ECONOMY

What Simitis will not include in his keynote speech in Thessaloniki

The party leaders’ speeches at the Thessaloniki International Fair (TIF) every year is always an interesting moment in the country’s political and economic life. In the case of the prime minister, Costas Simitis in particular, the task is even more interesting and, evidently, more difficult. However, now there are two substantial differences compared to the past; in spite of the ever-heavy presence of the State, the government’s ability to direct economic matters is weaker. Simitis’s other difficulty is related to the coming elections, due by May at the latest. In effect, the government has no more than six months to work. Any pre-election handouts and promises already suffer from two burdens. The first is that it is very difficult to impress the voters they are supposed to be addressing; many of the measures have long been promised and will, therefore, have a minimal effect on the grumbling of labor unions. Second, other measures are bound to have a limited impact on the purchasing power of the intended beneficiaries. In all, the effectiveness of the premier’s announcements is doomed to be limited, in both economic and political terms, given that he runs the risk of being accused of a free-for-all. One of the stickiest points for the prime minister in drawing up his speech is that the possibilities for him to promise new projects has been exhausted; almost every possible project has been included in the EU-subsidized Community Support Framework investment plan. The onus now is on finding the necessary funds to organize and support the operation of these projects. The best example is hospitals; after the politically agreeable pictures of inaugurations, taxpayers and social security funds have to foot the bills. Ideas such as all-day schools, kindergartens and citizens’ information and service bureaus have been late coming but are excellent ideas and are well-received by the public. But the more the people like them, the greater the cost to the budget. So the prime minister is certain to avoid any reference to the need for finding more funds; but this is precisely what one would expect from a responsible head of government. The other parties have a similar problem, as even the main opposition party New Democracy is flirting with the idea of minimum guaranteed social income. European experience shows this is a veritable truth test for all sides in the political spectrum. The same discussion took place in Italy in 1998, when a left-wing government applied such a program on a pilot basis in 39 of the more than 7,000 municipalities. Only last year these municipalities acknowledged that the system was not feasible and indeed, in certain cases, it leads to socially opposite results; the cost of identifying those in need and controling the mechanism is huge. The idea was also abandoned in Britain some time ago. In Belgium, a beneficiary cannot paint his house for fear of losing the stipend. A big issue on which Simitis is expected to place emphasis is the need to improve productivity; he cannot ignore it as it is the only way to narrow the gap between the incomes of Greeks and other European working people. Privatizations may have become popular due to their expected positive impact on the bourse. The way they have been carried out (with the government retaining control) has fiscal benefits for the Finance Ministry; however, it does not ensure that public enterprises will soon be able to make a valiant contribution to the country’s productivity. The real big change for the country would be the pursuit of deep and radical adjustments. It will be difficult for the prime minister to convince people that he is well-prepared for opening the way to the enterpreneurial culture needed for maintaining the Greek economy’s high growth rates. Last, but quite characteristically, the prime minister will not say a word about the changes required in the country’s social security system. This is bound to lag behind the latest developments elsewhere in Europe, particularly in France and Germany, where retirement ages are being upped. The sweeping winds in politics, which new PASOK General Secretary Michalis Chrysohoidis wants in the party’s sails, require courage much stronger than allowed by the fear of opinion polls and, ultimately, the ballot box.