On May 22, 2010 Mohamed El-Arian, CEO of Pimco published an article in the Wall Street Journal under the title “Return of the Nervous Weekend” in which he expresses the hope, among other things, that the leaders of the European Union will recognize the insolvency of Greece rather than view the problem as one of liquidity. If this were to happen, it will entail the restructuring of Greece's debt which is euphemism for Greece defaulting, and the creditors taking a hair cut. And all this can only happen with consequences that Mr. El-Arian recognizes too well and for which he does not hide his dread.
It may come to this in the final analysis but there is another possibility worth looking into, one that can solve the immediate problem and also put down the foundation for a long term solution. The Germans have already suggested that the Greeks sell some of their islands which undoubtedly many Germans would love to buy and have the money to buy them with. But this is such a drastic approach, it goes to the core of Greek sovereignty and pride, and is very unlikely to happen.
What the Greeks can do instead is lease some of these islands on a long term basis -- such as 49 years or 99 years -- to those who would begin to develop them immediately for tourism or something else and thus bring much needed cash to the country right away. This will begin to solve the immediate problem, but concurrent with it must come the effort to put down the foundation for a more permanent and long term solution.
Greece's long term problem is that, like the rest of Europe and other parts of the World, the nation has an aging population that does not reproduce itself sufficiently. The population is shrinking while getting older thus needs immigration from countries where the populations are growing and need a place to which they can migrate and start a new life.
Well, Greece is situated in a region where there are such populations. Not only that but the cultures of Greece and these places have so intertwined over the millennial, they can all get along like pals. That does not mean the old rivalries will die out overnight but Europe as a whole is beginning to learn from such countries as Canada, the US and Australia how to handle populations that come from different places.
I have no illusion about the Greek people suddenly welcoming young Turkish immigrants with open arms, for example, but I can see them welcome Egyptians from Alexandria who might have had Greek ancestors and who might even speak Greek today. But the question remains: What will these Turks or Egyptians or Tunisians or Moroccans or Syrians or Jordanians do in Greece? Well, they will work in agriculture, in hotels and most importantly in factories which will probably be built and run by Germans or French.
This will help provide the long term solution that Greece is looking for, and may even serve as a prototype for the other Mediterranean nations that have problems similar to those of Greece and are looking for a viable solution.