?Credit ratings of some nations simply not fair, not real?

Maintaining that Europe?s woes were a result of the 2008 subprime crisis in the US, the ambassadors of Spain, Greece and Portugal on Friday strongly criticised the credit rating agencies for their harsh actions, but were resolute in their belief that Europe?s future was tied to the euro.

In an interactive session at Express Adda here, Ambassador of Spain Gustavo Manuel de Aristegui and his Greek and Portuguese counterparts, Ioannis Rapttakis and Jorge Roza de Oliveira respectively, said their countries were pursuing a difficult programme of reforms. The session, co-hosted by Shekhar Gupta, Editor-in-Chief, The Indian Express Group, and K V Kamath, non-executive chairman of Infosys and ICICI Bank, sought to throw light on the difficulties that Europe faces, and life beyond the current crisis.

Rating agencies whose actions have been under a cloud since the collapse of Lehman Brothers were in the line of fire of the three diplomats. ?Credit ratings of some of our nations is simply not fair and simply not real. Nobody can say we are about to be downgraded to junk status because it?s simply not true,? said Aristegui.

Raptakis suggested that Europe should not rely on US-headquartered rating agencies. ?Something that we have to blame Europe for is that we have not established a rating company of ourselves and we rely on three America-based rating companies,? he said.

Oliveira complained that when Portugal asked for a bailout on April 11, that evening the agencies downgraded its sovereign rating to junk.

While India too faces a risk of downgrade due to inadequate policy reforms and high fiscal and current account deficits, Kamath argued for a united response.

?Euro breakup will hurt India?

Arguing for a stronger Euro at an interactive session at Express Adda in Mumbai on Friday, Ambassador of Spain Gustavo Manuel de Aristegui said the problem is not going to be solved by dismantling Euro but by strengthening it further. ?If something goes wrong with Europe, it will impact the whole world,? he said.

His Greek and Portuguese counterparts, Ioannis Rapttakis and Jorge Roza de Oliveira respectively, agreed. ?A breakaway of the Eurozone would be devastating not only for itself but for the rest of the world and it is something that no one wants. India too won?t be a better place if Euro breaks up and there is a huge tragedy in Europe,? said Oliveira, adding that everyone in Europe is of the opinion that Euro is an achievement that is irreversible. ?Once you are there, you are there to stay.?

The Greek Ambassador, in fact, thanked the crisis since it helped them see the problem and deal with it. ?We have started a lot of our reforms ? the pension system, health system… they were large and could not survive the way they were… because of the crisis we managed to make them smaller and more efficient,? said Rapttakis. There will be no Grexit (Greece exit from Euro), he said, adding none of the 28 members will exit the European Union.

The ambassadors also called for enhanced co-operation and said they have to make the monetary union and political union work. Aristegui called for ?budgetary co-ordination?.

Responding to a query on the direction that they want growth in Europe to take ? the Japan way or the India way ? Aristegui said the best formula is somewhere in the middle. ?It is a demand crisis and you have to act ? have austerity measures on one hand and stimulus plans for the economy on the other hand,? he said.

The Express Adda was attended by RBI deputy governor K C Chakraborty, Nikhil Meswani, executive director, Reliance Industries, Hemendra Kothari, chairman, DSP Blackrock Mutual Fund and Nilesh Shah, president, Axis Bank among others.