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Global Economics

Matthew Winkler Talks to George Papandreou



Why is it so important for Greece to share the euro, and why do you think the people of Greece will resist a return to drachmas?
Greece’s history in the drachma was an up-and-down history, a roller coaster. We are going through a crisis now, but we assume that this is something that we are going to get through. Our experience in the last 10 years, other than the specific crisis, was a period of high and important growth for Greece and better conditions. Now, we obviously have to make changes. But making the economy more viable, I think, will also create stability.


Opposition leader Samaras has said this government has no Plan B.
Let’s put it this way: We are in uncharted waters but we know where we’re going. We know where we want to get to and we may need to do corrective moves at different times. When we took over, our first estimates [of the 2009 deficit] were 13.5 percent. After working with Eurostat … it ended up at 15.5 percent. So a 5 percent reduction was a major accomplishment. No other country has done it in Europe. Secondly, the Plan B that Samaras has proposed is deemed by everyone as unrealistic. The real problem in Greece is not cutting taxes, it’s making sure that we don’t have tax evasion.


You’ve known Samaras for decades.
We have a long-standing personal relationship. But of course I think in politics one does well to differentiate the institutional and the official relationship. … Sometime, after a decade or so, we may sit down over a glass of wine and think back and say, “Let’s assess how things have gone in Greece.”


What are your top three priorities for the next 12 months?
Educational reform. That will go through the next month. Actually, the question of revamping the tax system so it’s simpler, but also just. … The more you have tax evasion, the more the people who pay are being the ones hurt the most, and those who don’t pay are free and very often the upper-middle and upper classes in a country. Third is moving forward on the growth prospect through development of our public assets, privatization, bringing in new partnerships with privatizing, and so on.


What’s the most important thing about how markets behave that you’ve learned over the last 18 months?
Markets themselves are looking for stability, and I think we have underestimated the capacity of Europe … to actually create a more stable framework for the whole issue of debt management, bonds, and so on. At times, not only I, but others, have talked about euro bonds to create a sense of security because you have markets, and markets I would say are much more volatile and much less self-regulating than one would expect.


Is it feasible and reasonable for Germany to consider a Marshall Plan for the members of the European Union, including Greece, who are struggling with debt in the same way the U.S. did for Europe in the ’40s?
The Marshall Plan was after destruction, and the U.S. came to our help and obviously this was very, very important for the future of Europe. I think now we have all the capabilities of doing it on our own and, in a sense, we have to. It’s not after destruction we’re dealing with, it’s trying to change to a very, very different world where we have to become more competitive.


When you meet investors, what do you tell them about Greece and why they should be investing?
I think there has been a lot of interest in Greece and we are already bringing in investment. We talk about green or clean energy. We have great potential—some of the rising stars such as windmills. Already in northern Greece, 15 companies are bidding for the photovoltaic center. It’s the biggest in the world. The wind potential, of course, geothermal you can link that back to the construction industry, which is quite advanced in Greece and can develop particular parts of green energy for construction from housing to power plants, which is already developing. So that’s another rising star.


How do you think history will remember you?
What I would like to see is that I have contributed to the public good of our country and in realizing its potential, because we have great potential. I really believe in Greece and I want to see that we liberate all the capabilities that Greece has.

 


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