The new goal: Growth

The decision by EU finance ministers to put the Greek economy under supervision over the next two years for its deficit was a painful yet explicit reminder that the only way out of the crisis is to muster a high growth rate. Many years after the introduction of the European stability pact and some time after the Socialist fantasies of a powerful economy, Greece is forced to bend to the fiscal principles it itself agreed upon. The deficit-trimming measures laid out in the 2005 budget and the obligation to bring the public deficit under the 3 percent limit, in line with eurozone rules, before the end of 2006 both signal a radical transformation of economic life. But not all is bad about the pressure: Reducing the deficit requires higher revenues, while higher revenues can only come about with more taxes or creative accounting. Above all, the economy needs growth-inducing measures. The government appears to be moving in that direction. The announcement by conservative Prime Minister Costas Karamanlis yesterday of plans for broad and in-depth agricultural reform – shortly after the cotton farmers’ standoff – was certainly a step in the right direction. The case of cotton subsidies highlighted the shortcomings of the current agricultural policy, which has impoverished large sections of the population when it could have been transformed into a lever of growth. Such a transformation would require radical reform, the introduction of new production methods and exploitation of the comparative advantages offered by Greece’s land and environment. A good example is organic and controlled appellation products: Demand for these products has skyrocketed both at home and abroad, and while the climate and Greek conditions favor their production, these advantages have been unexploited and any steps have been hesitant and uncoordinated. In a country with faltering productivity and low competitiveness, like Greece, growth is the only tonic. The government’s top priority should be to create a favorable context for growth that will encourage competitiveness, restore the confidence of the productive classes, provide incentives for new technologies and high quality and enhance social cohesion through the creation of new jobs and conditions for prosperity. All these measures will take courage, resourcefulness, determination, persistence and, above all, coordinated planning. Some early moves show that we are shifting away from the inflexibility and self-delusion that have plagued us over the past decade. There is no other option. Growth is a one-way street.

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