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Political instability is the biggest threat to Greece

21 March 2014 / 16:03:48  GRReporter
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Anastasia Balezdrova

Over the past four years, Greece has been able to achieve the desired budgetary consolidation, thus creating the basis for stabilizing the economy. However, structural reforms are still outstanding which can ruin what has been accomplished.

The issue of what reforms are and why they cannot be implemented in Greece was considered at a discussion on "Reforms and Economic Development", organized by the Hellenic Foundation for European and Foreign Policy ELIAMEP, the Institute for Economic and Industrial Research IOBE, the Greek branch of "Transparency International" and other non-profit organizations.

IOBE head and a lecturer at the Economic University of Athens Nikos Vettas pointed out that the governments had recently failed to remove the significant imbalance faced by the Greek economy until the outbreak of the crisis in 2009. "In 2009, the gross national product was -3.1%, in 2013 -3.9% and the forecasts for 2014 are that it will be 0.6%. However, while the problems with the budget are solved, the structural reforms are lagging behind. There is a total lack of competitiveness, many companies that are financed by the state budget do not want any changes, and every day organized groups attempt to blackmail the government not to affect their corporate interests," said Vettas, adding, "The reforms have to be implemented. Otherwise, the consequences for Greece will be negative. One scenario is for the current situation to become permanent and for Greece to remain a poor European country. The second scenario is even more dangerous. After the completed budgetary consolidation, the Greek economy is no longer such a great threat to Europe. So, the danger to really find ourselves outside the euro area is real this time."

European Commissioner for Maritime Affairs and Fisheries Maria Damanaki stressed that both the European and the Greek economy require significant and bold reforms. "The efforts of the European Union to overcome the economic crisis have led to major reforms in the modus operandi of the euro zone and in the coordination of the economic policies of the member states."

As for Greece, she said, "The primary surplus and other data are encouraging but the reforms are lagging behind. Thus, despite the cuts in wages and pensions, Greece has gained nothing from the international markets as exports have declined. Competitiveness cannot be improved by reducing labour costs alone. Reforms are required in the functioning of the market for goods and services, in linking education and vocational training to the labour market and in the tax function of the state. Restructuring, improving competitiveness in all areas and dealing with bureaucracy will make the Greek economy competitive and outward-looking."

Maria Damanaki stressed that the greatest fear and danger for Greece is the lack of political stability, urging all political forces to unite around the development of a national plan for economic recovery.

Minister of Administrative Reform and e-Governance Kyriakos Mitsotakis said that despite the difficulties over the last few years, the majority of the political parties have agreed on the main direction of Greece. He acknowledged that the reforms had not been carried out, indicating that the first reason for this was the government commitment to settling the issues of budget policy. "The most important reason for me was the second one, namely the inability of institutions to implement them", which, acording to him, is a product of the Greek "specificity" in a negative sense. "This is the reason why this process is far from perfect whereas all other countries, which had problems similar to ours, have long triggered the reforms and are already in the process of recovery."

To support his words he referred to a popular advertisement in which the residents of a village gather to solve the financial problems of the municipality. Having listened to the most extravagant proposals, the mayor forms a task force and one of its members, the chanter, says/sings, "We need to carry out reforms." Everyone in the cafeteria is petrified for a while and then one of the fiercest "speakers" says, "Take it easy with the reforms" and all start shouting over one another again.

Kyriakos Mitsotakis described the existence of different groups that try to impose their corporate interests to the detriment of the public interest. "Greece is a country of discrimination. Some people have more rights than others, because they have been able to pressure the executive power and to obtain them. This is true for both the public and private sector. An example of the first case is the teachers who refuse to subject their work to control, although they know that their number is the largest in Europe, they receive very low wages and the quality of our education is very poor. In the private sector, you can see the response of pharmacists, dairy manufacturers and publishers."

A few hours before the debate, he had become the victim of a trade union campaign. About 20 teachers had broken into his political office to protest against their inclusion in the mobility programme of the public sector, more of their colleagues shouting slogans in support at the entrance of the building. The protesters insisted on the opening of 200 new jobs in addition to their demands. They left the building only after the intervention of members of the riot police forces.

Tags: PoliticsEconomyBudgetary consolidationReformsMaria DamanakiKyriakos Mitsotakis
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