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It is the elites’ fault that Greeks do not want reforms

20 May 2015 / 18:05:16  GRReporter
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Anastasia Balezdrova

"The elites in Greece are responsible for society being unaware of the emergency." With this phrase, Slovakia’s former Deputy Prime Minister and Minister of Finance Ivan Miklos defined the essential problem that prevents Greece from emerging from its dire economic situation following the crisis of 2010.

Miklos was one of the participants in the Emergency Economic Summit for Greece organized in Athens by the Marcos Dragoumis Centre for Liberal Studies, the Friedrich Naumann Foundation for Freedom, the initiative Greek Liberal Monitor and the organizations in support of individual liberty, free markets and peace the Cato Institute and Atlas Network.

The summit took place at a time when Greece's creditors were sounding the alarm, warning that if Athens failed to come to agreement with them it would be left without funding and state bankruptcy would be inevitable.

It turned into a forum where current and former ministers, representatives of economic sciences and Nobel laureate in economics Thomas Sargent shared experiences of different countries in the management of such crises.

Slovakia’s former Minister of Finance stressed that Greece could learn from the examples of the countries around the Baltic Sea, Poland and Slovakia on how to recover its economy. "Change can only come through deep structural reforms and macroeconomic stabilization. If reforms were implemented in a proper way, they could very quickly lead to an economic upturn," said Miklos and gave the example of Latvia.

"In 2005 the country had a serious economic problem and the government immediately took the following measures: it cut public sector salaries by 26%, private sector salaries by 10% and the number of government departments and institutions by 40%. As a result, Latvia attained a 17.8% increase in gross domestic product in 2009 and became the fastest growing economy in Europe in 2013."

Ivan Miklos stressed that political will and public confidence that reforms are necessary for the economic recovery are of crucial importance. "In Slovakia, we organized seminars to inform the representatives of various sectors on the need for reforms. An uninformed society can hardly be motivated to accept them if they are not presented as a means that will improve the economic situation in the country from within, not through being imposed by the supervisory Troika, as is happening in Greece."

For his part, Sweden’s former Minister for Employment Sven Otto Littorin shared the Nordic experience in coping with the financial crisis in the 1980s. "It started with a housing bubble in Sweden too and it soon exploded in our faces, the budget deficits were huge and the political system was fully aware that we could not continue like that."

Littorin stressed that one of the main preconditions for economic recovery was the lack of bureaucracy. Another fundamental change was the tax cuts, especially in the sectors that created new jobs. As a result, in 2008, Sweden was creating new jobs at the fastest pace and it quickly emerged from the global economic crisis.

The Swedish politician denied one of the most powerful myths among Greek society, namely that Sweden is an example of how a socialist government can successfully deal with the economy of a country. "Although the Social Democrats have governed Sweden for many decades they have never "socialized" its economy," he said.

"Greece’s Prime Minister and Minister of Finance should be aware that a bankruptcy is a very expensive option that has no benefits," said Hungary’s former Minister of Finance and current leader of the Movement for a Modern Hungary Lajos Bokros.

"This will lead only to new budget cuts. And they can produce results only if combined with structural reforms," he said.

According to the Greek participants in the conference, Greece’s economy is the most non-free according to all economic indices and it is formed to serve corporate and clientelistic interests. Former Minister of Administrative Reform Kyriakos Mitsotakis stated that the previous government had still managed to reduce the number of civil servants from 942,625 to 656,414. The result was due to the rule of "one appointment for every five leaves" that the Memorandum of financial aid had imposed.

He did not oppose the remark that many of them had not been actually laid off but benefited from the legislation that provided for early retirement, but added, "The most significant change that we introduced was to cancel temporary employment contracts in the public sector. In the past, both major ruling parties took advantage of them to appoint their voters, and after their expiry, those people demanded to be appointed on a permanent basis." Mitsotakis was clear that New Democracy would not allow SYRIZA to suppress what had been achieved so far in order for it to create "the clientelist state that it has promised to its voters."

Bulgaria’s former Deputy Prime Minister and Minister of Finance Simeon Djankov took part in the conference too. In his speech, he presented several ways to combat corruption that Bulgaria had applied. The main ones were the reduction of public resources allocated for the implementation of public projects and of state intervention in the economy, and even including government functionaries in the companies of private entrepreneurs, giving as an example the books with visitors to the office of banker Tsvetan Vasilev at the Cooperative Commercial Bank.

Tags: PoliticsEconomicsSummitSupporters of freedom of marketsThomas SargentYanis VaroufakisReformsGreece
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