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Ivan Petkov

PhD Evangelos Karafotakis is an economist, analyst of Balkan economies, journalist, currently a consultant and poet. He graduated in agrarian economy in Greece and defended a PhD dissertation in Bulgaria in "the good times for science" as he says. He has worked in the Greek newspapers Naftemporiki and Express. He has conducted numerous interviews with the men of the day, including 4 interviews with Andrei Lukanov. He says that "after the black days for my homeland Greece" he has returned to "my beloved Bulgaria", where he wants to receive a pension. He looks for peace, because there is no stress in Bulgaria. And this is very important for him. He has currently abandoned writing scientific books and articles and devoted himself to his literary hobby, which is poetry. He is planning to write a novel similar to Dimitar Dimov’s ''Tyutyun'' (Tobacco). "But it will not be about tobacco," he says with a mysterious smile.

I told him about the basic idea behind GRReporter - to provide two-way information from Bulgaria to Greece and from Greece to Bulgaria and he exclaimed, "This is a very nice idea! Such information is almost absent. For many officials and businessmen Bulgaria is a tax haven. And the people in Bulgaria think of Greece as a tourist haven. And that is all."

What do you think of the increasing indebtedness of countries and of Greece in particular?

It is a vicious circle. Once they have fallen in this vicious circle, countries are forced to obtain increasingly larger loans to cover existing liabilities. The problem is that after a certain point this money is not spent on developing and stimulating the economy. And when there is no functioning economy, each subsequent loan only increases the existing debt. Government loans have always existed, but this process has deepened since 2007. Before 2007, Europe had moved production operations to China. However, China is now working on a large scale and cannot produce so cheaply. It has so happened that Europe is not selling in China, while China is selling in Europe.

On the one hand, we work to ensure the payment of interest whereas on the other, we do not have our own production. And this process will come to an end. Regardless of how much Germany insists on financial discipline, it is good that this discipline exists but financial discipline alone is not enough, it cannot ensure the future. For each wave of government loans is higher than the previous one. If this scenario continues, European leaders will be able to save the euro, but only in the northern part of Europe. The next crisis is just a matter of time and it will be even more profound. The solution is the development of production throughout Europe, including in Bulgaria and Greece. Industry in Bulgaria may not be competitive, which is a separate issue, but Bulgaria has food industry. I hope agriculture will recover too, Bulgaria offers services and they are not at all bad, it has a basis on which to develop. The problem of Bulgaria is enormous monopolization. Monopolies in the various economic sectors do not allow competition, and this reduces the possibility of a monopoly to enter the international market. It is good to work with markets such as Russia and the former Soviet republics but it is good to export to Europe as well. Monopolies in Bulgaria are the legacy of the centralized planned economy. The state can no longer assume the role of a manager; therefore, the problem remains to be solved by monopolists in Bulgaria themselves. However, monopolists are not interested in this.

After so many years as an analyst of the Balkan economies, I have noticed the following cyclic pattern: the first generation after the changes in Bulgaria managed to evolve, to capitalize and it began to produce goods. The next generation began to consume the goods created by the first generation. The third generation will destroy everything. The third generation that will consume and destroy everything created is on its way. This process started in Greece many years ago, after 1952. We went through all three generations and now we have no first generation of the cycle to create.

Could Greece be the factor that will overturn the political dominoes in Europe and affect the euro zone, and in what respect?

Greece is not a determinant in Europe. Greece is not Italy, nor Spain, but if Greece leaves, namely Italy and Spain will follow it. Although the policy of Germany to Greece is rough, I understand very well what Mr. Schäuble and Mrs. Merkel are saying because they have what to lose. It is mostly the stability of the European Union. They want no factor to be the source of instability, even if it is a small one. That is why they are fighting against Greece with so much power and in this way. Europe's stability concerns us all.

In the case of a possible GREXIT and return of the drachma, it is expected that there would be a mass withdrawal of savings and money transfers to foreign banks in order for the money to be saved in euro. What is your opinion?

