(CBS News) President Obama recently expressed concern over the financial debt crisis in Europe. No one knows more about that problem than now-former Greek Prime Minister George Papandreou, who had lost his job over the situation last November. Greece could become the first European country to abandon the Euro as its currency. In a "CBS Evening News" interview, Papandreou said that the European economy can be saved, but time is short. An excerpt of the interview follows.
Pelley: If Greece were to be forced out of the Euro currency, what would the consequences be?
Papandreou: I think they would be catastrophic for Greece. It would be like saying that a state like California, all of a sudden, would have to change its dollar to pesos or something like that. You can imagine the flight of capital, the run on the banks, the inflation, the loss of G.D.P., of growth.
So this is why even though we are in a very difficult adjustment program, which may need some modifications -- staying in the Euro is much safer, not only for Greece, but I would say for wider Europe. I'd add to this: Greece is also pivotal in the region. Think of the Arab Spring. We're just neighbors to our Arab friends. Think of the Middle East and Israel. Think of the Balkans and our Greek-Turkish relations. It could have very deep geopolitical-- ramifications, if Greece left the Euro.
Pelley: If Greece left the Euro, what would the consequences be for the rest of Europe in your estimation?
Papandreou: My belief is that the markets see what Greece is going through as a precedent for this European construction. That's why Greece does have a problem, but Greece is not the problem. Greece is a paradigm, if you like, for what might happen. So if we get our act together as Europeans and solve some of the structural problems of this integration in Europe, that'll be fine. If we don't and Greece, for example, exits-- then the markets will say, "Well, why not Spain? Why not Portugal? Why not Italy?"
Pelley: And the dominoes begin to fall.
Papandreou: And the dominoes begin to fall. So this is a crucial moment for European integration. It's a crucial moment. They are birth pains if you like for a more integrated or federated Europe, if you like. But this is a very crucial moment.
Pelley: This is the acid test about whether the EU survives, whether the Euro survives, whether this whole idea of European integration is possible?
Papandreou: I think we're at a tipping point, where Europe will either move forward into a more integrated Europe, getting beyond the blame game of scapegoating. We work together, we integrate, or we will start splintering. And that will have a major impact one way or another, around the world. If we're successful, it will help the world economy. It'll help the U.S. economy. If we're not successful, there'll be a very negative impact on the U.S. economy also.
Pelley: How likely do you believe it is that Greece will be forced out of the Euro?
Papandreou: I don't think anyone wants Greece out of the Euro. Greece has a difficult task. For example, let's take the Greek problem is like a company that borrowed a lot, but didn't produce a competitive product. All of a sudden, it had a big debt and people weren't lending to it or lending very high rates. So it had to change.
Pelley: And you believe we are at that fork in the road right now between integration and disintegration?
Papandreou I believe we're at that fork right now. We're at that very crucial moment. And it would may be a moment, which is not a few seconds. It may be a few months. But it's a very short timespan where we have to make these very important decisions..
Pelley: One of the things that President Obama said today was that the leaders of Europe must show a commitment to an integrated Europe. What does that mean to you?
Papandreou: I would very much agree with President Obama. And there has been a hesitancy, an understandable hesitancy, because we're different countries, different languages linking our fate together. But we have to do that, in this international world. And this is part of what's happening in our globe. We have to work together, beyond stereotypes, beyond former racisms and so on. We have to make Europe work.
This means in practice, we should move to a banking union. We should move to a fiscal union, where we monitor more carefully what goes on in each country. We should move into an economic union, for example harmonizing our tax systems, becoming more competitive. We should move into a social union, where, for example, unemployment benefits are centralized in a way where a young person can get a voucher and travel around Europe and find work or be trained in any one of the countries. And we should become a more democratic union. I would believe that we need, at some point, to elect a president of the European Union as a United States citizens elect a president of the United States.
Pelley: Are you talking about a United States of Europe?
Papandreou: Well, we're not there yet. And it may take a generation. But we have to move now, because otherwise the system and the markets are seeing that this system has too many problems. It's too complicated. It has too many imbalances. And that means that they cannot trust. They don't have confidence in Europe as it is today. And the lack of confidence is the most corrosive sense that you can have in any economy, that we had with the banks. And now it's being corrosive for the European Union. So we have to show that we have the mettle, we have the will to move forward. I think that the European leaders will step up to the mantle and will be able to make these decisions. They're difficult decisions, but we have to make them.