Β. Κασκαρέλης: Η οικονομική κρίση είναι παγκόσμια. Το πρόβλημα δεν είναι μόνο της Ελλάδας

Αντιμετωπίζοντας την κρίση υπό ένα άλλο πρίσμα, ο κ. επικεφαλής της ελληνικής διπλωματικής αντιπροσωπείας στις Ηνωμένες Πολιτείες επισημαίνει ότι μπορεί να αποτελέσει αφορμή για αποφασιστική και συλλογική δράση, μπορεί να είναι η ευκαιρία για την Ελλάδα, την Ευρώπη, τις Ηνωμένες Πολιτείες, την παγκόσμια κοινότητα να επαναπροσδιορίσει τον τρόπο με τον οποίο διαχειρίζεται τα του οίκου της, τις σχέσεις με τους εταίρους της, τις επιχειρηματικές δραστηριότητες, για να αναδυθεί ισχυρότερη σε ένα περιβάλλον αρμονίας και σε κατάσταση ετοιμότητας προς την αντιμετώπιση κάθε είδους προκλήσεων.

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Διαβάστε την ομιλία του Έλληνα πρέσβη, κ. Β. Κασκαρέλη στο πανεπιστήμιο του Illinois.

REMARKS BY H.E. AMBASSADOR OF GREECE,MR. VASSILIS KASKARELIS AT THE AMBASSADOR’S SERIES

Thank you very much for inviting me to be part of the Ambassador Series and giving me the opportunity to talk to you about Greece. I also look forward to our discussion and the exchange of ideas.

First of all, let me just say a few words about the relationship of our two countries.  Greece and the United States have been faithful allies for a very long time. They have fought on the same side of all major conflicts throughout the 20^th century and this first part of the 21^st century.  Only a few days ago, in Washington, there was a series of events in celebration of the 60^th anniversary of the Korean War, which highlighted Greece’s role.  Greece was one of 15 countries to join the U.S. in that effort. More recently, since 1998, we have participated successfully in all of NATO’s initiatives for the security and stability of the W. Balkans;  from day one, we have been present in Afghanistan, providing engineering and medical personnel; globally, we are the number one power in commercial shipping; hand in hand with the US, we play a major role in protecting the seas from piracy off the Somali coasts; in the Iraqi War, Greece has assisted U.S. operations in a decisive way, through its Souda Bay facilities, following Turkey’s refusal to allow American Armed forces to cross its border into Iraq.

This Alliance and Partnership between Greece and the US, forged in deeds rather than words, is stronger today than ever before. As President Obama stated, welcoming Prime Minister Papandreou in the White House last March, “…whether in good times or in bad times, the people of Greece will always have a friend and a partner in the United States of America…”.

Having said that, allow me now to address the elephant in the room, making front page news in the majority of American and international media in the past six months: and that is, the Greek economic crisis.

All of you have heard, read and possibly even debated whether Greece doesn’t bear considerable responsibility for its current economic situation.  There are many reasons why this Greek crisis has resonated with so many of you, and that is because, to a great extent, many of you might even identify with its consequences, as you have also lived through the rollercoaster experience of the 2008 Wall Street collapse, and continue to be nervous about the global economic crisis.

Because, no matter how you look at it, this crisis is global.  I even dare say that Greece has been singled out as the guinea pig.

Please do not misunderstand me.

I have no intention of painting a pretty picture; what I will try to do is give you a pragmatic account of the problems Greece is facing, of what we are actually doing about them and of our capacity to bring about significant change.

Just to give you an idea about the situation we are facing:

• in 2009, a deficit that was budgeted to be 3%, was then reported by the previous government – last September, just one month before the general election – to be 6%, and then ended up exceeding 13% of our GDP a mere month later;
• a public debt exceeding 110% of our GDP – and clearly on an unsustainable trend.
• a competitiveness deficit.
• and last but not least – and most damaging – we have a credibility deficit.

The surprising fact is that the Greek economy is not a poor economy; the State might be poor, but the private sector is wealthy. As we speak, in the Balkans, Greek companies have invested over 30 billion euros, providing employment to approximately 200,000 people.  The truth of the matter is that the Greek economy is simply a mismanaged economy.

For decades, it has fallen victim to a political system built on clientelism and patronage, on inequality and injustice; a political system captive to special interest groups with special privileges.

This has allowed for growing graft, which undermined public trust, hindered entrepreneurship, and wasted taxpayers’ money, and investors’ time and patience.

It also created a culture of extreme tolerance towards tax evasion and eroded civic responsibility.

Just as important as the fiscal deficit, is Greece’s credibility deficit. Our EU partners were understandably skeptical about our promises to rein in the deficit and crack down on issues such as corruption.  Today, however, we are demonstrating our commitment in dealing with the situation.

Down to its core, Greek society has known all this for a long time and has yearned for sweeping changes and reform.  And that is precisely what the new government of Greece is undertaking.

