The Eurozone crisis is all about confidence; the banks, markets and politicians do not have confidence in Greece being able to pay her debt, even when it has been slashed.
This is a much misguided view driven by a political response to economic woes based on complicated financial instruments, bail-outs, stability funds and the inevitable bank recapitalisations - essentially the same financial engineering that was at the heart of the original collapse in confidence.
A different, previously overlooked, solution is starting to gain traction around cabinet tables and boardrooms in Europe. It is a solution that breeds confidence, based on hard assets - a real world solution built on sound economics.
Greece is blessed with abundant assets that provide a comparative advantage against other states. These enable Greece to export its way out of the current situation, without the need to further write down its sovereign debt.
Rather than requiring bail outs, the energy deficits of Germany and other Northern members of the European Union provide a huge opportunity for Greece. After shutting down eight nuclear reactors after Fukushima, and the planned closure of the rest by 2022, Germany will be left with a severe energy deficit of 79 MWh per year.
Greece, on the other hand, has one of the world's highest rates of irradiation, the power source for solar energy (1800 kWh/m2). At a recent conference in Hamburg, the Greek Minister of Environment, Energy and Climate Change proposed Project Helios, which would see Greece provide at least 10,000 MW of solar energy per year to Germany.
Greece can provide solar energy on a more cost effective basis than the Germans can provide a like amount of renewable energy. It would allow Germany to meet EU rules requiring at least 18% of its energy to be from renewable sources by 2020.
At least €25 billion of the cost of implementing and maintaining such a programme would come from sources within the EU. It has been estimated that Project Helios will create up to 60,000 direct jobs in Greece alone, as well as an even larger number of indirect jobs. Taxation on these jobs would likely generate more than €1 billion per year.
Over 40 years, and without taking into account the positive effect of direct and indirect jobs from this project in Greece and the rest of the Eurozone, this would require a mere 25% Greek profit and value added tax on the profits to recover an amount sufficient to amortise 20% of its total sovereign debt prior to the recent 'haircut'.
Given the renewable energy deficit of neighbouring countries, Greece is perfectly placed to expand its solar and wind energy potential alongside Project Helios. Greece could use such exports to repay more than 40% of its indebtedness, plus interest, over the next forty years.
The logistical value of Greece's chain of 6,000 islands, of which only 227 are inhabited, has also been overlooked beyond scare stories of islands being sold off. In reality, their value is greater than Greece's current indebtedness. The real value of its offshore island infrastructure is as transport ports for LNG supply to other EU counties and for offshore port operations. It is believed such facilities could reasonably be expected to provide at least €4 billion in annual revenues for Greece.
There are also potentially productive hydroelectric sites in Greece and neighbouring countries which could be used as low cost power sources for mineral and manufacturing activities. Of even greater value are the significant oil and gas reserves recently discovered off the coast of Crete. In the longer term, these could make Greece one of the wealthiest Member States of the EU.
Greece is asset rich. There is little need for a loss of confidence and a resultant default to occur that would risk the world economy.
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