State aids farmers, depositors

As Greece assumes the presidency of the European Union, Prime Minister Costas Simitis knows that the next six months will be decisive for his government’s future and for political developments generally, and is therefore trying to rectify weak areas. He has realized, say observers, that if he cannot turn public opinion around by June, it is certain that current trends in the electorate will be translated into a majority swing toward the opposition New Democracy party. Under such circumstances, Simitis cannot be expected to view the expected war in Iraq as solely an issue for the Greek presidency (he believes there is a 90 percent chance of the US intervening in Iraq), but as a crucial factor in domestic affairs, at least regarding the effect an extended crisis in the broader Middle East could have on the Greek economy. Preventive measures It is no coincidence that Simitis’s recent meeting with Development Minister Akis Tsochadzopoulos focused on ways to take precautions against possible increases in fuel prices and other adverse economic side effects, such as tourism. At the same time, recognizing the failings of the Greek economy – its productive and competitive weaknesses that were all too evident during last year’s introduction of the euro – the prime minister is trying to avert the effects a deterioration of economic conditions would have on the majority of the population, who saw their incomes fail to cope with the demands of the new hard currency. Given these concerns, along with the public’s frequent expressions of dissatisfaction with the government and the time and energy required by the Greek presidency, the prime minister is trying to cover his rear guard while traveling around European capitals. Hence his scheduled meeting today with Economy and Finance Minister Nikos Christodoulakis and Bank of Greece Governor Nikos Garganas to evaluate the economy’s tolerance and determine which areas need the most support. Special measures Nor is it a coincidence that immediately afterward, Christodoulakis has scheduled a press conference, where he is expected to announce the conditions for issuing «people’s» bonds and to present a legislative amendment making them tax-free. This measure aims, in effect, to benefit the majority of small depositors and to encourage commercial banks to follow suit with more competitive products. Meanwhile, special measures to help farmers are expected to be announced in the near future. The Agricultural Bank is to try to re-establish links with farmers by introducing more flexible loan payments. According to reports, terms for funding loans for cultivation are to be completely changed, taking the form of open credit such as that given by modern private commercial banks to the self-employed. Until now, the Agricultural Bank has implemented a very strict policy, demanding repayment of loans for cultivation within 12 months, forcing farmers to take out consumer loans and incur ongoing debt. The new loans will carry a 4.5 percent interest rate. Once the interest is paid, the credit ceiling may be raised by 75 percent, thereby covering any poor harvests and averting a credit squeeze for those who cannot pay back their loans within the year. Ten-year renewable investment loans will also be made available for the purchase of modern equipment, with an interest rate of 6.5 percent. Farmers will have to pay back 5 percent of the loan capital annually. PASOK hopes these measures will help it re-establish links with the farming population, which has not looked favorably on the ruling party in recent years. Reconstruction programs are being drafted for prefectures such as Karditsa, Trikala, Arta, Thesprotia, Grevena, Pella, Florina, Kastoria, Drama, Serres, Kilkis, Chios and Achaia, to highlight the comparative advantages and to group policies based on activities provided for in the Third Community Support Framework to improve the economy and develop activities to bring in extra income. Separate plans for each are being drawn up for each prefecture with the cooperation of the Agriculture, Development, Finance, Labor and Education ministries, adapted to the particular problems and needs of each area. The government is also aiming to develop the «social economy,» to support professional unions of doctors and nurses in order to provide special services in healthcare and care of the aged and the disabled. It is clear that the government is turning its attention to policies linked more and more with the next elections. It believes that institutional changes in the economy are more or less under way, that no more benefits can be reaped from privatizations and that during this phase there is no more margin for major structural changes or radical reforms. In April, the government will enter the fourth year of its current term and no one is expecting it to implement harsh or aggressive policies. From now on, the prime minister will be trying to capitalize on the opportunities offered by the Greek EU presidency and the game of diplomacy with Turkey. The government will simply be doing «maintenance work,» turning more and more to social policy and seeking to forge contacts with the masses that it has lost in recent years. It is clear that public finances and the resources needed to fund these populist policies are of little import. In any case, until 2004 Greece will be forced to keep spending. It is the period immediately afterward that everyone is thinking of but no one is talking about, at least for now.

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