A prerequisite to any change is restoring confidence, as by March of this year, the markets had essentially closed down on Greece. Not because of any potential negative impact of Greece’s economy on our European partners, since the Greek economy represents only 2,4% of the European Union’s economy; but, rather, to test the Union’s political steadfastness and the stability of the euro.

In order to restore confidence, Greece took measures that were both extremely severe and of immediate outcome.

The Greek government also worked with our EU partners to develop a new mechanism providing a very substantial guarantee and a specific support package.

At this point, I would like to address a serious distortion that is shared by many in the U.S., by emphasizing that the EU and IMF financing is not free money; these are loans to be paid back with substantial interest – and they are contingent upon making changes and not simply returning to business as usual.

Furthermore, as difficult and painful as this crisis and the corrective measures may be, we view it as an opportunity to help us emerge as a stronger and more viable economy and society.

So what has the Greek government done these past few months?

It has made very tough – the toughest in Europe – but necessary decisions. We have embarked on a massive fiscal consolidation effort.

Just to name a few measures already approved by the Greek Parliament:

• A cut in public sector salaries by an average of 20% in nominal terms
• A cut in pensions in the public and private sectors by 10% to 15%, with protection extended to lower pensions
• Across the board cuts in public sector expenditures of up to, or exceeding, 10%
• A recruitment freeze in the public sector for 2010 and 2011.
• A 4-point increase in VAT.
• A 30% increase in excise taxes – for alcohol, tobacco, and petrol.

We are aiming:

• To bring the deficit down from nearly 14 per cent in 2009 to below 3 per cent by 2014;
• To put the debt to GDP ratio on a downward path after 2013
• In 2010, on the back of measures totalling 9 percentage points, we will be reducing the deficit by 5.5 percentage points – from 13.6% to 8.1% of GDP.

And we are now witnessing the first signs that we are turning the corner.

In the first 5 months of the year, the deficit is down 40%, compared to the same period last year.

Revenues is up, while expenditures have been severely curtailed.

Moreover, before even many of the new measures have been locked in, we are well within our targets. This has been certified by the monitoring mechanisms of both the EU and the IMF.

Obviously, fiscal consolidation is the cornerstone of the government’s program, but it is not enough.

We also need structural reform; otherwise, all positive results will be undone.

So, the government has embarked on a mission to address long-standing problems.

• Firstly, restoring trust in our data and statistics. The newly established Hellenic Statistics Authority has full operational and administrative autonomy.
• Secondly, completely overhauling our tax system. Legislation passed in April makes the system more fair and effective. We are using IMF expertise to guarantee best practices in tax collection by directly attacking evasion, a chronic ailment in countries with high self-employment such as Greece.
• Thirdly, enacting new regulations for our public administration, including full transparency and meritocracy in hiring and promotions in the public sector. This strikes at the heart of clientelism. To give you some concrete examples:
• Even top political posts were advertised through our Open Government system on the Web.
• We have a new total-transparency law, ensuring that all govt decisions and procedures will be posted on the web.
• We have passed new laws concerning corrupt practices of civil servants, including politicians, and there are ongoing commissions weeding out past corrupt practices where multinationals – such as Siemens – and public officials did deals under the table at the expense of the public good.

Furthermore, the government is enacting legislation for the reorganization of state apparatuses.

• We recently approved the radical reform of regional and local administration, reducing layers of bureaucracy, reducing the number of prefectures from 60 to 13, and the number of municipalities – from over 1200 to 325.
• We have abolished over 4000 public sector entities.

As far as businesses are concerned, among others:

• We are simplifying the process of doing business in Greece and the process of establishing a company will be possible in one step rather than in forty.
• We recently unveiled an ambitious and wide-ranging privatization program, complemented with a number of other policies, so as to push forward policies that create opportunities, attract investment, particularly green investment and jump-start the economy.

Finally, we are legislating to safeguard the long-term viability of our pension system, which would otherwise collapse in a few years, and we are reforming the state health system by cutting down hospital expenditures.

We have a long way to go on our three-year economic policy program, but we have come a long way from our starting point and that was only three months ago.  And just to put you in the picture of how serious the measures are, this 3-year program will be monitored daily by EU and IMF experts based in Athens through twelve quarterly reviews.

These decisions and measures are not only to the benefit of Greece, but also reflect our commitment to protect the stability of our common European currency.  So I’m confident that Greece will very soon be a paradigm of open government.

Understandably, several questions have been raised.

• Can the Greek government implement these reforms?
• Can it withstand social pressure?
• What about social unrest?
• How will our banks survive?

The majority of the Greek people recognize that it is in their own self-interest that the measures be enforced, regardless their harshness. There is wide public support for these reforms, more than any other time in Greece’s recent history.

But we must recognize that countries are not like financial markets. Social change cannot happen as swiftly as credit default swaps. You cannot sell short on social commitments and political responsibilities.  So, although there are great risks in the current crisis, there are equally real risks in unrealistic expectations and inflammatory impatience, some that we have seen in the press around the world.

