“I am proud to have taken part in an election battle over a real controversy; a conflict of ideas, values, analyses. I think it was one of those election contests in which people really had to choose between different imperatives.
One of the questions in these elections was, why are we in this sorry state, why are we in this stagnation? Is it because of the economic crisis or is it because of the memorandum, the programmes?
And the Greek people decided: Both. They decided and they gave us a mandate: that this economic programme, the memorandums, failed. They failed on the level of flows and stocks, to put it in economic terms.
By flows we, economists, mean the public deficit, the balance of payments. Both are in some balance. We don’t have deficits. It is balanced, but at a very low level – as Keynes taught us in the 1930s. And when an economy has lost 25% of its GDP, when it has unemployment over 25% and youth unemployment of over 50%, this is a balance at a very low level.
At the same time, regarding the stocks, like the debt, we can’t even talk about balance when it’s at 180% of GDP, while it was at 120% at the beginning of the crisis. For this reason alone, a government of the Left will not be able to sign off on the completion of the evaluation.
We are committed to not undersigning this programme that failed. We won’t close it.
We also commit to not discussing these issues with the Troika. Not because we consider them bad people. They are technocrats, but they had a specific mandate: to discuss the logic of the programme itself and to implement this programme. Not to discuss a different programme with a different logic.
That is why we are talking to the ECB, we are talking to the Commission, we are talking to the IMF. But we are talking institutionally with those people whom we can convince, to consult on the logic of this programme.
But I return to the second. Was the crisis also a reason why we are in this sorry state, irrespective of the memorandums? And the Greek people responded to this in the affirmative. They said, yes, there is also the economic crisis that impacts this situation, and it was clear that reforms were needed, but different reforms, with different priorities and rankings of importance.
From the onset of the crisis, we in Syriza who dealt with this issue said that it is not just an economic crisis. We said from the first day that this crisis is a crisis of values, a crisis of institutions, a crisis of production and consumption models. We said this from the very outset.
But the thing is, Greece’s elite are part of this problem, they are part of this sorry state of affairs we have. And of course the elite and the parties that supported them – Pasok and New Democracy – always believe that others are to blame for the crisis, not themselves. That unionism is to blame, and particularly in the public sector. That popular resistance to neoliberal reforms is to blame. We heard this from Mr. Simitis, we heard it from Mr. Stournaras, we heard it from Mr. Hardouvelis, we heard it from all the prime ministers of the memorandums.
But the Greek people decided something completely different: that we need different reforms, with a different hierarchy: that it is more important to fight the black market in petroleum than to sack the cleaning women and the school guards; that it is more important to confront major wealth and tax evasion than to go up against the cleaning woman. Moreover – we’ve said this, and all of Europe hears it – when one expects a pensioner on €400 a month to pay €10 to see a doctor or buy medicine and you call it a “reform”, you’re giving reforms a bad name.
Europe is gradually being convinced this is not reform, and it wants to hear the real reforms that will change the state, change the relationship it has with the economy and society. And that is why we are negotiating with our partners for a different outlook on reforms.
Certainly, the OECD is here so we can talk, but we won’t discuss the toolbox. Note: It is not at all certain – future historians will decide – whether this toolbox was from the OECD or from our own people who passed things through the back door to get them on the list of reforms. We will discuss our ideas with the OECD, because reform is important. Just as we are talking to and getting advice from Lazard about how to confront the debt and how to create fiscal space. Of course, Lazard gave advice on a previous programme, but we never said we know everything, we never said we don’t lack technical knowledge. We said they will come to serve a different plan for the debt; a plan for how fiscal space can be created so that these reforms can be sustainable.
Because no one – not even the London investors – believes that this country will be able to emerge from this crisis through a number of years with a primary surplus on the order of 4.5% of GDP. The investors themselves say that a solution has to be found, because this Mid-term that was passed last year by the MPs of New Democracy and Pasok doesn’t work out. No country in global economic history – we have data for over 200 years – has ever managed anything such thing.
And for a further reason: that in the midst of a wretchedness, in the midst of uncertainty, in the midst of a huge recession, no reform works. When people are afraid, they don’t invest. When people are afraid, they don’t even invest in human capital. The reforms – whether those that this government will support or those supported by other forces – do not work within the framework we have now. And we are gradually convincing our partners that, for our reforms or any reforms to be realistic, there has to be fiscal space. That is why we have to discuss these matters that have to do with the fiscal issues.
We have very little time. Why do we have very little time? First, because a government that had the option of a six-month extension chose a two-month extension. Why did it choose a two-month extension? Precisely because it knew that it would lose the elections, and precisely because it knew that it would create a problem. Because a government, for the first time, went to elections saying that there would be a Grexit, that deposits would be lost, and it created fiscal and financial problems for the next government. That is why we are pressed for time.
