And unemployment will rise? The I.M.F. is estimating that it’ll reach 15 percent in the next few years.
Any unemployment frightens me. But the biggest fear we should have is of getting into a negative spiral where our current problems are not just a phase we have to get through to get the economy growing, but will feed into a vicious circle of depression and lack of confidence in the country’s future. To get out of that, you have to keep talking and working for growth.
The constructive part will be the other kind of changes that will bring back consumer confidence and foreign investment. And secondly, there is a social balancing act we have to do - provide a sense of justice by going after tax dodgers and the kind of conspicuous consumption practiced by people you know are not paying their full share in taxes. And finally, there must be a safety net for those who will inevitably be in trouble.

Even the I.M.F. is not sure that Greece will be able to pull out of this one.
At the moment the international story about Greece is that it’s a basket case living beyond its means. That contains an element of truth, but has been blown way out of perspective. Greeks work more hours than the O.E.C.D. average and they’ve managed to close the gap in income with other E.U. countries. If you go around the Balkans you’ll see Greek banks dominating, not to mention shipping [companies]. In 2003-4 we were the fastest growing economy in the E.U., faster than Ireland in 2003. But we didn’t use that window of opportunity to do the kind of restructuring that was needed. So now we have to move from a consumer-led, construction-based growth paradigm to an investor-led, export-led, new tech-based green paradigm.

Will there be more privatizations?
Some. For example, we’re issuing four new licenses for casinos. This will hurt the existing casinos, but bring revenue for the state. There’s also a lot of unregulated online gambling that we need to look at.
We have high stakes in energy, ports, telecom, water, banks, and then we have real estate that needs to be exploited properly. I don’t mean forests, but commercially interesting real estate inside the cities.
The state sits on some very expensive property that could be sold, rented out, part of a commercial vehicle that could be floated. Estimates of the total value of real estate owned by the Greek state vary from the very conservative, 30 billion euros to the wild, 300 billion euros. Somewhere in between lies reality.
On the expenditure side you’re cutting a lot of fat that exists, and that doesn’t hurt growth. You have this potential for unleashing parts of the economy through opening up closed professions and changing conditions in the labor markets.

Nevertheless, Greeks are not exactly anxious to get jobs in the private sector.
Greeks are traders by nature and they do very well when let loose. But in this country entrepreneurship has [received] a very mixed review from people. That partly has to do with heavy hand of state and a particular political culture that followed the end of dictatorship (in 1973). Once you’ve built all these impediments to competition, it’s much harder to take them away.

The markets have savaged the euro. Will your reforms be enough to stop this trend?
I think that the markets have been very skeptical in adapting to a new reality, which is that there is a new government that is doing things very differently to how they were done in the past. If you look at the economy’s fundamentals today and compare them to four months ago, we’re hitting the milestones we said we would. Yes, we’re in a recession, but [we are] taking decisions to address them. That doesn’t justify the kind of borrowing spreads we’re seeing.

   Email This Post      Print This Post       Previous