ECONOMY

Investment scarecrows

The world is awash in capital whose owners are looking for profitable investment opportunities. Some of them have inquired with Greek authorities even before the present government took office 13 months ago. But most either received no answers or retreated in the face of inexhaustible red tape. Attracting more foreign investment was one of the expected positive repercussions of Greece’s entry into the eurozone. Monetary stability, a satisfactorily developed banking system and a relative lack of big foreign investments seemed to bode well for more foreign capital. However, «most foreign investors seem to think that we are trying to dupe them,» says a senior minister with a grudge. What is wrong? Public deficits, higher inflation, problems in foreign relations, language, the legal framework and the geographical position are not real obstacles to the expression of genuine investment interest. The real «monster» is public administration. And entangled local business interests often act as a scarecrow. In fact, the more hospitable the top government tier is, the more hostile state agencies are and, very often, the more aggressive the opposition of entangled interests becomes. More than 3 billion euros of investment funds in tourism, energy and real estate development have been frozen. The projects will not move on despite political will, ministerial exhortations, fresher administrative decisions, mature court verdicts, and even direct pressure. A well-known story is that of «the priest with the beehives,» who has reportedly hampered for years the realization of an important investment of Japanese capital in wind power in Laconia prefecture, in the Peloponnese. Former prime minister Costas Simitis stood aghast when a high-level official told him in Japan about the adventure of a relevant permit issued in 1999 but canceled in 2002. This investment, initially at 50 million euros and in full operation at 300 million euros, obtained a new permit in 2004 and is, simply, waiting for the (new) decision by the Council of the State in May 2005. Two big obstacles Competent ministers and prime-ministerial advisers speak of two great obstacles: the lack of zoning studies and the power of «administrative collectives.» Despite the constitutional provision for Special Zoning Plans for Tourism and Wind Energy by the state, nothing has been done. The Council of State has been therefore rejecting almost automatically the permits issued by government agencies or independent authorities (such as the Regulatory Authority for Energy, RAE). «Despite the sincere efforts by employees in the competent ministry,» says a top government official, most files «are left to gather dust.» The second great obstacle is the power of the state bureaucracy. The combination of onerous, unclear and complicated legislation leads big projects to one rejection after another. The public administration «does not have the ability to judge complex projects» and therefore the whole state «moves backward,» a prime-ministerial adviser explained. To this situation, which is equally well known to officials in the former government, the government is reacting in three ways: – It is asking agencies not to close files but monitor them and give (any) replies; – It is coordinating competent agencies to handle jointly the problems that emerge; and – It is making it clear that public and municipal authorities, state and other agencies should not just wait for state funding but facilitate business opportunities capable of bringing in taxes and creating financial activity and new jobs. For the moment there is still some real optimism; but that cannot bring a definitive solution by itself.