ECONOMY

The government’s lack of boldness bodes ill for convergence with rest of EU

Tuesday’s Inner Cabinet meeting did not deal with the draft law for reforming the administration of state-controlled utilities, as had been originally scheduled, but instead centered on an older piece of draft legislation – approving a European Union regulation concerning the fight against money laundering. Why did they dig up a «routine» draft law instead of dealing with important structural changes in the economy? The only possible answer to the question is that the government has lost its initiative for good and is being dragged into the noxious environment created by irresponsible television channels bent on spreading the message: «All politicians are equally corrupt and incompetent.» However, the future of this country will not be determined by the supposed revelations of corruption that have been staged by media entrepreneurs, but by specific measures to help the economy recover and grow, as well as improve and upgrade education and health services. The Greek people voted for this government so that it may rehabilitate the economy and put it on the road to convergence with the rest of the EU, promote a knowledge-based society, stem unemployment and fight poverty. Instead, we are now seeing a frightened team anxious about what TV channels will choose for fodder each night and whose minister’s private secretary they will expose. If the government had work to show for itself, if investments were made and working people felt secure about their jobs, no one would pay any attention to the shameful media. I read in the latest report by the Organization for Economic Cooperation and Development (OECD) that the living standards of the average Greek are not expected to reach those of the average European in the old 15 member states before 2027, unless the country proceeds with structural changes. In contrast, if such changes were to be adopted that made the labor market more flexible, convergence was projected to be achieved by 2022. And if these measures were accompanied by the liberalization of markets, such as that of energy, the year of expected convergence is brought forward to 2018. The OECD argues in the report that the structural changes it recommends would increase productivity and labor supply in Greece, boosting the potential growth rate from the 3 percent to which it is expected to decline in coming years to 4.5 percent. But is it only structural changes that are not making any progress? As it emerged during last week’s visit by EU Regional Policy Commissioner Danuta Hubner, despite the government’s efforts for increasing the absorption rate of EU investment grants, the danger of losing funds remains. For this not to happen, the total budget of investment programs to be processed and approved in the next 14 months for grants under the Third Community Support Framework – which expires at the end of next year – must equal that of programs approved over the last five years. As the newspaper Naftemporiki writes, between 2001 and October 15, 2005, the total budget of definitive contracts signed amounted to 18.48 billion euros, or 54 percent of the total public contribution. Will the next 14 months be sufficient for the remaining 46 percent to be processed? Unfortunately, the government seems to lack the determination to face this challenge.