The non-reform impulse

Twenty-five years after Greece joined the EEC and six years after it became a eurozone member, the institutional framework that shapes the conditions for business activity in this country remains confusing and contradictory and thus intimidating to foreign investors. One of the first things Costas Karamanlis did as prime minister was order his ministers to free 15 major business projects from the shackles of red tape. Yet more than two years after the premier’s call, stagnation remains. Asked about the causes of inertia, most ministers point a finger at the Ministry of Environment and Public Works. Indeed, prospective investors are put off by the lack of a clear town plan specifying zoning classifications for industry, energy and tourism, which exposes them to legal action by the Council of State or the Central Archaeological Council. Three times over the past two years Minister Giorgos Souflias made specific town-planning commitments, pledging to disentangle big investment plans that have been pending for years. Instead, he revived controversial plans to divert the Acheloos River in western Greece in a bid to win votes from the farmers of the water-guzzling cotton crops in the area. This is unfortunately how local politicians have chosen to respond to the urgent need for social and economic reform. Instead of modern-minded changes, reactionary politicians have revived old-party tactics. It should come as no surprise, then, that Greece is at the bottom of OECD tables in foreign direct investment. Indeed, why would foreign companies wait forever to get permission to do business in Greece or pay extra money in bribes? On the contrary, each time the government has managed to reform a state company, it has drawn a quick response from foreign investors, as demonstrated by the renewed interest in Emporiki Bank following its successful restructuring.