So it’s dangerous to push people too hard and too fast. For example, Greece already has one of the lowest wages in Europe. The average wage in Greece is just under 24,000 dollars, compared to just over 40,000 in the U.S. We intend to reform our economy with the help of our citizens, not in spite of them.

And if we’re not careful, both higher taxes coupled with lower revenue could actually slow down our recovery. That would not only be both unjust, but it could also bring about social unrest, which up to now has been minimal. Deflation is also a genuine risk, if we don’t take parallel measures to kick-start productivity and create new jobs.

No doubt Greece is facing great difficulty, but it is tackling its problems. And there are those who recognize its tremendous growth potential.

There is huge interest for investment which could make Greece an energy hub. Qatar, Abu Dhabi, Libya, Azerbaijan, Turkey, Russia and Italy are some of our partners that have not only expressed interest, but have already signed up to strategic agreements over the last few weeks on the energy front.

China recognizes the potential of Greece – major shipping nation – and of Piraeus, our major shipping port, as a hub for their products to Europe.

Theories about defaulting, and exiting the Eurozone show a remarkable lack of historical perspective and understanding of the basic rules of European economics and politics.

Greece has become the object of countless analysis from people often without much knowledge of the country and facts: journalists looking for a sensational story, academics hoping to prove a pet theory, local politicians hoping to score points against the opposition, populists lying to create stereotypes and scapegoats for the real problems that their societies face.

If the last eight months have been a test for Greece, they have also been a test of Europe’s collective ability to rise to the challenge, find solutions to new problems, to react swiftly and effectively.

Have we been successful?

Sure, we could have been quicker in our response but if four months ago you said that Europe would have in place a fully functioning support mechanism and Greece would be well on its way to fiscal consolidation few would have believed us.

Europe is now leading the way to clarify the framework within which international markets operate.

We welcome the recent final agreement on a stabilization fund for the euro zone and we call for the mechanism to be permanent.

We should now work for a permanent stabilization fund, a new European Monetary Fund financed by contributions of eurozone members proportionate to the size of their wealth.

These are practical steps towards more effective economic governance, an issue on which we hope to build on.

But not everyone may want us to succeed. Huge money has been invested on Greece’s default. And this brings me to another point — the need to address the threat of speculation and ill-regulated financial markets, a threat that imperils not only Greece but the entire global economy. This is the reason it was included in the G 20 agenda a couple of days ago.

This threat is evident every day as Greece manages this crisis, for the immediate problem is not dealing with the recession but in servicing our debt. Despite the deep reforms we are making, traders and speculators have forced interest rates on Greek bonds to record highs. Many believe that there have been malicious rumors endlessly repeated and tactically amplified, that have been used to manipulate normal market terms for our bonds.

The same financial institutions that were bailed out with taxpayers’ money are now making a fortune out of Greece’s misfortune, while those same taxpayers are paying the price in deep cuts to their salaries and social services. So, unscrupulous speculators are making billions every day by betting on a Greek default.

A further point is that even though Greece accounts for just about 2,4 percent of GDP of the European Union, our economic situation can have a far larger impact than that figure implies. An ongoing euro crisis could cause a domino effect, driving up borrowing costs for other countries with large deficits, and causing volatility in bond and currency rates across the world. A small problem could be the tipping point in an already volatile system.

A weak euro also means something else. It could mean a rising dollar.  In turn, this means a rising U.S. trade deficit, which will not help America’s economy rebound.  That’s why Europe and America need to work together, to say enough is enough to these speculators who only place value on immediate returns with utter disregard for the consequences of the larger economic system, not to mention the human consequences of lost jobs, foreclosed homes and decimated pensions.

These market manipulations at the heart of the banking system’s collapse are still in legal practice. It has been often said, and, I believe quite rightly, that a person ought not to be allowed to buy fire insurance on his neighbor’s house and then burn it down to collect on that insurance. Yet, that is exactly what is done in the market for credit default swaps. This malaise has led banks to foreclose on the homes of millions of Americans, but this malaise now haunts not only Greece but all of us.

If Europe and America jointly decided to step in and shore up global financial regulation and finally ensure enforcement of these regulations, they could curtail such activities.

So this crisis is an opportunity to correct many of the excesses of the globalization. It calls for deep structural changes — changes to our global institutions, to our system of global governance.

This crisis should be an opportunity for decisive and collective action, for regulation which is urgently required if global economic growth is to be sustainable. We need global coordination of monetary policies, and if we let market forces alone dictate the terms, our economic recovery will almost certainly slip into reverse.

European partners have taken a common initiative to strengthen financial regulation, particularly vis-à-vis speculation. We need clear rules on shorts, naked shorts and credit default swaps.

The well known cliché of an opportunity in every crisis is quite applicable here.  This is a great opportunity for Greece, the European Union, the United States, and the global community to reassess the way we manage our affairs, the way we treat each other, the way we conduct business, and emerge stronger, more in harmony with each other, and at a good point to confront the many challenges we face.

Thank you for your attention and I will be happy to answer any of your questions or hear your ideas.