‘You were living beyond your means’

Olli Rehn is clearly worried about the future of the euro as well as the polyphony, or maybe cacophony, that is being caused by the issue of economic policy within the European Union. Supremely calm, a technocrat with an even voice that never shows sign of anger or frustration, the European commissioner for economic and monetary affairs had spent his day in meetings with Greek politicians before being interviewed by Kathimerini last week. He explained why the EU took so long to publicly warn Greece about its fiscal problems, what surprised him most over the last few months that he has been focusing on Greece and whether he thought it would be difficult for Athens to get approval for the next tranche of its loan package. Rehn, however, placed most emphasis on one point: «For a long time, you lived beyond your means.» Nevertheless, he appeared optimistic that the Greek economy would soon see growth. You said that you have been paying close attention to developments in Greece. What has surprised you, pleasantly or unpleasantly? Compared to other member states that have been in the same situation that Greece was in this year, the political determination to reform the economy has definitely surprised me positively. It’s been even better than I expected. But of course it is important to maintain the momentum and not to let it slip, not to become self-complacent. I wanted to ask you about the past. It is surprising to me that before the crisis reached its climax there was very little concern on the part of the European Commission or the European Central Bank. Why was that? The main causes behind the sorry state of the Greek statistics started to be revealed only at the end of last year. During last winter and the early part of this year, the real state of public finances and the much higher fiscal deficit became clear on the basis of more realistic data. And even that was then proven to be less pessimistic than the real deficit figure of 2009 – it started at 5.7 percent and went to 15 percent – [it] was a major revelation, which then prompted the Commission to encourage Greece to take action on both the fiscal and the statistical fronts. There had been warnings previously – I don’t need to go into ancient history – but in the most recent period this was the most critical new finding, which then prompted further action. Do you think in any way that the Greek government or the Commission were slow to act in terms of the markets? Were they too late in taking action? We took action as soon as we were aware of the situation and I recall spending a big amount of my time when preparing for the parliamentary hearings in January with [European Competition Commissioner] Joaquin Almunia and my director general Marco Buti in dealing with the Greek case. When I started in office on February 9, the very first legislative proposal of the new Commission was to call for audit powers to [be given to] Eurostat, which then passed during the summer in the legislative process and now we have audit powers. And the second major act was to participate in the Eurogroup meeting on February 10, which paved the way for further decisions on Greece. So of course this crisis has been a learning process for everybody, but at the same time the reaction has been as rapid and effective as it can be in the [current] political context. In terms of the Greek statistics that you referred to, are you happy about them? Are they safe? Do we have a clear picture about 2009-10, of what the state owes and so on? The figures for 2009 are certain, it’s a closed case. In other words, precisely in order to have a clean slate we prolonged the validation of Greek data on debt and deficit from October to mid-November and we closed the books of 2009. That is a clean slate and I’m very happy to say that Eurostat, which is an independent institution, was able to validate the data for the first time without reservations. That is major progress and it’s important that the action plan to reform Greece’s statistical office, ELSTAT, will be completed and completely implemented, because it is essential for the EU but also for democratic decision-making in Greece. Some argue that although the political leadership is there to take some painful decisions, the biggest problem in Greece is execution and implementation. Do you see this as a problem in terms of, for example, hospital management and tax revenue mechanism, and how would you address such a fundamental issue? It is indeed, but the government is pursuing reforms that will enable a more competitive healthcare system etc. This requires work in all key sectors and I would say that the healthcare system is one of the focal points. It is important that citizens have good-quality services; it is important to reform the system so it becomes more cost-efficient and less of a burden on taxpayers. We see that – it is not only my opinion. Our economists both in the EU and the IMF studied the reform of the healthcare system very carefully and it is one of the areas where one can get the most results in terms of better service and better efficiency.

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