ECONOMY

Greece needs political leaders with vision to reveal the truth

The Greek economy has too many serious problems to remain on automatic pilot. This means the country needs a strong government to take the lead and convince the large majority of people of the need for sacrifices to safeguard and raise the living standards of the population. Will the results of the Greek elections for European Parliament be able to bring that about? We are not so sure. Their results will be interpreted by the various political parties in any way that suits their interest. The ruling conservatives will most likely say they have gotten the political message and will place more emphasis on the large number of voters who chose to abstain, while the main opposition socialist party will focus on its big lead over New Democracy and make an appeal to those who did not bother voting this time around. However, there are two indisputable facts that marked this election: On the one hand, there is the big lead by socialist PASOK over the ruling conservative New Democracy party and, on the other, there was the unusually high percentage of Greeks eligible to vote who chose not to do so. When the political analysts have all the data from the election results, they will be able to tell us whether the ruling party’s slump at the ballot box was more due to voters’ perception of corruption or the effects of the economic crisis and, more importantly, economic policy. This is a very important point, as there are Greek politicians and others, especially on the left but also a few on the right, who were emboldened by yesterday’s election results and called on the government not to take unpopular economic measures. So, if the analysis shows the great majority of voters chose to punish the ruling New Democracy party because of its unpopular economic policy, this will put more pressure on the current government not to take strict measures and will send a powerful message to PASOK. That will remove the impetus for any government to take enough unpopular measures to arrest the dynamics of the burgeoning budget deficit and set it on a downward path in the years to come, at a time that the messages from Brussels point to the contrary. It is well known that our EU partners have had enough with our excuses over the years and creative accounting techniques to cook the numbers and will no longer tolerate any inconsistency between what we promise and what we deliver over the next few years. They may not be very vocal at this point because other major eurozone countries are in recession. However, they will be more strict and caustic in their remarks – and perhaps actions – once the international economic crisis begins to wane. Unfortunately, the majority of Greeks has not been told the truth about the state of the fiscal balances, the state of social security and a number of other problems by the two main political parties that have monopolized government the last few decades. Even when they do speak, as Prime Minister Costas Karamanlis has, about the need for fiscal and other structural reforms, they are very vague and it does not cost them anything. However, when it comes to action, reforms take a back seat. Politicians know the political cost of such decisive economic policy very well and tend to put it off, making things worse. This is because they think a large portion of Greek society is not ready for the actual truth. It is no coincidence that the ruling conservatives and Socialists before them chose to solve the country’s fiscal imbalances by relying mainly on strong economic growth rather than tackling long-standing issues of expenditure control and tax evasion. Some think the issue could be resolved if the Greek economy faced an crisis on a grand scale, so that policymakers would have no option but to adopt the necessary measures. By all accounts, this is not going to be the case this time around. So, it will take the political leader – or leaders – with vision, who put less weight on political cost, not just to listen to the people, but also to take the helm and have the courage to tell the populace the truth about the necessary sacrifices that have to be made for the good of the country in the medium term. Moreover, these leaders will have to rise above their own partisan lines and dogmatic views to make economic policy as effective as possible. Can yesterday’s election help bring this result in deeds and not just in words? We are not so sure.