It would be better that this did not happen! I hope it will not happen. We will not talk about it, because it will not happen.

There is hunger for capital in both Bulgaria and Greece. In this situation, is there an optimistic perspective for the development of trade and economic relations between the two neighbouring countries?

As you know, the economy is supply and demand. In Bulgaria, of course, there is hunger for capital and investments, and for large and extensive ones. When a foreign investor comes here, what will he receive? In Greece, there are some ecologists, other existing structures, which prevent an outside investor from entering. I do not mean just monopolies. As an agronomist I studied ecology, I cannot understand how ecology has turned into economics, social science and I do not know what other science. It is everything else except what it should be. An investor who enters Greece will face many problems: with the local authority, the church, with some structures which he is not familiar with. Likewise, if he comes to invest here in Bulgaria he will face similar problems, regardless of the specific organizations or structures that hamper the investing activities. Not only do we not offer demand, we also kill it. We still have very old Balkan notions of trade and development. We must break these outdated perceptions, this mesh, which prevents us from moving forward. We need to know in what direction we want to develop. And when we understand what we want, we can immediately offer something concrete to investors to attract foreign capital. Most major foreign investments in Bulgaria were not the result of any investment programme proposed by the Bulgarian state.

Does this mean that fiscal policy remains the only attractive thing that Bulgaria can offer to foreign capital to attract it?

There are other things such as cheap labour, but it is not as specialized as it was in the past. There is good administration as well. But the strongest and major advantage is that it is a tax haven. However, it should not remain Bulgaria’s only advantage because it is just one factor. Hunger exists in Greece, but it is not a tax haven. Note that a foreigner has to pay 50% in taxes, including a dividend tax in addition to the income tax, and there is an incredible bureaucracy.

Is this the reason why many Greek companies come to Bulgaria?

Yes, it is.

What do you think of this hydra, corruption? Is there a scenario in which to handle corruption in our two countries?

There is corruption everywhere. Everywhere! Ask Mr. Schäuble about Siemens and for the three submarines sold to Greece that could not sail.

There has been, there is, and there will be, corruption everywhere. Corruption is not the most important negative factor in an economy. It is important how this corruption seeks to develop, not as corruption but as penetration of capital in the economy. Allow me to say that, here in Bulgaria, there was much more corruption under socialism than there is now. Many people from the time of initial accumulation of capital in Bulgaria are now prominent businessmen. This is not a positive!

Are Bulgarians xenophobes? How do they accept a foreigner?

Sociologist Konstantinos Karavidas in 1924 concluded that our people, from the Balkan region, are the same in terms of culture, we just speak different languages. In his opinion, the mountaineer type is always stubborn, more suspicious, more closed to others, according to his criteria and ideas. In Greece, we have the same problem with xenophobia on the part of the same type of people. People who live on the coast are more open and the reason is not in climate but in trade relations. Trade always makes people more cosmopolitan.

I have heard a lot of things in Bulgaria, but I ignore them. You can hear the same things in Greece. The other Greeks who live here and I myself personally, we live very well, very normally and have no problems with our Bulgarian friends.

We often hear the argument that we, the people in the Balkans, are lazy, that we always avoid making an effort. Where does this argument stem from, is it true?

That is nonsense; it is something said by people who wrongly interpret statistics. We are not lazy! According to the statistics of hours worked per week, both Bulgarians and Greeks work the most across Europe, in terms of time. However, if one entirely trusts this indicator one will make a huge mistake. At least 12 different factors need to be analysed to properly assess productivity. So, let us put aside who is working hard and who is lazy, and see that people in Bulgaria work more than 48 hours a week, in Greece they work 42 hours a week. In both countries, the salary does not comply with working hours. Our problem is not that we are lazy but that we are not effective.

Is this why we are poorer compared to the rest of Europe?

