The threat of the United States of America declaring war on Iraq plays a serious part in the drafting of the 2003 budget, as Greece, like Europe and the rest of the world, will inevitably be affected by its consequences. These consequences cannot be predicted with any certainty, since they will depend on the range and duration of the conflict, and on the extent of the damage done to oil wells and pipelines, not only in Iraq, but possibly also in other countries in the region. Even if one accepts the argument that within a relatively short time after the USA takes over Iraq, oil will start flowing normally to the international market and its price will fall, it is hard to avoid the conclusion that it is highly likely there will be a brief period in which the price of black gold shoots upward just before and during the hostilities. Experts estimate that the price of oil will rise temporarily to as much as $50 a barrel. The most pessimistic scenarios rarely play out, but the Greek government should prepare the country for this one. First, as a matter of urgency, Greece must build up its oil reserves, and it must make political approaches to those oil-producing nations with which it has friendly relations, so that there is a willingness to supply oil should supplies become tight. The government must also be prepared to institute a drastic reduction in fuel taxes so that the burden of the oil price hike is not immediately shifted onto consumers, as this would have a disastrous effect on living standards and macroeconomic indicators. Given that a reduction in fuel tax would instantly translate into a major decrease in public revenues, thus widening the deficit, this raises the huge question – not only for Greece but for all Europe – of the limitations imposed by the eurozone’s Stability and Growth Pact. By happy coincidence, this issue has already been raised in the European Union, because – independent of any attack on Iraq – the economies of several eurozone countries are being choked without reason by the dogmatism of the Stability and Growth Pact giving rise to the idea of its gradual relaxation. This gives the Greek government more room to maneuver, but it requires constant vigilance and preparation as of now to deal with the situation.