would have to manage. Granted, there will be a localized storm; but, afterward, the sun will shine. Wealthy Greeks transferred their assets to safe havens abroad long ago. The money will come back to Greece only once Grreece has re-established its competitiveness.
SPIEGEL: What sort of exchange rate do you envision between the euro and the drachma?
Sinn: If Greece depreciates (its currency) by around 44 percent, the nation will be about as expensive as Turkey. Then Greek products will start selling again, and tourists will start returning.
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