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PM: Eurozone exit not a choice; promises Greek 'success story' in a year
Prime Minister Antonis Samaras emphasised here on Thursday that Greece will not choose to leave the eurozone -- he used the infamous "Grexit" term -- while at the same time warning that if the country left the common currency international markets would most likely target the next "weak link".
Samaras spoke at an event in the French capital commemorating the 125th anniversary of the International Herald Tribune's founding, within the framework of the "Global Conversation" initiative.
Moreover, the Greek prime minister emphasised that competitiveness must be restored not only in the Greek economy but throughout Europe, while stressing that Greece has already changed its course.
"I am absolutely confident that in year from now, a Greek success story would be a boost for the European project as a whole. It will be correctly perceived as a major proof that Europe can solve its problems and successfully overcome its difficulties," he said in a live address carried over an Internet link.
Samaras' address, in full, follows:
In this unique opportunity where we are celebrating the 125th Anniversary of a historic paper, the International Herald Tribune, I want to share with you some thoughts. Relevant with the problems my country faces today; but also relevant with the big challenges Europe faces as a whole.
After all, the “Tribune” has always been a unique forum for European and transatlantic discourse. And what a better way to celebrate its anniversary than addressing major challenges that our common to all of us, although for some of us they are truly dramatic.
As you all know, I come from a country that has not paid attention to the dimension of competitiveness since it joined Europe. And know it pays the price…
But Greece is not alone. Many people across the European Union suffered from the illusion that quantitative growth along with redistribution policies was enough to guarantee prosperity and a better future.
Thus the policy problem was, for many years, summarized in two sentences:
-- How to maximize annual nominal growth rates.
-- And how to redistribute it to the societies through the tax system and government handovers.
Competitiveness was forgotten under layers of bureaucratic red tape, barriers of entry, disincentives to innovation, all kinds of market distortions and dominant oligopolies in various centers as well as trade union power abuses.
At the same time, over the last decades other regions of the world made the decisive turn to competitiveness.
Stop and think for a moment: how much time does a new product or an innovative idea take to materialize and test itself in the market in other regions of the world compared to Europe?
The rest of the world is gaining ground in terms of competitiveness, while Europe in general is losing ground.
There are exemptions of course but Greece along with most of southern Europe wasn’t one of them.
For decades we were trying to sustain a high level of nominal growth mainly though consumption and income redistribution policies. But when you are lagging behind in terms of competitiveness this can only produce high deficits both in the budget and in the foreign accounts. And when this happens, the only thing you can “redistribute” is borrowed funds to the detriment of future generations. This is exactly what happened to Greece for almost 30 years.
We are now trying to remedy all these wrongdoings. We are cutting government expenditures, eliminating red tape, buy passing bureaucratic inertia, fast tracking investments. We are moving ahead to a bold tax reform that imposes zero tolerance to tax evasion while providing incentives to investors. We are also moving ahead with an enhanced privatization agenda, capitalizing on idle public assets in a strategy that will make it possible to service our debt and launch our economy on a sustainable long term growth trajectory. In a nutshell, we are changing Greece at home and we are rebranding it abroad. There is a caveat to all this however:
Societies are not “engines” that you can turn off, change their defective parts and then put them back together again. People are not “spare parts”, or naked numbers.
Politicians are, maybe, expendable. But democracy isn’t.
Market distortions and government bureaucracy should be abolished. But social cohesion should be preserved.
Social pain is unavoidable at times of adjustment. But social turmoil and a break-down of law and order must be avoided.
Because, as history has proven times and again, if democracy collapses and societies disintegrate to chaos, no adjustment plan can survive.
So we are dealing with - as the economists often put it - a “constrained optimization” problem: how to maximize the efficiency of the adjustment plan, preserving social cohesion and democratic institutions.
According to our experience here is a list of what you must do right from the beginning:
* First, tell people the truth, the naked truth without playing political games, or petty partisan politics. This will give the government the high moral ground.
* Secondly, try to build the largest possible social and political consensus. In other words, fight hardships with a renewed sense of unity.
* Thirdly, show, right from the beginning, some light at the end of the tunnel. In other words, fight pain with hope.
* Fourthly, while imposing harsh measures, try to concurrently solve some other problems of society, like fighting crime, restoring public order, and creating a renewed sense of justice.
* Fifth, do not correct past mistakes by making the exactly opposite mistake. The opposite of something wrong is sometimes, even worse.
In the past, we wrongly assumed that “demand will create its own supply”. It would be equally wrong to assume now that the opposite will happen: that an improved “supply will automatically generate its own demand”. The truth is that economic automatism does not work in a crisis environment; as it never worked in the past, in an environment full of distortions.