And, third, because we had to convince the Europeans that there is a big difference between what we are actually saying and what our opponents say we are saying. We went to a great deal of trouble – and we are still going to a great deal of trouble – to convince the Europeans of precisely what we are saying. For example, that we are Europeanists not for tactical reasons, but strategically. Because what we fear above all is the breakup of the Eurozone, which would take us back to the decade of the 1930s, with hostile currency depreciations, with nationalism, with popular demands being marginalized even further.
We are Europeans because we understand that there are a number of supranational problems that require supranational solutions, like the debt, the environment, tax competition and, comrades of the Communist Party of Greece (KKE), confronting of the financial markets and the multinationals. Because it has become clear that it is exceedingly difficult for a country to confront the multinationals and the financial markets on its own.
We also have to convince our opponents that we are not populists, that the Thessaloniki programme contains prioritizations, that even our own people are not pressuring us to do more things immediately. Because our people understand that when you have lost 25% of GDP, you can’t just press a button and get wages back to where they were. And our people know that we have to have priorities, that we have to have a plan, that we have to have a roadmap.
Allow me, before I return to issues concerning the negotiations, to say a few words about the Foreign Ministry and international economic relations.
The upgrading of the international economic relations portfolio to the level of Alternate Minister indicates the importance the government attaches to this issue. Because we really do want to work intensively during our term to develop the country’s bilateral economic relations, and specifically on the following lines:
First, upgrading and improvement of the services provided by the Economic and Commercial Affairs offices, which operate around the world, depends first and foremost on the people who staff those offices. So we need to show confidence in the experience and abilities of these people. I must say that my first meetings at the ministry with the administrative and diplomatic personnel and my first meetings in Rome, in Berlin, in London, with the people who deal with economic and commercial affairs were very, very good. We have very estimable staff, with whom I look forward to very good collaboration, and we will build on this structure that, as Alexis Tsipras says, already exists.
Second, the promotion of exports. As we know, there are many ministries with competencies in branches of the economy with export activities. So, in the coming time, we will take initiatives for better coordination among all the competent productive ministries so that we can promote exports not in an ad hoc manner, but in a concerted and organized manner.
In this process, we have to take as a given our cooperation with productive agencies, the associations of exporters, the chambers and other professional organizations. We will initiate a dialogue and identify the problems and omissions that exist currently, so that together we can find ways to confront them and introduce innovations into our policy on exports, with the aim of increasing our exports.
Third, expansion in the field of bilateral economic relations. As we know, the government has set the target of productive reconstruction of the Greek economy and, additionally, is putting great emphasis on the role of the social economy. Before the crisis, “Greece’s not producing anything” was among the great myths and false narratives.
To provide an example, before the crisis we had impressive performance in the sector of software, and we had rapid development in production and exports in this sector of science and technology. We know that we have a comparative advantage on the level of science and technology, based on the knowledge and skills of young scientists. Today, however, not only are we not benefitting, but other countries are making gains from this. So we have to reverse this situation.
Let me give you another example: During the crisis we saw the development of a social economy and social solidarity, and these sectors must be developed even further. In short, of course our economic diplomacy must be based on the promotion of products like olive oil, or on traditional sectors like energy, but I don’t see why we shouldn’t look for cooperation and synergies with other countries, whether in the sector of software or with regard to the social economy.
And we have also stressed that, for us, in contrast with the memorandum, the economic model cannot be founded only on export orientation, with indifference towards domestic demand.
So we need to develop broader economic relations with countries in and beyond Europe; relations based on this effort towards productive reconstruction. To give you an example, we will pursue development cooperation, for example, in the sector of infrastructure, between public corporations, etc. Bilateral economic relations can also help with regard to the tools that can be used here at home. For example, we can learn about, consider and adapt to our own situation institutions and agencies that exist in other countries for the support and funding of SMEs, etc.
I want to say that the concept that we can also have economic relations in new sectors shows that this government wants to try to reconcile the old with the new. The government will try to contribute to the creation of an alternative model for the functioning of the European and global economy; a model based on cooperation and solidarity, and not on exhaustive competition or on economic and social dumping.
In this context we will attempt to expand and deepen bilateral relations not only with countries with which we maintain traditional ties, but also with the emerging BRICs economies and with countries of Latin America that are trying to build their economic policy – internally and externally – based on a different model.
As we perceive economic diplomacy, we will have continuity and innovation, because we have to point up and prove that Europe can incorporate the new, can incorporate democratic demands, can incorporate democratic rights: that this is a Europe that is listening to the new arguments.
If you want another reason why this Europe has bogged down, it’s not just the macroeconomics, it’s not just the austerity policies. It is because it lost this pluralism. For thirty years, we had only one response, whatever the question was: the market, entrepreneurship, the private sector. It is now time that it be heard that there are many other solutions, pluralistic solutions, social solutions, various innovations coming from below, from this society. And those who accuse us of proposing old things – I think they have forgotten how to hear and see what is new when it presents itself.
It is for this Europe that we are negotiating: a Europe that will be open, democratic; that will consult, synthesize, but that will not stick on rules, will not stick to an old model that has failed. It think they are listening to us in Europe precisely because we have things to say. And when you have something to say, they always listen to you.”
February 12, 2015