ECONOMY

A crucial Cabinet reshuffle

The national economy minister in the new Cabinet due to be announced today will be afforded no grace period in promoting and coordinating the reforms required for Greece to sail through the choppy waters of the international economy. The likely departure of Yiannos Papantoniou from the post he has held for the past eight years will signal the beginning of a new phase in the economy, much more complex and demanding, the phase of the euro – the European single currency to be introduced on January 1. The incoming minister will soon have to decide whether to continue with the hitherto slow-going policy of privatizations or go for a boost that will upgrade it into an effective tool for reducing the size of the State and bolstering the dynamic forces of the economy. The program of deregulation in a series of basic sectors, such as energy, telecommunications and coastal shipping, is a burning issue. Business leaders believe that the pace and resolve that the government shows in this field will determine the entrepreneurial climate and the level of investment, both domestic and foreign. These elements will also make a considerable contribution to boosting national income and employment, as well as the fortunes of the stock market, which seasoned observers consider a particularly serious stumbling block in the chances of the ruling party of being re-elected. A significant outstanding issue awaiting resolution remains the determination of the price of natural gas for the newly licensed private electric power producers. The issues needing attention in coming days and weeks are the privatizations of the Hellenic Industrial Development Bank (ETBA) and Olympic Airways, and the sale of a large minority stake in Hellenic Petroleum to a strategic investor. A further crucial task is the development and application of the implementation mechanisms of the European-Union subsidized third Community Support Framework investment plan. The government is determined not to fritter away the 17-trillion-drachma program, which runs until 2006. The planned taxation reform is also among the prominent medium-term issues requiring attention. The government hopes to usher a fairer system and boost competitiveness through a radical simplification tapping the potential of new technologies. This will have to be complemented with an overhaul of the public expenses system, which will involve changes in evaluation and auditing. Reducing public debt and ensuring budget surpluses is a further major concern. Looming above most other considerations for Prime Minister Costas Simitis in forming the new government is who goes to the Labor and Social Security Ministry. Observers take the view that this is the most critical juncture for the last two decades for that particular office and the composition of the ministerial team. Indeed, it is said that the orientations and (electoral) success of the new scheme will largely depend on it. The incumbent Tassos Yiannitsis has been largely held responsible for the cost of the unsuccessful launching of the government’s initial proposals for the crucial issue of social security reform earlier in the year. Whether the prime minister has decided to give a determined push toward a solution or further delay it will become clear today by his selections for the specific ministry, particularly for the post of deputy minister for social security, which is currently held by former trade union leader Christos Protopappas. Outside the incumbents in the ministry, there are very people considered able to tackle the issue without needing considerable time to familiarize themselves with it.