ECONOMY

Document’s goals are obscured by double language

The confusion that has prevailed after the announcement of the «Convergence Charter» by Prime Minister Costas Simitis over the «social» and «pro-business» elements of the government’s economic policy is indicative of the duality of purposes – and often, the duplicity of the language used. Obviously, economic progress creates the preconditions for social amelioration. It is also true that the economic reforms needed to boost competitiveness must be embraced by society in order to succeed. However, if we want to place the horse before the cart and not vice versa, we should not hesitate to speak clearly. Only a change in policy that will unambiguously support entrepreneurship will lead us to economic convergence with our European partners. The government, however, encourages the mistaken assumption that state handouts will lead us closer to European living standards. The result of actions targeted toward achieving convergence will be shown in the growth of gross domestic product (GDP), that is, the wealth the country creates each year. Convergence will be achieved when, as is the case now, Greece’s GDP grows faster than that of the EU as a whole. At present, the gap is 3.9 percentage points. The government maintains that, until 2008, the gap will stay in the 2.5-3 percent range. This hypothesis means that the EU, as a whole, will continue flirting with recession. However, if it achieves growth slightly higher than 2 percent, as current forecasts show, Greece’s GDP must grow by over 5 percent annually to achieve convergence as fast as the government wishes. For this to happen, we will need to find a substitute for the EU inflows that help us build Olympics-related and other infrastructure projects. It will also require a huge leap in private investment, which, in turn, will require attracting foreign capital. However, the charter itself sets contradictory targets when it promises privatizations and «strategic alliances with a view to boosting competitiveness» on the one hand and, on the other, says that the State will «retain a strategic influence in large enterprises and crucial sectors.» This double language is as old as the ruling Socialists’ grudging acceptance of the market economy. However, no progress in this sector has been made. The reason is simple: Without radical reform of the State, most of the charter’s promises will be empty of any real significance. Simitis should have already committed himself to such reform before the 2000 elections by explaining that it is a process that exceeds any government’s four-year popular mandate. At least, now he would be four years closer to his target.