Geolab's director in Globo newspaper Brasil
1) How important is the Parliament approval of the new wave of austerity measures for Greece’s economic future?
The fact that the Greek parliament, facing the prospect of default, had to choose between a second bailout and a disorderly default merely epitomizes a broader political, institutional and moral bankruptcy. Although, a lot of the measures if implemented can contribute significantly to the badly needed modernization of the Greek economy and the Greek society, for political reasons only the part of pure austerity measures has won publicity in the country. As we are at point zero in psychological terms, the choice facing Greece is between a free fall to the bottom and a race to the top. This recession could prove the right time to make substantial structural economic and social changes, especially reducing the public sector, improving administration and revitalizing private sector through competition. Austerity can produce growth if Greeks are determined to reduce irrational state spending, which results an overtaxing policy and consequently reduces consumption. Facing already an approx. 7% recession we are forced to treat the disease rather than the symptom and we should do it fast and without compromises.
2) Will the terms of the approved packaged be really implemented?
Implementation has been for decades the major deficit in the Greece, and without implementation neither rule of law nor reform of any kind can take place. The prerequisite and result of implementation is reform and the prerequisite of reform is consensus; in that sense we need to distinguish between a general social agreement on the need for reform and a relative agreement on what reform should look like. The desire to reform exists at the public but alas not yet at the political level. In order to achieve that, Greeks must meet the urgent need to upgrade the country’s public administration which is intimately connected with reform. It will be a painful procedure as not only does this task require a change in long-held practices and ethics, but it also needs to happen at a time when the state sector is losing experienced staff.
3) How will the public respond, with a new and more violent wave of protests? Who are the ones protesting?
Greece still lacks a narrative that can connect why, what and how: why Greece ended up here; what options does it have; and how are those options connected to different futures for the country? Greeks may agree on the reforms needed but they disagree on how Greece got into this mess and they also cannot see how these choices will get the country out of this crisis. The answer to the above is a leadership problem. Violence has nothing to do with the citizens who express their protest, their agony and fears facing the uncertain future for them and their children; it’s a politician task to deal with it. One should differ between the people who are demonstrating on the streets and the organized crime groupings appearing as “anarchists”. The later regularly use political and social mass events –mainly- in the centre of Athens for creating a chaos and effectively plundering shops, banks and enterprises; it’s a police task to deal with them. Citizens protest; criminals apply violence with a certain underlying purpose.
4) How do you see the EU treatment of the Greek “problem” today, two years after the beginning of this crisis?
In the Greek Crisis, the debt as such seems to be the lesser Problem. EU responded slow and inadequate especially regarding the commitment by the large states to the euro. EU was mainly concerned to protect the national banking systems against a Greek default. Indeed for most of the last two years, the euro zone headed by Germany has done what is necessary to prevent a catastrophic collapse of the euro zone while seeking to avoid taking responsibility for the debts of the “corrupt”, “unreliable” and “unreformed” economies of Greece, Portugal, Italy and Spain. It is obvious that for the rich European countries, it makes economic sense to preserve the euro, but without having to cope with countries whose political systems can't be trusted. In that sense Greece is treated as a unique case for everything and that poses chances and grave dangers. Resolving the crisis will not be the result of expanding bailout funds or European Central Bank programs but rather the result of creating conditions for trust.
5) How would you evaluate Mr. Papademos leadership until now?
Polls initially favourable to the government of Lucas Papademos, point to the belief among some Greeks that a technocratic administration might be preferable to the incompetent political class. This does not imply an adherence to the austerity measures, but rather a willingness to correct things. Some even believe that a strong foreign authority might guarantee a competent governance in the interests of the country. He managed to negotiate
the PSI that could significantly improve the sustainability of the Greek debt, giving also Greece the necessary breathing space to effect structural changes. I think that he will be of great service to his country if he sets out the dynamics for restoring the competitiveness of the Greek economy by reforming institutions and governance processes. Technocrats can turn to politicians; the reverse is impossible.
6) How do you see Greece in five years?
Can we deal with the causes that led us to the current impasse in five years? Currently it seems we cannot muster the energy to carry out the deep reforms that are seen as necessary by a large share of the electorate and by our lenders. But despite critics, Greece has in fact improved its primary budget balance by about 8 percent of GDP since 2009 and its public expenditure as a share of GDP (44%) is not too big relative to other European countries (Eurozone average of 48%). There is enormous demand for change by a people frustrated by injustice and incompetence; this demand must be translated into policy. Undeniably that the Greek economic crisis is a political problem and the only option is to turn the crisis into an opportunity by using the provided liquidity, and by working hard on rebuilding Greek institutions and markets: fast and effective. Such a task will need the mobilization of a new political elite. Cutting public sector jobs will not be enough if we don’t improve the capabilities of the state and not just shrinking its size; Greece needs less state but also a better state. I am confident that our country will prove itself against all odds by achieving a smaller but more competent state sector, and a bigger and more competitive private sector blowing the crisis away. Bearing in mind that “politics is the art of possible” it will be our determination that will set the “Greek standard of the possible”. Having lived off borrowed money Greece will find the strength to build a sustainable and prosperous future.