Straight talking

Faced with a grim fiscal situation and quite overblown public expectations, which were in part fanned by New Democracy’s pre-election promises, the government must now get its act together and hammer out a road map for the future. To be sure, everyone would want to see the administration both fulfill people’s various – and usually legitimate – demands and, at the same time, redress blatant fiscal imbalances. Yet the government cannot possibly square the circle. Prime Minister Costas Karamanlis and his policymakers in the National Economy Ministry must make the requisite decisions and, most crucially, enforce them in a decisive fashion. Both those who placed their faith in Costas Simitis’s painstakingly crafted mantra of Greece’s supposedly «powerful economy» and those who were skeptical about the self-imposed deficit revision have all been forced to shed their convenient illusions. To be sure, the real picture could not have been disguised for much longer. The alarm was often sounded during the previous years; the warnings often came from senior Socialist officials. The point, however, is not to attribute blame but to implement a policy that will boost economic growth and nudge the fiscal economy onto a healthy course. Unless radical measures are swiftly introduced, the country could regress to its 1992-94 near-bankrupt status. The softly-softly approach suggested by the government measures that were recently announced underscore the Karamanlis administration’s intention of, on the one hand, protecting low-income groups and, on the other, mitigating the dangerous repercussions that shock therapies usually entail. A gradual adjustment can be effective as long as it is consistent. Should a mild approach degenerate into a pretext for avoiding the issue, European Union pressures will intensify and ultimately result in harsher measures, aggravating the strain on Greece’s low-income strata. Although Greece’s membership of the eurozone cushions the economy against monetary pressures, the fiscal imbalance cannot go on any longer. The public is equally put off by governments that prettify or dramatize the situation. People want straight talk that gives a genuine description of the country’s fiscal problems. Most importantly, people want a government that can guarantee an exit from the crisis. The prime minister must respond to this challenge. Speaking the truth to the people can inject self-discipline into society – a precondition for a collective effort to rebuild the economy.

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