Signs of relaxation

January’s inflation, the exact figure for which will be released tomorrow, exceeded the 4-percent threshold. Despite circumstantial elements that had an adverse impact on the inflation index, notably the heavy snowfall at the beginning of the year and the profiteering wave that accompanied the launch of the euro, the upward spike is still a cause for concern. And the persistent effort by several merchants to freeze the exorbitant prices of certain agricultural products, even though supply has since returned to normal levels, is a dangerous trend that should put the government on the alert. Furthermore, the overall state of the Greek economy and, above all, the country’s high public debt level, allow no room for relaxation in any sector. People in the know are aware that many of the seemingly exceptional economic figures are a result of the kinds of creative accounting that flourished in Europe during the process of meeting the nominal Maastricht criteria. The European Commission has already (during its recommendation at the ECOFIN meeting on Tuesday) criticized Greece for its lack of transparency by including share-exchangeable certificates and other extraordinary revenues in the budget, a move which raised doubts over the quality of fiscal adaptation; questioning, in other words, both the raw data and the overall picture of the Greek economy as painted by the government. Unfortunately, the nascent tendency to relax, which will likely intensify as the country moves closer to municipal elections later this year, is reinforced by similar developments in the eurozone. The inflation rate increase in the euro area, and the politically driven decision of the EU governments to allow Germany to dodge an official warning over its growing deficit – in a move that also saved weaker Portugal, which faced the same threat – have inevitably encouraged local supporters of the policy of minimum effort. The prevailing view that the EU’s stance betrays a more flexible interpretation of the stability pact complicates the already painful and unpopular process of adapting the Greek economy to the European environment. We should not be lulled into the belief that Greece will receive similar treatment in the future. Political realism dictates the acknowledgment of the power gap separating the two countries. The government must realize that it is in Greece’s interest to adapt to reality rather than continue the game of disguising it. Petrie, a native of Orlando, Florida, had been in the navy for 20 years. He lived in James City County and had two children from a previous marriage.

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