Progressive Governance Conference
Policy Network – Progressive Governance Conference on “The Agenda following the crisis for the center-left”
3rd Plenary Session on “Future jobs and growth: how can the center-left governments to make a difference?”
Prime Minister, George Papandreou, in response to a journalist’s question concerning the problems faced by citizens in Greece and across Europe, said:
“Well, first of all, if we are talking about Greece, obviously we are paying for problems which we have inherited from high debt and deficit, which we have to deal with. And that is why yes, there is a sense of insecurity and salaries and pensions have been cut, and obviously we are in the middle of the path, or of the tunnel, if you like, in moving towards something which is much more hopeful, a viable economy.
And this is what we need, is to create a viable, responsibly viable economy, which provides for security for all and jobs”.
Regarding the role which Europe can play to tackle the economic crisis:
“I think Europe, with all its difficulties today – and I would say, since we are here at this progressive forum a conservative Europe, where we do want to see changes in the governments and have a much more progressive Europe – Europe has great potential. Europe could leverage money, could create Eurobonds, could develop financial transaction taxes, could invest in the green economy, in education and in innovation, for quality jobs and for quality products, and of course infrastructure also.
And this is where I believe is the future face of Europe, the optimistic, if you like, side of where Europe can go, because it has great potential”.
On the government’s action to implement the changes and lead the country out of crisis:
“Obviously Greece is doing its work. Greece is on track. And what we believe is we have to be able to stand on our own two feet. And that’s why we are making changes, innovating in our economy, and we believe this will bring back jobs and security”.
Asked about the financial aid given to Greece and the need for solidarity from the EU countries, but also from Norway, the Prime Minister said:
“Greece is not alone. To the contrary, we had much help and have had much help in this new mechanism which was created, initially for Greece. Then the EFSF, as it’s called, and that has now been applied for Ireland and for Portugal and the future mechanism of the ESM after 2013.
So Europe has shown its help and solidarity in dealing with the crisis that Greece has faced. And if we didn’t have that help, we would be in dire straits, in a very difficult situation, a much more difficult situation.
I would like also to thank Norway too, which in her relationship with the European Union, she has also funded a number of activities. Among them are activities to help us deal with the political asylum/refugee issue, which we have in Greece, which is a very big issue, and I thank Norway for that”.
Speaking about the changes that need to be done in Europe and the need for collaborative work and effort by the member states of the European Union and especially by European progressive political parties, he said:
“The climate in Europe still is something we have to change. There is a lot of ethnophobia, xenophobia, blame games and so on, and this is where I think a progressive politics can come and say well, this is not the way to deal with these issues. We have solutions. Working together collectively, bringing our potentials together: this is the European way. This is what we have been successful at.
We shouldn’t lose that. We shouldn’t lose that impetus, not only for the specific crisis of Greece, but for a wider number of issues.
We still are in a basic crisis. It’s not a post-crisis, really, but it’s still a simmering crisis. The environmental crisis, the migration crisis, as we talked about, other types of crisis in the region, the changes in the Arab world.
This is where Europe I think really can work together, work together positively, rather than try to find who is responsible and who is to blame. And that’s why I think we progressives have much to offer”.
Asked about the possibility of imposing stricter conditions in Greece, from the European states, and the time that Greece will need to climb back to the markets, he said:
“First of all, we haven’t negotiating any new conditions. And we believe we are on track and we are robustly applying a very difficult, but I think ambitious program to make our economy more viable.
Therefore, we obviously will move ahead. Now, whether the markets respond positively as early as we like or not, that is something which of course we will have to deal with, and we will have to deal with, not only in Greece, but also at the European level. But we are not there yet, so we are moving forward.
Well, I can also add that Greece is confident. Other than cutting our budget by 5% with very drastic measures in 2010, we have set in a number of reforms in many areas, in the public sector, the tax reform, pension reforms and so on. And there is of course a time lapse for the results of these reforms, but we already are seeing very important, I think, first signs, such as over the last 4-5 months we have a consistent increase of exports of 40%.
Tourism seems to be up this year, very good possibilities. Inflation is now being controlled.
There is a great interest in investment in Greece, not only in green investment but in other areas also, and we have now created a fast-track mechanism for large-scale investment.
Obviously the markets are still very risk-averse. Obviously the markets still feel the brunt of the 2008 crisis, and anything they see that they are not absolutely sure of they will avoid. This is one of the problems; this is one of the systemic problems in the eurozone also, but I believe that, as we move forward, we will be able to convince even the most doubtful”.
Asked if Greece was the victim of international speculation, but also to what extent is the fault of the Greeks themselves for the economic situation of the country, he noted:
“Well, first of all we have said we are responsible for the fact that we have a big debt and a huge deficit. And, as I said, this is a symptom of some deeper problems in the way we had our governance structures, transparency, making our economy more competitive, our education system, our health system. These are things we are changing.
So the first responsibility lies with us. But that doesn’t mean that there aren’t others that want to make a profit out of a difficult situation. And here we have the derivative market. It’s obvious that there are people that are speculating against Greece, obvious that we have a system, an international financial system, which allows somebody to bet against his or her neighbour and if the house next door gets on fire you get the money.
Now, that’s not a very smart system, and we have asked for greater transparency in the CVS market, greater transparency for the rating agencies, greater transparency in the financial market. This is part of a global agenda of how we reform the financial system and regulate the financial system in the correct way.
This is something which is not only Greek. It’s a wider agenda, but now it is affecting Greece, obviously”.
Regarding the estimates of the EU about the recession and deficit in Greece and the possibility we ask for a new economic aid package, he said:
“Well, first of all the estimates that were made last year by the IMF and the ECB and the Commission did not come out exactly correct as far as the recession. We had a deeper recession than was expected. That obviously changed the outcomes. But still we had a budget cut of 5%, which is a huge budget cut. We were able to reach that.
This year we have our goal of reaching 7.5% of budget cuts from 10.5%. It’s a very big, again, cut, and we are now in the process of developing the policies for this year in order to reach that goal, and we will be announcing them quite soon.
But I think it’s very important because this will bring us very close to having a primary surplus, just one or two billion, I think, away from a primary surplus. And that’s very important in order to create confidence in the Greek economy, not only in the markets but also amongst the Greek people and our European partners.
So yes, this is difficult. Yes, it’s a difficult path. We have challenges. The situation obviously is not easy.
I would also add to this that we are living in an extraordinary time, when every little detail of what is going on in Greece is magnified in international media and everybody has become an expert on the Greek economy. And every day we have everybody predicting one way or another about what may happen in the Greek economy. That is not the most peaceful of environments in which to have development and growth.
So what I have often said is, you know, leave us to our peace and quiet, to do what we need to do. We are doing it, but leave us to our peace and quiet to do it, because that is going to give a sense of security and also a prospect.
But of course if every day we talk about doomsday coming, that is not going to help investment. That is not going to help our banks. It’s not going to help the consumption. It’s going to create insecurity amongst the Greek people.
So we have a battle to fight, in any case. Let’s not make it worse”.