Greece is facing a total economic meltdown in a few days, due to its ongoing, unsolved sovereign debt crisis. For the last five years the Greek government has pursued under pressure from the “troika” a harsh austerity policy, which has now been rejected by the people of Greece in a referendum.
In the last five years the EU, IMF and the Greeks have failed to come with a structural solution for the crisis in Greece. And since the new left-wing government got into power five months ago, things have only worsened as the new government has failed to reach an agreement with the other euro-countries.
Briefly stated the EU and the IMF want that Greece will implement more reforms and more austerity, while the Greek government seeks debt relief and new financial support. However, in my humble opinion both sides fail to come with a structural solution for the bad Greek economy. In the short run new monetary aid might lighten the troubles of the Greek people, but this will only leads to the same situation as now.
The main problem of Greece its lack of capacity to earn money, as a nation. More austerity will not create any earning capacity by itself. Instead there should be looked for a way for Greece it increase its national income. If there is sufficient income to repay debt, the amount of debt is of secondary importance.
My solution for Greece is plain and simple. As we all know Greece is a sunny, very sunny country and is hence a suitable location for harvesting solar energy. The electricity generated in this way, then could be exported to, say, Germany.
One way to implement this idea is to “rent” the roofs of individual Greek citizens and to install solar array on it. A similar method would be a German-style feed-in tariff, which would allow the owner of the solar array to sell of his excess electricity back to the grid. Both methods will provide cash in the hands of ordinary Greeks.
Another approach would be for the state to install solar farms on public land. In this case the revenue will flow to the Greek treasure, which will allow the government to fund its expenditures. This might help to ease the budget cuts.
Anyway mass deployment of solar arrays in Greece will create jobs as those arrays need to be installed.
A problem with this idea are the required capital investments. If there would be broad political backing of this plan among the other euro country, the ECB might be willing to provide funds to start up this program.
There are several reasons why other euro countries might support this plan. First, solar arrays need to come from somewhere and Germany is one the largest producers of these things. Secondly, it will help the EU to meet its carbon reduction aims and in particular it fits within Germany’s “Energie Wende”. Third it will reduce Europe’s dependence of fossil fuel and will make the EU less vulnerable for blackmailing by countries like Russia.
However, if the EU political elite would refuse to back this idea financially, the citizens of Europe could make a difference by raising the money themselves through crowd funding.
This program could be expanded to other sun-rich, weak economies in South-Europe. Italy, Spain and Portugal are other euro countries which are struggling with economies. They could also use the revenues of exporting electricity generated by solar power.
An important side effect of this program would be that the ties between North and South Europe will become stronger as North Europe will be the primary buyer of Southern solar power.
I am not the first and certainly not the only one who has proposed solar power as a (partial) solution for the economic problems in Greece and other South European countries. One important program is the Helios project.
Massive deployment of solar power in Greece, together with debt relief and economic reforms will help in my humble opinion the Greeks to overcome their economic troubles and to have prospects of a bright future.