SEV timid on investment

The chapter on the fiscal audit is now closed, Economy and Finance Minister Giorgos Alogoskoufis stated recently, and a new cycle of policy to tackle the multiple problems of the economy is about to begin. The economy’s sliding competitiveness is one issue that his predecessors had quite forcibly pointed to over the last few years. Alogoskoufis has followed suit, asking for the obvious (just like his predecessors) from the Federation of Greek Industries (SEV) – to invest in the country. Greek industrialists were supposed to be the first to rush into making the most of the positive climate created by investment incentives and tax reform laws, before their foreign colleagues come in, if they ever do. For the time being, SEV is not responding to calls for action, avoiding risks. One might observe that Greek industrialists, who operated for years in an environment of state protectionism, are now unable to move in the direction the Greek economy needs. This has illustrated the weakness of the Greek middle class, which has hardly ever pushed for reforms willingly. On the contrary, it has supported dubious political decisions that largely stemmed from strictly party political objectives. Curiously, this has been confirmed once again these days as politicians beg for investments but SEV, through its chairman and executive president, Odysseas Kyriakopoulos, confines itself to supercilious carping. Last week, for example, Kyriakopoulos said that the bill excluding media owners from state tenders makes foreign industrialists laugh. This is the same man who, through all the previous years when «national suppliers» monopolized procurements, never breathed a word of criticism. But now that an effort is being made so that the country can escape this oriental bazaar of kickbacks and corruption, ideologically deified by Costas Simitis’s PASOK, Kyriakopoulos feels moved to criticize. A glance at the Bank of Greece data on the current account balance from January to November 2004 underscores the sinking of the Greek economy, its shrinking competitiveness and the inability of the present economic model to contribute to growth. Exports in the first 11 months of last year came to 11.4 billion euros, while imports rose to 34.4 billion euros. The trade deficit is immense, and the question is how it can be narrowed in the future. A large part of the funds needed to continue importing is covered by revenue from Greek shipping: In the same period, shipping brought in 12.09 billion euros, clearly more than the influx from Greek exports. Maybe the success of shipping is also based on the fact that the state cannot influence it, keeping it safe from state subsidies and predictability. The figures illustrate how Greece funds the large deficit on which its well-being is based through resources from shipping or elsewhere. This cannot go on forever, nor can we wait for the good God to save us: He is not responsible for the red tape nor for improving our quality of life. The country is in immediate need of real investments from Greeks or foreigners, with clear and transparent rules for all. In this sense, the field of the real economy will be where the New Democracy government will be tested. If it succeeds, it will add to the Greeks’ income in a way no one will be able to dispute. If not, it will be the same old story, with Greece taking a few more steps backward.