Greece struggles as its tragedy played out on very global stage

Greek prime minister George Papandreou must have wished he never stepped on the plane for Davos, writes SIMON CARSWELL

AN APPEARANCE by Taoiseach Brian Cowen would have filled out the picture. The prime ministers of two of Europe’s most fiscally challenged countries – Greece and Spain – took to the Davos stage and pledged their loyalty and devotion to membership of the “strong” euro club.

Once again, the future of the euro zone became the focus of debate at the World Economic Forum’s annual meeting of the political and business elite. This attracted the most attention on day two at Davos 2010. The other issue of note was the continuing swing of global economic power to the east, as China’s vice-premier, Li Keqiang, showed off his country’s growth.

The Greek prime minister George Papandreou must have wished he never stepped on the plane for Davos. Greece, which is playing the part of the canary in the coalmine for the euro zone this year, has been forced to play out its debt tragedy on a very global stage. “I am in popular demand here in Davos,” he said, referring to the many interview requests he has received.

Undoubtedly the financial crisis is regarded as the first test of the euro zone since its inception in 1999 – a recurring theme in the Swiss mountain resort.

European Central Bank president Jean-Claude Trichet said that other industrialised countries had the same problems as Greece, and that the euro zone, the rest of Europe and the US remained “under stress” as a result of the crisis.

Latvian president Valdis Zatlers said his country was still keen to join the euro by about 2015, a factor that was jumped on by Spanish prime minister José Luis Rodríguez Zapatero. He said the euro’s strength was shown in the fact no country would leave the euro, and that more would join.

Still, Greece is struggling the most. Papandreou wasn’t happy. He denied a Financial Times report published on the first day of the summit that Greece was wooing China to buy up to €25 billion of government bonds. (Another signal of Beijing’s increasing power.) Greece had not sought financing from anywhere other than the bond markets – not from China, the euro zone or other EU countries.

Meanwhile, China and India, once seen as “emerging”, have become established economic players. China’s vice-premier Li said sales of consumer goods rose 15.5 per cent last year and that almost 10 million people were moving from rural areas to cities every year. He avoided the prickly subject of whether China would revalue its currency to allow foreign competitors in.

As Peter Sands of UK bank Standard Chartered, a “co-chair” of the Davos think-in, has pointed out this week, it is not so much power shifting from west to east as from “those who consume and borrow to those who produce and save”. For the Greeks, the borrowing has put it on an uncomfortable pedestal.