ECONOMY

Fires and economy subject to common weaknesses

The large forest fires which have raged across different parts of the country since Friday provide another example of why Greece is not the economic tiger of southeastern Europe. Regardless of whether the fires were the result of an organized plan by arsonists as the government implies or a combination of factors, i.e. arson, negligence, et cetera, the cost to the country’s ecological system will be very serious for years to come and its economic impact significant, although manageable. Once again the fires are giving politicians of all colors an opportunity to fight it out, blaming each other for the inefficiencies of the fire service and other agencies responsible for handling the current situation. There is no question that the current government bears the prime responsibility for the visible lack of coordination of various units, firemen and policemen in putting out the largest fires experienced by the country in decades. But here as on other occasions there is a common denominator. The chiefs of the fire department and other agencies may have been appointed by the conservative government but the structure, the people and the culture of these agencies and organizations have been the result of actions taken by successive Greek socialist and conservative governments in the past. Any major attempt to streamline their operations to make them more efficient has been resisted by a large number of operatives within their ranks who come from different political strata. Their common goal is to preserve the status quo and judging from the outcome, they have succeeded in doing so, because they have had political backing from factions in all political parties. Similar situations are being encountered in other parts of Greece’s economic life. The social security system is an example. The majority of the politicians in the two main parties know very well what has to be done to tackle the problem. Raising the effective retirement age may be a painful but necessary measure. However, almost no one dares to say so because they know it is unpopular. Instead they opt for short-term remedies, such as finding extra funds to finance the burgeoning deficit, merge various pension funds and go after the dodgers of social security contributions. Needless to say, they have been using the same arguments for years to no avail. Another example is the deterioration in the international competitiveness of the Greek economy as shown by the large current account deficit in excess of 11 percent of GDP. This deterioration has been steady but has not come to the fore because the Greek economy has been growing by 3.5-4 percent per annum for more than a decade. Nevertheless, every time general elections approach, the main opposition party uses the erosion of competitiveness as an argument to make its point because it cannot really hit the other side on GDP growth. The current ruling party also did it when it was in the opposition. The fact that competitiveness is a medium-to-long term process does not seem to bother either side. Reining in primary budget expenditures and restricting pay rises to numerous civil servants to compress further inflation or opening up «closed-shop» professions are hot potatoes for both main parties. These are the same political parties that demand that the state be effective in putting out the raging forest fires but don’t want to cede partisan control of the proper agencies when they take power.