Below is the text of Alternate Foreign Minister Euclid Tsakalotos’ interview in the Sunday Vima of 11 April 2015:
Euclid Tsakalotos: “Measures against hidden wealth and tax evasion”
The Alternate Minister for International Economic Relations makes assurances that the liquidity problems will be ironed out when the negotiations produce results
“Salaries and pensions cannot be reduced further, however much our lenders insist,” Euclid Tsakalotos says.
Alternate Foreign Minister Euclid Tsakalotos announced Measures against tax evasion, corruption and hidden wealth in his interview with the Sunday Vima; measures aimed at bringing the government to an agreement in principle with its partners, but he explains that “the most critical phase is the major negotiation on the debt, in June.”
JOURNALIST: After two months of negotiations, we reached the point where the government legislated the first measures for our avoiding the risk of a default on payments. Why didn’t you act earlier?
E. TSAKALOTOS: Liquidity was already limited by the previous government, with the aim constricting our efforts. We immediately started a round of meetings with European leaders, and we moved ahead to an initial agreement in under a month. So no time was wasted. The results of the agreement of 20 February are not yet apparent, because, as the details are worked out, issues are arising that require further negotiation. The processes are time consuming, intensifying the liquidity problem. This is a price we will have to pay in order to make other gains that are of greater importance. If we agreed to whatever was asked of us, we would secure liquidity, but our prospects for recovery would be lost. As the negotiations proceed, we will get the injections of liquidity we need until the final agreement.
JOURNALIST: Was the government perhaps trapped by pre-election declarations and couldn’t decide on measures like reduced VAT on the islands that are major tourism destinations?
E. TSAKALOTOS: Unlike previous governments, we are maintaining the prerogative to come through on our promises, without evasion or excuses. Democratic processes are not a game of making impressions during election campaigns, and then going back on promises after elections. We made a commitment to our programme. We had the support of the people, and this will be our last line of defence.
JOURNALIST: What are the main measures that can support your commitment to a balanced budget?
E. TSAKALOTOS: Our commitment is to achieve a primary surplus on the order of 1 to 1.5 percent. The practice until now was for surpluses to be achieved through excessive sacrifices on the part of the weaker groups in society. The surpluses will come from those who have the financial capability and who have for so many years avoided contributing what they should have. They will be measures against tax evasion, corruption, hidden wealth. A first step in this direction will be, for example, the improvement of VAT collectability, or regulation of the chronic issue of TV channel licenses. The humanitarian crisis is now of such intensity that we can no longer tolerate some people’s getting richer easily, while the limits of the vast majority of society are being tested.
JOURNALIST: The liquidity problems are stifling the economy. How can this situation be dealt with?
E. TSAKALOTOS: There are short-term liquidity problems, and they will be ironed out when the negotiations produce results. We are the only country, for some months now, that is paying its debts with its own resources, which of course cannot go on for long. The long-term liquidity problems derive from the negative credit exposure of the banking system and impact the real economy to a greater extent. This requires a radical settlement. Consequently, when we have got beyond the tight situation deriving from the negotiations, we will need to rebuild our growth policy with new tools, to the extent that the banking system cannot bear up under the weight of the fundamental role it should play: development. The goal is to establish a development bank and strengthen the role of the cooperatives so that we can ensure sources of liquidity for the private sector.
JOURNALIST: What are the government’s plans for Social Security?
E. TSAKALOTOS: Our planning is to block reductions in pensions, and that is why we will not implement the zero deficit clause. Salaries and pensions cannot be reduced further, regardless of whether our lenders insist. We might be able to look at changes to some extreme cases of earlier retirement, on which we, too, agree, but that’s all. The Social Security issue is very serious and requires thorough study, but we have to bear in mind the conditions under which we are being called upon to make decisions. It is obvious that, if you try to study the viability of the Social Security system when you have over 20% unemployment, the only conclusion you come to is that you have to cut pensions drastically. But this is not a rationale, unless you are obsessively neoliberal.
OECD KNOW-HOW FOR THE CREATION OF NEW JOBS AND REDUCTION OF BUREAUCRACY
“Structural reforms are vital”
JOURNALIST: The negotiations certainly won’t come to an end at the upcoming Eurogroup meeting. Obviously, they will continue for the Mid-term and perhaps a third programme.
E. TSAKALOTOS: The major negotiation on the debt, in June, will be the most critical. The satisfactory arrangement of the debt is pivotal to making the debt sustainable and releasing the country from excessive spending to serve the debt, especially in times of recession, like the present. It is also of pivotal importance to achieve an agreement on low primary surpluses, as opposed to the 4.5% provided for in the Memorandum. If all of this is achieved, we will have adequate fiscal space in which to maneuver. In combination with a serious and targeted programme of investment spending, we will be then be able to talk about a sustainable development model.
JOURNALIST: In the summer, Greece may need a new aid package to pay off the ECB bonds. What solutions are you looking at?
E. TSAKALOTOS: If we can put together this model, the assistance packages from the partners, the expiration of the bonds and all of these things that look like mountains now will turn into minor issues for which the right solutions can be found more easily. We are endeavoring to definitively overcome the irrational development models of the previous decades, and that is why I believe that, in the end, our partners will realize that it is also to their benefit to help this effort meet with success.
JOURNALIST: What are the key aspects of the changes being looked at in collaboration with the OECD?
E. TSAKALOTOS: The structural reforms are necessary, and that is why we have asked the OECD to assist with its know-how. First of all, in the field of the labor market, we are seeking ways to create new jobs, particularly for the young. In the field of public administration, we are looking to reduce bureaucracy and administrative costs, as well as combat corruption. In the fiscal sector we are looking at the improvement of the framework for allotment of spending and ways to control tax evasion and tax avoidance through an international system of information exchange. With regard to the business environment, we are looking to weaken the cartels.
April 14, 2015