Different Mentality Is Needed for the End of Greek Crisis
Author: Alexander Shamshiev
04.09.2015 // Photo: http://pa-academy.kz
Greek PM Alexis Tsipras resigned, the parliamentary election was declared afterwards. Prior to that, on 5 July, there was a bailout referendum, and the majority voted against the EU plan. RuBaltic.Ru discussed the situation in Greece with Andreas Andrianopoulos, the Director of the Institute of Diplomacy and Global Affairs in the American College of Greece (Athens), ex-mayor of Piraeus, ex-MP, ex-Minister of Culture, Trade, Industry, Energy, Technology and Mass Communications.
- Mr. Andrianopoulos, how would you describe the political situation in Greece?
- Speaking about the current situation in Greece, right now we have a political campaign underway. The election has been declared because the ruling Syriza party split almost in the middle. The majority of bills adopted by the parliament got their support with the help of the opposition. That is why the prime minister reasonably enough decided to call an election no to stay as a hostage of the opposition. The lists now won’t include the dissidents from his party, and he hopes to receive the most votes and that the newly-formed government will be able to control the parliamentary majority. I assume that he will likely not win the most votes. Syriza may get first place in the election, becoming the nominal winner, but won’t become the parliamentary majority party. For this reason Tsipras will again require the support of the opposition to govern. And he will get into the same situation as of today. With the exception that his party will be more consolidated, his own MPs will support his viewpoints more. In other words, he won’t face difficulties within his own party, yet won’t have the majority as well.
- How did you vote in the July bailout referendum?
- I abstained because thought that, no matter how I voted, “Yes” or “No”, the results would be the same. And my thoughts got justified: the people in the government campaigned for “No”, but after “No” got 61% votes, the prime minister turned around and chose “Yes”.
People voted “No”, which means they didn’t accept the EU proposal and mandated the government to undertake new negotiations for a better deal. In the end, the government negotiated for the deal, which turned out to be worse than the original EU proposal. How did this happen? The European center-right recalled their proposal prior to the referendum, and after that the negotiations had to be done all over again. I knew, this would happen, so I didn’t vote.
- How the new EU deal was worse than the previous one? Did Greece have other options?
- It got worse because the events occurring before and after the referendum significantly worsened the economy. When the negotiations over the final deal between the Greek government and the European Union began, we needed more money to stabilize our economy. It meant more taxation, also drastic cuts of public spending, especially concerning welfare programs. Possibly, it would require the redesign of the social safety net system, as result pensioners would suffer from the decrease of pension benefits. We would face other difficulties. Also, once more we were offered to make structural changes that the Greek governments never did. They agreed, signed the documents, adopted subsequent laws but never implemented these measures. Now these demands are taking place again, and I have doubts that even now the government will implement them.
We are in a situation, when the ruling party says that it agreed with creditor’s formula that it doesn’t like. If you have signed on what you don’t like, are you going to implement it? I doubt it a lot.
And even the opposition, which supported these bills, not wanting to drop the euro and exit the EU, doesn’t like proposed measures. We have a memorandum and a reform package, endorsed by the Greek parliament and the majority of the people on the political scene, but no one likes it! Everybody is against. So who will bring this program to life?
Did we have an alternative? Of course! I spoke about it a thousand times. The alternative was that we had to avoid any types of high taxation. We have to cut taxes, but at the same time the money, lost from the lowered taxes, we must get by cutting public spending via abolishing the government agencies.
- Which ones?
- I will give an example. From 2004 to 2009, there have been more than 600 government structures created – agencies, organizations, institutes, state enterprises. First off, I would abolish them all, because they aren’t practical, they don’t offer anything, except employment for some people who give votes to the government. They don’t aid the economy. When I was the Minister of Industry, we had one company for gas. Now there are five. One imports gas, the other regulates it, the third distributes it, the fourth delivers gas to cities, the fifth delivers gas to factories. All separate organizations! Why? Abolish them and leave one. Join it with the state corporation responsible for electricity. But we created an inflated public sector, useless to the economy. We don’t have public agencies that handle, let’s say, innovations, advanced education. Nothing of the kind. Our public sector only produces bureaucracy and creates jobs to get votes for the employer. That is why we have to decrease the number of structures in the public sector and its functions. We have to take the budget and go from expenditure to expenditure, cutting them with the exception of the ones, considered absolutely vital for the functioning of the state and the economy. If we will do this, we will very easily cut spending and won’t have to increase taxes – on the contrary, we may even lower them, simultaneously curbing bureaucracy. This will attract foreign investments.
Our country’s problem is that, regardless to the steps we take, and no matter now harsh they are, we are moving from slump to slump. We get lower and lower in terms of economic performance – no foreign investments, no new jobs, no new enterprises. Why is that? Because no one will come to invest in a country that alters its taxation system seven-eight times a year! Who will invest money? No one. Currently, private properly is almost unreachable. People, who have been investing into private property for years, are now going crazy because they can’t survive. I myself have to take loans from banks to pay off taxes. It is impossible. I have to pay the loans and as a bank guarantee I use the property from which I have to pay taxes. And I can’t sell it, nobody will buy it because he will have to pay increased taxes. We landed into the dead-end situation.
