ECONOMY

The Portuguese lesson

The election victory of the Socialist Party in Portugal last February was seen by PASOK as clear proof that fiscal audits and real public deficit will lead to political and economic dead ends. The previous Portuguese government of conservative Jose Manuel Durao Barroso was the first in Europe to admit it had broken the 3 percent deficit as percentage of the gross domestic product, determined by the EU Treaty, and to cooperate with the European Commission in applying austerity measures to contain the deficit. In February, Barroso’s party – after its leader had moved on to head the commission – lost to the Socialists of Jose Socrates, with PASOK celebrating it as an omen for its return in power in Greece. Return to do what? To continue the fraud and the tricks of the past, concealing the truth about the economy and insisting on the lie of «strong Greece»? Unfortunately for PASOK and fortunately for the Greek people, such deception has no place in today’s world, where economies compete daily in a liberal market. Jose Socrates told his people the truth after he, too, had completed an audit in Portuguese economy. His economy minister, Luis Campos, announced that the fiscal deficit will reach 6.8 percent of GDP this year, more than twice the EU limit. Campos did not hide the fact that this monstrous deficit will be contained through tough measures such as cutting salaries and pensions and reducing spending on medical care. This week Campos also announced the increase in value-added tax by two percentage points. This is the tough fate of governments which, in their effort to please voters in order to gain time, abandon the problems of the economy and make the situation worse. The Portuguese example proves that if a country has deficits in its public finances it will pay its debts through measures that are painful for its citizens. An indebted economy has no other cure than austerity, whether there be liberals or socialists in office. They should have not allowed the budget to veer out of control. It is not just Portugal. Eurostat, the EU’s statistics body, is preparing a report revealing that Italy has also broken the Stability Pact, since its deficit in 2003 and 2004 exceeded 3 percent. It would seem that Italian Prime Minister Silvio Berlusconi has taken a page out of former Greek prime minister Costas Simitis’s book on how to falsify fiscal data. Yet lies eventually get exposed, and the Commission plans to ask Italy to take corrective measures immediately. So what do PASOK fraudsters have to say now, having accused Economy Minister Giorgos Alogoskoufis of treason? I think Portugal’s example as well as Italy’s are proving that the audit the New Democracy government conducted soon after it came to power was not just imperative but also an act of wisdom. It saved the economy and the international prestige of the country. Had New Democracy continued the deceitful tricks of PASOK, the situation of the economy would have worsened, as behind the fake deficit the public debt would have actually reached gigantic proportions. Sooner or later, Eurostat would have revealed the truth and the country would have been humiliated in all markets, proving it was not just one party acting deceitfully to win votes but the entire political spectrum. Much as the press with entangled interests is trying to hide the truth, the fiscal audit is proof of not just sincerity but also political will to correct public finances and make Greece acceptable to all international organizations.