ECONOMY

Expose and persuade

Alpha Bank President Ioannis Costopoulos aptly linked the problems of cash flow in many sectors of the economy and suffocation of the market with the poor state of public finances. Speaking at the bank’s AGM, Costopoulos noted that the considerable fiscal deficits contribute to the rough situation, as they create delays in disbursals and payments of the state’s debts to private companies. Indeed, as the state must save about 6 billion euros in 2005 and 2006 (by cutting spending and raising tax revenues) to bring the budget deficit below the 3 percent of gross domestic product that the EU dictates, does it not make sense for the market to be gasping for the lack of this money? This belt-tightening by the state is therefore the primary reason for the problems the economy is facing now, which the prime minister not only exposed, but has reiterated in saying that «we have two tough years ahead of us.» However, those shedding crocodile tears about the hardship are trying to carefully hide the fact that the cause of the troubles the government now faces is the monstrous deficits and the colossal debt it inherited from PASOK. It is worth noting that in 2005 we will have to pay some 22 billion euros just in debt repayment, which is more than what the state will pay for all salaries and pensions. This year, we will pay 10 billion euros just in interest, which is more than all spending on medical care and grants to social security funds; and this year we will pay in interest more than we will spend on all public investments. So who created this huge debt that is choking the economy? Who made Greece hostage to Brussels, having to pay this ransom of 6 billion euros that now suffocates the market, raising the value of rubber checks by 64 percent in the January-March 2005 quarter? These heavy responsibilities must be stressed to the public by the competent government officials, to convince citizens that the new sacrifices they are being asked to make will result in the country’s release from the extra heavy burdens and debts of the past so that the post-2006 tax revenues can be allocated mainly to development and the covering of social needs. Is this public briefing being made systematically and persistently? I would say the opposite. Government officials not only have avoided defending their economic policies and not pointed out the primary responsibilities of PASOK, but are also hiding behind one another trying to be nice and pleasant to voters. Let me give you a typical example: This week there was a meeting at the Economy Ministry with the participation of Finance Minister Giorgos Alogoskoufis, Transport Minister Michalis Liapis and Merchant Marine Minister Manolis Kefaloyiannis about the deficits of state companies, subsidies for sea transport to remote islands, etc. When the latter two were asked by journalists afterward about increases this year or next in fares on train, buses, and ferries, they answered, «The increases will be virtually nothing.» How can this be so when the state covers the deficits of the Hellenic Railways Organization (OSE) and when oil forces the costs of coastal shipping companies higher? All ministers, more or less, have kept themselves locked within their ministries and are only interested in their own public image. When, for instance, a professional group with demands meets with them, the answer it gets is stereotypical: «You are absolutely right, and I, as your minister, am on your side and will satisfy your demand promptly, but the State Accounting Office is refusing credit.» Nobody tells the people, the workers, the professionals, that the situation regarding the country’s public finances is tragic, that we are under supervision by the EU and that unless we cut the deficits, court action awaits us, with fines and funds lost which will prove fatal for development. Certainly all governments, and, above all, those of New Democracy in the past, had been marked by lack of agreement and by feuds and mutual undermining. Today, though, with such serious problems in the economy and the all-out attack by the entangled interests, arguments within the government have a high political cost. The government is not combative and above all it does not attack.