ECONOMY

Investment subsidies are fine but the method of appropriation leaves the door open to fraudsters

As expected, Wednesday’s parliamentary discussion on the budget did not offer any insights as to where the economy is going, with opposition rapporteurs resorting to scaremongering once again. Because at least until January, when the European Union’s finance ministers’ council (Ecofin) will confer on whether Greece has abided by the strict dictates of the Stability Pact, the main opposition PASOK party will continue to make the economy the centerpiece of its anti-government campaign. It is time the government reacted with initiatives to bolster the confidence of business and the labor force. Just as in March, when the prime minister announced a slew of measures that improved the business climate by showing that the government does indeed dare to take bold measures, he must now assume responsibility for a new wave of changes. In order to do that, PM Costas Karamanlis needs to be closely linked with the country’s progressive and productive forces. Primarily, of course, with working people, who want to see convincing programs for fighting unemployment and boosting the cost of living. Equally, he must be mindful of entrepreneurs who are fighting to stay on top and succeed both at home and abroad. I am aware that ministries are under siege from business people pressing for incentives, supports and subsidies with the sole aim of swindling the state. Neither the country nor the government stands to gain anything from such people, who can only create more scandals. I read, for instance, the occasional statements of Development Minister Dimitris Sioufas about the response of entrepreneurs to the investment incentives law, to the effect that applications for inclusion of schemes under the law, enacted in March, are nearing a total value of 1 billion euros. This is no doubt good news but we would say to Minister Sioufas that such a rush of businesspeople taking advantage of subsidies is only to be expected when the government is dispersing money (the subsidies amount to as much as 40 percent of the investment). Those who are older will remember that many of today’s lame ducks that go out of business or move to neighboring Balkan countries have also benefited from previous investment incentives laws. Now the market is again awash with rumors that, along with good honest businessmen who want to make good use of the subsidies and see their firms grow, sit many fraudsters. They sometimes succeed in their pursuits by overvaluing land and fixed-capital investment. After realizing their initial windfall gains, they don’t hesitate to shut down their ventures. Ministers will retort that the committees evaluating the applications make a thorough job of it. But who makes up these committees? State officials and party functionaries. Is there a banker on the committee who finds an investment viable and, for this reason, quietly decides to participate in it? Surely not. The door to the waste of hot state funds is therefore open. Mr Prime Minister, ask your good economic advisers to draw up a list of the 10 most successful Greek businesspeople, those who run export companies, who innovate with new products, who lead the market by selling reliable and reasonably priced products, those who are neither subsidized by the government nor are suppliers to it. Ask them how they came to lead the market and what it would take to see hundreds of other successful businesspeople like them.