Reforms or ‘management?’

The government appears focused on preparations for the Olympic Games but is, in fact, deeply concerned about the post-Olympic period, given the great expectations as to what is to happen after September, which will largely determine events over the next four years. The Economy Ministry realizes that drafting the new budget will be difficult, as is made evident by the hastily announced tax reforms and over-borrowing by the State, which no government would attempt if it did not have serious cash-flow problems to begin with. At the same time, there is a general impression that after the Olympic Games there will be problems in the private sector as well; construction will decline, while tourism is not living up to expectations. The State will be forced to exercise caution and households will have to show self-restraint. The growth rate will decline slightly and problem areas will become more obvious. Bank circles estimate that toward the end of the year, or early next year, there will be signs of trouble in the construction, textile and food industries, unless the Olympics dazzle foreigners into seeing Greece as fashionable, as one Canadian newspaper wrote. But, because this year’s miracle happened in soccer, it would be a good idea not to set one’s sights too high and rather focus on the ride ahead, which is looking to be somewhat bumpy. The government has shown no sign of doing anything about these problems, but has simply dealt with issues pending from the previous administration, restricting itself to proclamations about the future. As one banker said: «It is as if we are at the cinema, have seen the ads and the previews and are waiting for the main film.» Another banker seems sure that Karamanlis «will surprise us in the fall.» Economy Minister Giorgos Alogoskoufis said «we will move ahead with caution and moderation… we want whatever we do to be correct and profitable… We also have to manage the political timing.» This he said obviously in reference to the possibility that elections may have to be called next March should Parliament not be able to elect a new president of Greece with the necessary majority. It is statements such as these that create a sense that more dynamic political reforms, which the country is in such need of, will be postponed. Greek and international experience has shown that newly elected governments have to move fast and effectively in the first two years to give themselves scope to enjoy the benefits of new policies. Put in other words, the government should manage the political timing, as the economy minister said, the question is in what way?