The new year demands reforms

The outgoing year 2002 began with great hopes and expectations, and with celebrations and exultations about the new, strong and safe currency. However, today in the present highly volatile environment, there’s no such thing as certainty. The euro is indeed stronger and less unpredictable than the drachma but it is better suited to economies and societies that are more organized and have a hardier economic base. The Greeks soon realized that the euro is no panacea. It alone cannot bring about economic prosperity. On the contrary, it may well cause problems that were disguised during the early festive days. The previous months have demonstrated that the Greek economy has not fully absorbed the new currency. The drachma has been replaced – and the transition was rather smooth – but its impact on the economy was heavy and apparent. First of all, it sparked a wave of price hikes in the market and highlighted the country’s production deficit. Exports came down by 11 percent in 2002, while the country saw a precipitous rise in imports. The direct contrast between prices and the absence of any mechanism for bolstering our lost competitiveness has shown that Greek products are expensive and have no chance in a highly competitive environment. Even traditional local products are losing ground in the big markets of Central and Northern Europe, while Greece’s services are not as appealing as they used to be. It’s clear that Greece adopted the euro without making the necessary adjustments. It kept the old protectionist measures of indirect and direct subsidies in place, maintaining an outdated system that is out of sync with the new environment, as it cannot generate new ideas to meet the requirements of this new and complex era. As long as the country is held hostage to the economic habits of the previous period, Greece is bound to become poorer and poorer at the expense of its population. If 2002 was marked by welcoming the euro, 2003 will have to be remembered as a year of great reforms in the economy, in production and economic behavior. Unless the wager of competitiveness and productivity is won, Greece will become the New Mexico of the United States of Europe: an impoverished and wretched suburb of the South used for the reception of migrants – and nothing more.

Subscribe to our Newsletters

Enter your information below to receive our weekly newsletters with the latest insights, opinion pieces and current events straight to your inbox.

By signing up you are agreeing to our Terms of Service and Privacy Policy.