ECONOMY

SEV sees no war fallout yet, calls for structural reforms

With the exception of a few sectors, the Greek economy has yet to feel the repercussions from the war in Iraq but the government would be well-advised to speed up structural reforms to counter the impact and to lay the foundation for long-term growth, the Federation of Greek Industries (SEV) said yesterday. «There is as yet no quantifiable fallout from the war in Iraq. It is still too early. Industries have not been directly affected yet, but the tourism and packaging sectors are beginning to see problems related to rising oil prices,» said Odysseas Kyriakopoulos, SEV head. The Greek National Tourism Organization estimated bookings for summer holidays have fallen by as much as 20 percent as a result of the conflict but said the pace could pick up in the second quarter of the year. Greek cruise ship operators, in the meantime, have reported cancellations reaching as high as 30 percent. Greece might be cushioned from the full impact of the Iraq war by the inflow of community funds and 2004 Olympic Games projects, but its total reliance on imported oil leaves it vulnerable to rising fuel prices, said Kyriakopoulos. «The uncertainties generated by the war underscore the need for structural reforms, especially those set out in the Lisbon agenda,» he said. «We need to create room for maneuver.» EU leaders meeting in Lisbon three years ago agreed to implement structural reforms and encourage innovation with the objective of making the region the most competitive economy in the world by 2010. A leaders’ summit last week in Brussels reaffirmed the ambitious goal while acknowledging that progress has not been as swift as they would have liked. Some of the more urgent reforms that the State should implement involve the taxation system and the development law which has yet to be put into effect, said Kyriakopoulos. He also cited the shortcomings of labor legislation and rules governing projects financed by community funds, suggesting more flexibility with overtime requirements for the first and opening up the field to bigger companies for the second. Another critical issue concerns land planning and environmental requirements for businesses. Kyriakopoulos also called for more speed in deregulating the energy market, which was partially opened up two years ago and continues to be dominated by electricity monopoly Public Power Corporation. «Deregulation is not an end in itself. It will create competition, lead to lower costs and higher productivity,» he said. Delays in implementing structural reforms could have a catastrophic impact on Greek competitiveness and the unemployment rate, Kyriakopoulos warned. «The continuously widening trade deficit shows Greek competitiveness is deteriorating and local products unable to compete in overseas markets,» he said.