NEWS

Karamanlis to respond on economic policy

New Democracy leader Costas Karamanlis will deploy the description of the «real state» of the Greek economy in recent reports by European organizations, the government’s responsibilities, and the effects of its measures on the average person’s budget as his weapons when he makes his reply to Prime Minister Costas Simitis at the Thessaloniki International Fair. Karamanlis is determined to strike at the government’s weakest spot, the everyday problems of the public, who have been heavily hit by rising prices and inflation. He is expected to stress the economic difficulties faced by the poorer sections of society, and the serious troubles of the middle classes. In response to the premier, who will defend the achievements of his economic policy, the ND leader will object: First, that the quality of life of Greeks is far below that of all other Europeans, because the Greek economy is the weakest in the European Union, with a GDP around 67 percent of the EU average. Second, unemployment, which he will describe as the greatest social problem, is expected to be more than 10 percent, against the EU average of 7.5 percent. Third, inflation, which raises prices and shrinks the incomes of workers and pensioners, is 3.6 percent, or double the EU average. Fourth, Greece has the highest level of poverty in Europe, with 22 percent of Greek households subsisting below the poverty level, compared with 18 percent in the rest of Europe. Greece also has one of the highest rates of social inequality, since the average income of the richest 20 percent of households is 6.5 times greater than the average income of the poorest households. Fifth, the economy’s bad record of «firsts» and «lasts:» First in regional inequality, which is depopulating the countryside, and last in productivity, nominal convergence, competitiveness and investment. Six, the country’s fiscal problem is growing. Greece has one of the highest percentages of public debt, the state budget is in serious trouble, with loan requirements representing 4.5 percent of the GDP in 2001. Karamanlis will blame these difficulties on the government’s acts and omissions, especially on its failure to plan for the post-EMU period, and basing nominal convergence purely on revenue. He will say that without basic changes in economic policy (structural changes, privatization rather than partial share sales, and an end to creative accounting), not only will actual convergence be missed but even nominal convergence will be in danger. He will accuse the government of adopting a managerial approach rather than being innovative, and of prettifying reality. And he will present ND’s economic platform, based on «competitiveness, development and social cohesion.»