No it cannot. The ratio of domestic debt stock to Greece's GDP is around 120 percent. The public has learned that the budget deficit, which will intensify the domestic debt stock, was not 6 but 14 percent recently when Papandreu administration came to power. Now, to issues shall be highlighted. First question to ask is as to why Greece is the problem of foreigners. Second question is closely related with the first one. Shall the support to Greece be provided at a rate close to market interest rates as precious consultants of German's President insists? The answers to these questions will set forth clearly the problems we are facing.

Answer to the first question: Since the domestic debt stock of Greece is shouldered by foreigners to a high extent, the Greece issue is not a problem for Greeks but for foreigners. In fact, Greece holds a bargaining power. Please recall the Turkey of the year 2001. We were faced with the problem of rolling over domestic debt in the market. This refers to the following: You have to convince those who hold the domestic debt at hand to repurchase the government debt securities (GDSs) in their portfolio again and again at each auction. For the investor it is an opportunity to change his/her portfolio position in each auction. So the trick is managing to resell the GDSs to investors who can change the portfolio position at each auction.

Then, what can a government having domestic debt rollover problems in the domestic market do particularly given that the ratio of domestic debt to GDP is around 176 percent? First, it can declare delinquency or demand to restructure the debt. In that case, international funds can be transferred in. Turkey failed to declare this when necessary. The reason was quite simple: Turkey failed to say this because almost all of the GDS stock was held by domestic investors. If Turkey could have done this back then, the outcomes of the 2001 crisis would have been even deeper and loss of national wealth would have been higher. However, Greece can say this since the debt stock is held by the European banks. Nonetheless in this case the Greek government will be spreading the crisis across Europe. So this is the first point to keep in mind: Greece can in a way behave like Argentina. That it does not is an indicator of acting responsibly. The country fulfills the requirements of being an EU member also accounting the sake of other member countries.

The second option to take is of course Greece starts to take measures to reduce the debt gradually in time. How can the share of domestic debt in national income be reduced? First, public budget starts to have primary surplus. Primary surplus indicates that the government tightens the public budget upon budgetary savings. This is the first indicator that domestic debt can be handled. This method which can convince foreign investors implies tightening the belts for Greek people. For Greece and other Mediterranean countries including Turkey tightening the belts implies raises in tax. It is not a Mediterranean tradition to keep tax rates constant and concentrate efforts on expenditure reducing measures. We are bad at firing or reducing the salaries of public employees; but we are quite good at collecting higher tax revenues. Once you enter this path, the possibility for fund inflows appears. If such a high domestic debt stock is financed through market interest rates, the required budget austerity becomes hard to achieve. A fund transfer from the domestic economy to outside through interest payments emerges. This is a false response to Greece's responsible behavior before the European Union (EU) as mentioned in the previous paragraph. So, this is the second point to underline.

The historic-high Greece bailout package of the EU that took shape last weekend shall be assessed with this lens. What will limit the size of the fund transfer from Greece to the world is the replacement of the domestic debt stock with another debt stock. This is exactly what is tried to be achieved with the IMF and EU funds. This has two purposes: First is to relieve Greece from the trouble of convincing foreign investors to shoulder a part of the domestic debt and reduce the 'error' margin. Second is to reduce the interest payment burden on Greece and shift the natural path of growth for the domestic debt. This is exactly what the question we put at the beginning implies: A bailout plan based on usury rates is against the nature of the concept. And let this be the third diagnostics to make.

It is not rational that the €100 billion bailout plan package mentioned by the EU will be offered upon 5 percent interest rate. Just take a look at the 1.25 interest rate the IMF offer for the first $20 billion part to realize the irrationality here. The purpose of the bailout plan is to reduce the burden on the shoulders of the county and ensure the feasibility of the adjustment process. The purpose here is not to punish Greece. However 5 percent interest rate implies fund flows outside Greece. This is the fourth point to underline.

Let us deal with the fifth and the last point: Why does the EU try to punish Greece? As the surveys conducted in Germany indicate, 60 percent of the public is against the spending of funds for the bailout plan for Greece. Therefore, a mechanism that will enable fund transfers from Greece to the world markets makes sense. Under these circumstance, however, the sacrifice Greece made by deciding to pay its debt gets lost in the shuffle.

This is not an easy problem to solve. Only God can take without giving. Someone should carry the cost. The answer should come from the politicians.

This commentary was published in Referans daily on 04.05.2010