* Sixth, at difficult times, rule by example. If you ask people to accept cuts, the Government as well as even member of the Parliament, should first impose cuts to itself. If you are asking people to work harder, the Government should work day and night…
* Seventh, be sure you make the proper association between key words defining the program: Fiscal discipline, competitiveness, restoring pride and establishing freedom and prosperity.
If you want to change the way people think, if you want them to brake away from bad habits of the past, then you have to inspire them to redefine their priorities.
Fiscal discipline should not be a “punishment” imposed by outsiders. It is a basic virtue that restores pride to the society as a whole. Nobody has pride, when relying on his creditors to keep him afloat every month.
And competitiveness should not be just another word. It is not only a technical term pertaining to efficient production of commodities. It is also a political prerequisite for a democracy to thrive and for a society to prosper. It is related to Freedom and Justice.
Restoring European competitiveness is defining who we are and where we want to go.
You probably noticed that talking about competitiveness I switched my main focus from Greece to Europe. This was not a “slip of the tongue”. It is my strong belief that competitiveness is also a crucial prerequisite for European Integration.
Competition requires a common context acceptable by all. Without it, competition will evolve to sheer aggression, a war of everybody against everybody, a bellum omnium contra omnes according to Thomas Hobbes in his Leviathan.
But competition also requires a driving spirit of constant challenge to prevail, an endless daring to fight, a trial and error process ending up in winning or losing. Otherwise, it becomes its opposite: apathy and fatalism.
I believe Competitiveness transcends ideologies and political stereotypes.
It is peaceful, since it relies on the coexistence of individuals within a common context; and it is also aggressive since everybody is trying to better everybody else.
It is conservative, since it always needs to preserve the common context within which competition takes place; and it is also progressive, since it always moves ahead to new forms, new ideas and new trends.
It is very orderly, since it has to obey strict rules; and it is very chaotic, since it always revolutionizes everything.
Competition is not synonymous to the law of the jungle, where only the “fittest” survive. It requires democratic rules, social safety nets, opportunities for everyone to win and second chances for those who lost. Competition is not the “prize of the winners”; it is the game that allows everyone to aspire that he/or she can win.
Competition is balancing individual incentives with social considerations of preserving the community, obstructing the strong from abusing their strength and allowing the “losers” of yesterday to become the “winners” of tomorrow.
Admittedly, in the last decades some of us forgot all about competitiveness.
Our debt crisis is to a large extent a competitiveness crisis. You can end up with a huge debt by many routes. But there is only one main highway to get out of it: Restoring competitiveness! And there is only one safe way to avoid a debt crisis in the future. Always keep on the edge of competitiveness.
Now, some might ask at this point: If competitiveness is the main target, why shouldn’t Greece leave the euro-zone, return to its national currency again, devalue and gain competitiveness instantaneously?
My answer is straight and blunt: We are ruling out, completely, the prospect of exiting the euro. We know that this is not an option for us. It is a total disaster!
Greeks have already lost 35% of their standard of living in the last 5 years. If they exited the euro now, they would lose another 70% from the current levels, in the next few months! No society can sustain that. And no democracy can survive it.
A “Grexit” would be very destabilizing for the Union as well. Once one member country exited, it is most probable that the international markets would target the next “weakest link”. Nobody knows where this could end. It would be very painful to everybody. And could prove fatal for many…
The truth is we cannot avoid the hard work to restore competiveness by a "quick fix", like a breakdown of the Union, or the expulsion of some of its members.
It wouldn’t be a “quick fix”, in the first place. It wouldn’t be an “easy way out” for anybody. It would leave Europe less united and less hopeful. It would leave many of its members, hopeless and helpless…
Big political projects are driven by dreams. You never do something big without inspiration. If you kill a dream, you don’t end up with more realism; sometimes you end up with more misery; and a dead end.
If you take away a couple o pieces from a puzzle - or, better, a political mosaic - you are destroying the whole image.
Take it from us, who have learned it the hard way: There is no “short cut”, there is no “easy way” out - we should restore competitiveness! Not only for our economies to recover, not only for our societies to survive, but to preserve our Union and to prevail in a competitive world.
Greece is already reversing course. I am confident that Greece will make it. I am also confident that Europe can make it. We can come out of the crisis, stronger, wiser, more united, more self-confident and – above all - more competitive.
I am absolutely confident that in year from now, a Greek success story would be a boost for the European project as a whole. It will be correctly perceived as a major proof that Europe can solve its problems and successfully overcome its difficulties.
Some might think this is “a bit optimistic”. There is nothing wrong with that. After all, to be competitive, you have to be optimistic. To succeed in something you have to believe in it.
In any case, my belief in my country and in Europe is my positive message tonight. After all competitiveness is not about optimism. It is about optimization: Always optimize what you have, to win the game. Always believe in yourself and inspire all around you to get the best out of them. For the Common purpose!
And this is exactly what we are doing in Greece today…
SOURCE: ATHENS NEWS AGENCY