A wrong notion of life in Europe is spread among us in the Balkans. In Europe, 80% of people do not have their own house. In Greece and Bulgaria, if you do not have your own house, you consider yourself as poor. About 60-65% of the huge salaries that we hear they receive in Western Europe go on the rent. This is the largest expense of a Western European family. The remaining money is spent on food, clothing and other everyday essential goods and services. A very small amount of the money goes on entertainment. In Bulgaria and Greece, we can live on sausages and deprive ourselves of other things but we drive expensive luxury cars into which we pour petrol for 10-20 lev. In Greece, the situation is similar, although at another level, at a little higher level, but in the same spirit. This is part of our culture. Everything is a matter of viewpoint. In Western Europe, they do not have their own houses or villas. The priorities are different.

What are the similarities and differences in the fates of Greece and Bulgaria after 2007, when Bulgaria joined the European Union?

So far, Bulgaria has not had such a huge problem with borrowing. It is important to understand that Bulgaria is the last tax haven in Europe. And that without being an offshore zone. If this cannot be understood in Bulgaria, then it will be very bad for the country. In Bulgaria, there are foreign companies and huge amounts paid as taxes, because it is a tax haven. If the percentage of loans increases to the level of the gross domestic product, then the state will be obliged to increase the profit tax. In that case, why should a company work in Bulgaria? It would prefer to work elsewhere. It is because if the tax on profit increases, this will lead to an increase in other indicators, including salaries, prices and so on. From this perspective, Bulgaria is not in the same position as Greece. Greece must carry out very deep reforms in public administration. I like it that no public official in Bulgaria is permanent. In Greece, you have to overcome this thing, which is a very strong tradition. The public sector should be cut. I am very happy when I see that, administratively, Bulgaria is at least 10 years ahead of Greece. Bulgarians accept advice from people whose opinion they respect. That is why I say that Bulgaria does not have the same problems as Greece. And it will not have them if it remains hospitable to foreign capital and companies. If it heads to the euro zone... I am sorry, but things there will not be so bright in the future. It will be foggy. The longer the euro does not replace your national currency, the better for you.

Outside the economic sphere, which are the bridges that connect Bulgarians and Greeks?

We should start with our history. We have been very closely related as nations and we have not had any problems. We need to consider the contribution of the Karakachans in southern Bulgaria and of the Bulgarians in northern Greece. We are members of the European community, we must sit at the same table, abandon the myths, those of mass consumption, and sit down and talk. Then we will have no problems and we will see that we are the same. Politics divides us but we are the same beyond it.

Do you have a hobby and what is it?

I write poetry, but not poetry that caresses the ear. My poetry causes itching of the brain and makes you think. The theme of my poetry is the Balkan countries, their economy, history, society. I do not deal with anything else. All my research activity was associated with the Balkan states, and so is my poetry. This is my love. I am an inhabitant of the Balkans, I am neither Greek nor Bulgarian.

I am a keen angler but this depends on the weather and conditions.

What is your favourite place in Bulgaria and Greece?

In Greece, I like the sea, sun and food. In Bulgaria, I like nature too and the mentality, not only in Bulgaria, but also in Romania, and Macedonia, and Albania. I feel good throughout the Balkans. I like our mentality. It is rough, it is not so cultivated, but something distinguishes us from other people. I will allow myself to be a snob a little.

In conclusion, what is it that will unite us in the Balkans and lead us to a better future?

It is to change our culture. And if we cannot change culture, then we have to dig a huge hole to hide in it. Not the Balkan mentality, which I have mentioned, it helps us. We must abandon the agricultural way of thinking and turn to a more modern way of thinking. The time of labour co-operatives is over as well as the life in an isolated community, distrusting everything new which scares us because it is unknown. Labour co-operatives are the outdated way of living in the Balkan Peninsula that united the workforce in the countryside. This way of living exists even now in our culture. Once relatives, parents and children lived in a closed community, the houses were together in a closed square, behind a common fence. The time of isolation and separation is over, in the modern world there is no place for such isolation, especially as a way of thinking.