ECONOMY

EU club demands changes

Greece faces a series of challenges and dangers when the European Union economy opens its doors next week to another 10 members. The internal balance of power we have come to know up until now in the EU’s economy will shift, and the level of competitiveness among the Union’s smaller countries will increase sharply this decade. EU funds aimed at helping poorer countries improve infrastructure will largely be channeled to new members, which means that flows toward Greece, Portugal and Spain will lessen. Evidence so far also points to a similar shift in the movement of private business capital. The basic question that needs to be answered is how prepared Greece is for this new environment. The answer is that Greece, unfortunately, will fall further behind in Europe in the competitive rankings because up until today it has not pushed ahead with major reforms which would have boosted the economy, making it more productive and more attractive to foreign investors. This is not only the view of the market and its participants but also of officials at EU offices in Brussels. About a month ago, foreign investors were informed that the future of the Greek economy will probably take a turn for the worse with the broadening of the EU. A recent study of competitiveness published by the Financial Times, said that Greece ranked in last place of the current 15 members. The study’s forecast showed that it will even be leapfrogged by some of the poorer countries set to join the club on May 1. The 10 new EU members are Estonia, Cyprus, Latvia, Lithuania, Malta, Hungary, Poland, Slovakia, Slovenia, and the Czech Republic. Markets experts say that this change is due to the big differences between member states in the technical know-how and human resources they offer. So what can the Greek economy hope for? Economists argue that Greece needs to quickly outline a strategy regarding its place in the EU and at the same time deregulate the private sector, which is a productive force. It is unacceptable, for example, that that the banking system in Bulgaria and Romania has been deregulated by up to 90 percent while in Greece about 50 percent of it is still in state hands. Another problem area is education, at a time when the competitiveness of countries is determined by knowledge and how well educated its human resources are. The central and eastern European countries set to join the EU offer not only cheaper but also better trained human resources. Greece will need to carve out competitive advantages and attract foreign investment, among other things. Brave reforms are needed for the economy to grow and for businesses to be able to broaden their activities abroad. A dialogue which should have been started long ago between all involved parties should relate to the piece of the puzzle which determines Greece’s role in the EU, and to set out a vision regarding where it belongs in the new European era. Slovakia, for example, will transform itself into the country that will produce Europe’s cars and is attracting huge investment from America, France and Germany. Ireland has specialized in technology and drawing gigantic investments while creating jobs and adding to economic prosperity.