More deregulation

The finishing touches to the legal framework for regulating the liberalization of Greece’s energy sector indicate that the conservative government is surpassing any misgivings that might have put the brakes on further economic deregulation. It has often been pointed out that the best tonic for the country’s faltering productivity and flagging competitiveness would be to put greater emphasis on the energy and tourism sectors. And rightly so. Successive Greek governments have, for years, heralded the deregulation of the energy sector in what would bring the domestic market in line with European Union standards and join the global trend against monopolies and more market freedom. The liberalization of telecommunications – the first sector to be deregulated in Greece – showed that much potential was there just waiting to be unleashed. We have only recently started to realize the economic potential and growth prospects. Telecommunications is perhaps the only industry that has succeeded the past few years in attracting domestic as well as foreign capital. This has helped to create new jobs, expand the market, and fuel competition – which actually benefits consumers by offering better products and services at lower prices. Similar advantages came from the deregulation of other sectors that were previously dominated by state monopolies, such as the postal service and, most importantly, the banking sector. Steps were at first timid but have now become more decisive and steady. Judging from the experiences of other countries, the liberalization of the energy sector will produce many positive spillover effects. A first benefit is that greater market freedom will lure foreign private capital for the construction of a new electrical power production unit in cooperation with the Public Power Corporation (PPC). Equally important is the entry of private power companies into the market, breaking PPC’s monopoly, as well as the deregulation of the natural gas market. Even with some delay, monopolies are finally crumbling and the one-time dominant state giants are being forced to restructure themselves and readjust their position in the marketplace, and new products are also entering the market. Unless we repeat past mistakes, as with the disguised protection of the OTE state telecommunications company and other state corporations, the deregulation of the energy market could resurrect Greece’s gasping economy.