Pointless handouts
Prime Minister Costas Simitis’s proclamations of a government program with a «horizon» of 2008 fools no one. The real horizon for the government’s priorities looms much closer, in the form of the next elections, followed by another landmark year, 2005, when further elections must be held if Parliament fails to elect a new president of the republic. With the goal of re-election monopolizing the thoughts of the government camp, no one expects it to speed up the structural reforms it has ignored for three years, with the exception of a partial solution to the social security issue. Such a move would prove extremely counterproductive from the electoral point of view; these moves are usually carried out at the beginning, rather than the end, of a government’s term in office. What one expects now is precisely the opposite: no painful changes, but numerous handouts and even more promises. Bank of Greece sources make no secret of their concern, claiming that the likelihood of yet another election in 2005 has only intensified fears that the ruling party and the main opposition will be drawn into a contest as to who can give out the most, with the opposition preferring to go beyond the government’s promises rather than reject them and thereby risk losing votes. Even Nikos Garganas, governor of the Bank of Greece, has indicated that he shares these concerns, which are linked to another risk for the economy: the delay in structural changes needed to boost competitiveness on the one hand, and on the other, the increase in the budget deficit. The latter is not due to productive expenses, but to vote-grabbing handouts that would exacerbate the already shaky fiscal situation and exert even further inflationary pressure; all this as the government’s economic team is admitting to limited revenue and is now undertaking to police prices in tourist resorts. Political and business circles are admitting that the lack of competitiveness and the onset of campaign handouts is threatening to widen the gap separating us from our European Union partners and delaying for two more years the necessary structural reforms. This vicious circle is likely to begin at the Thessaloniki Trade Fair. If the prime minister’s annual keynote speech on the economy launches the pre-electoral handouts, these fears will be confirmed. For the good of the economy, Simitis should resist the temptation.
