To survive, the Eurozone has to face up to Greece and economic stagnation, former Prime Minister Alfred Sant said today.

Replying to question during a seminar on ‘The Euro Crisis and the Future of the Euro Zone’, Dr Sant said effective solutions to both these challenges were still pending.

“If they boil over, both or one of them could paralyse the proper functioning of the eurozone project,” he said.

Dr Sant said that over the past five years, the eurozone built up strong protective structures to guard it against the financial threat of collapse if one or two members went bankrupt and had to leave the eurozone.

However, a long standing crisis with Greece would erode the stability of the zone and would politically increase the likelihood of similar situations developing in other countries, mainly in the south of Europe where the social impact of bailout programmes had been very hard.

The other challenge was that the eurozone seemed unable to compete successfully in a globalised world. It has been mired in economic stagnation and unemployment and there seemed to be no real strategy for getting things moving again.

The political right claimed fiscal consolidation would do the trick, but it did not. The left claimed governments should spend and invest more but there was not enough political support for this.

So too frequently, the result was that remedies were carried out in too little, too late mode which left things almost like they were.

Answering a direct question on whether the eurozone could survive, Dr Sant replied: “the answer remains like it always has been - too much political capital has been expended, on left and right, in too many countries for the leaders of eurozone countries not to go on keeping it going as best as they can”.

The seminar, at the old university in Valletta, was organised by the university’s Department of Banking and Finance.