We should have done what the Brazilian president Lula da Silva (2003-2011) did. Da Silva was a left-winger, a hardcore Marxist. Compared to him, Tsipras is Margaret Thatcher. Brazil’s current president and da Silva’s successor Dila Rousseff used to be a member of a guerrilla movement, kidnapping people from the streets. And now they are executing free-market policy – they understand that they have no other choices left. Da Silva was successful. Brazil joined BRICS. He adopted a course of the cooperation of private and public sectors. He cut taxes. He didn’t have to cut salaries and pensions. That is how he survived. And in Greece, governments don’t wish to cut the public sector. Because the public sector is colonized by politicians: the majority of public sector workers are members of three-four main pro-government parties. And for the sake of keeping their jobs they are destroying the economy. So alternative existed back then, and it exists right now. But for that we need different mentality, different views.
- There are discussions going on about the origins of the Greek crisis. One side points out the fault in the EU policy, particularly German policy. The other side says that Greeks themselves are at fault, they are too lazy, can’t work properly. Do you agree with any of these positions?
- The “lazy Greeks” is a preposterous arguments employed by certain Northern Europeans. They say this because they believe that Greeks want to live off their taxes. From their perspective, it is understandable. If Croatia or Slovenia would face problems, while the Greeks had to be taxed in favor of saving the Croats and the Slovenians, we would say the same thing. It is a stupid argument.
But, of course, Greeks are at fault. They are at fault because for a long time voted for governments, deeply sunk into expending public sector and concentrating efforts on loaning money from abroad instead of undergoing liberalization of the market and attracting foreign investment.
The Europeans are also guilty of several things. First, the methods of saving Greece, that they are proposing, are incorrect. They are wrong because they focus on taxes and impose heavy burden on society. Germans and the French love taxes. We don’t need that many taxes. Like I said, we can easily cut public spending. But Germans and the French are statists, they don’t like the idea of decreasing of the public sector and the number of state entities. They have their own giant public sectors. The French and Germans are not neoliberals.
When I worked in the government and was an active politician, we had a think tank, originally funded by the German Konrad Adenauer Foundation, close to the Christian Democrats. They ceased funding us and said that we were followers of the Anglo-Saxon economic policy. They hated the free market! I get baffled when I hear that the Greek bailout programs are allegedly neoliberal.
Neoliberals begin from cutting taxes. This is A to Z of neoliberalism! How can you be a neoliberal and impose taxes? How can you be a neoliberal and govern the public sector by authoritarian means, suppressing the freedom of trade, crushing labor rights, forcibly changing prices? The regulation of prices and income – is this the neoliberal policy? Harold Macmillan, former British PM, said that “a good diplomat always remembers what he must forget”. Likewise, a good leftist must remember not to blame the current affairs on leftist policies.
- Europe is suffocating from the influx of refugees from Africa and the Middle East. The European Commission voiced the initiative of compulsory resettlement and relocation quotas. The Baltic states, the Czech Republic, Hungary and some others vehemently stood against it. What do you think of this idea?
- It is, indeed, a great problem. I have been telling five years ago that the immigration problem and the influx of hundreds of thousands of refugees and illegals, especially from the Muslim states, will be a time bomb for Greece and for the whole Europe.
Concerning the solutions, the EU Commissioner for Migration Dimitris Avramopoulos, who is Greek, proposed the idea, which sounds reasonable. The influx of refugees should be allocated between all EU members, not only Greece, Italy and France (the Spaniards have built a wall in Morocco, which is hard to overrun). It is reasonable because the Europeans, including Northern Europeans, are always the first to criticize the Greeks and Italians on how they treat the refugees. So if you don’t want to become a part of the problem, you must be a part of the solution. You can’t lecture us on how we must treat the refugees more humanely and generously, and, at the same time, to distance yourselves, hiding out far away in the North. You are making ethical demands but refuse to help in solving the problem. Show us an example, bare responsibility and accept a part of the refugees. And only then tell me how you are going to treat them, when you open the borders, which thousands cross daily. Today I read a Greek article saying that 12 thousand refugees landed on a Greek island, ready to head for Athens by sea – just think about it!
Реформаторские инициативы, подобные казахстанским, примерно в то же время появились в Узбекистане, могут в ближайшее время появиться в России или Беларуси, но никогда — в странах Прибалтики и Украине. Там категориями модернизации больше не мыслят.
«Убийство — незаконно. Поэтому все убийцы заслуживают наказания. Если, конечно, они не убивают тысячами, под звуки фанфар».
В начале двадцатого столетия петербургскими архитекторами были созданы наиболее известные в Эстонии особняки в стиле северного модерна (Лютера в Ревеле и Амменде в Пернове).