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Victoria Mindova

Severe measures and civil unrest haunted Greece recently. We asked the President of the Hellenic Chamber of Commerce Konstantinos Mihalos to suggest how the Greek economy would develop and what twists to expect on the political stage. In his opinion, the government has neither the political will, nor the manpower to implement the austerity program of the country and early elections and Memorandum 3 are awaiting Greece.
 
The austerity plan was adopted last week that will bring new extra taxes, surcharges and in general, a new tax burden for the citizens and for the large companies and industries which are also suffering from the crisis. What is the position of the big business on this issue?

The problem again is that the policy is applied, which repeats the mistakes of the previous Memorandum signed in May last year. Even then we stated that this mix of policies and measures would surely lead to a deadlock, because it mostly relies on revenues from higher taxes rather than on budget spending cuts. When this policy is applied in times of recession it is natural to expect that it would take any opportunity for growth. The first failure is now supplemented with the same recipe and the same policy that is set in the austerity plan and in Memorandum 2. The market can not meet the needs of economics and business, not to mention the return of economic growth.

And here applies the expression that when you milk a cow you have to feed it. Therefore, we insist that there should be measures to stimulate the economic growth, to be implemented in parallel with the fiscal consolidation. After two years of attempts of the Hellenic Chamber of Commerce, the country's prime minister sent a letter addressed to the relevant commissioners in the European Union, through which we tried to release the funds for the National Strategic Development Program. These are 15 billion euros, which are allocated for Greece and we would like to be granted without the obligatory participation of the state. And that money can not be used since 2009 due to the negative balance. It will be invested in public projects and to stimulate the economic growth and employment, which is one of the biggest problems in times of recession. The money from the National Strategic Development Program will stir private investment too, because as long as the Memorandum is in force the banks can not receive money from the capital markets. This results in fiscal strangulation of the market. The banking system of the country is "sick" and the private economy, which has all the prerequisites to be both innovative and competitive, has no major funding sources and it can not develop these qualities due to the lack of cash flows. So, neither Memorandum 2, nor the austerity program can be applied adequately, because things will not get better only with high taxes. Under these conditions it is also very likely to have Memorandum 3.

In this case, I can not help but ask what are the most pessimistic scenarios about the development of the Greek economy?

If we continue with this policy, which was adopted last week, without being able to change the parameters of the contract, it would suffocate the private economy even more. Furthermore, the massive privatization program, combined with the current low market prices and lack of clarity whether the distribution networks in the energy, water supply and other sectors would be kept suggests that privatization revenues would be much lower than expected. Under these conditions, there is a certain fear that we would reach an economic deadlock and loss of any social support.

Why is keeping the distribution networks, for example in the energy sector, more important than the production units in the privatization process?

The experience worldwide shows that the state should not give the right to control the distribution network. Do not get me wrong, I do not speak on behalf of some national pride. It is a strategic position in the privatization process.

We have already mentioned the problems of cash flows in the banking and the real business. However, Greek companies, especially large industries, continue their activities and still prevent losing jobs. What causes this? Are there alternative sources of funding and if "yes", what are they?

Funding is extremely difficult under these conditions. Even if a company or an entrepreneur has a financial basis to stand on, it runs out of it sooner or later. Currently, the business is absorbing the money collected over the years, which is largely due to the decrease of bank deposits. This phenomenon is due to two main reasons. On the one hand, we have the catastrophic communication means of the current government, which is talking about economic "giants", "guns at the negotiating table", "negotiations with the back pressed against the wall." Such statements only encouraged the withdrawal of funds from Greek banks. In recent months, however, deposits were drawn mainly because the income is not enough and the costs are high. This applies both to people and business. Thus, the Greeks begin "eating the ready money," and the businessmen who have some savings are forced to throw them into the battle with the crisis. As you can see, this process has both a start and an end, which seems to be very close.

Do you anticipate lections?

I believe this is the scenario most likely to come into our political reality in September. It may be inevitable, because there is no light in the tunnel at the moment. The necessary reforms are not applied and this will most likely lead to early parliamentary elections.