Jeffrey Sachs defines as very traditional and conservative the markets to which Greece exports the majority of its products, namely Italy and Germany. In his opinion Greece underestimates the Middle East which exports oil and oil products and which has a lot of free money. At the same time, the economies of these countries need to import almost everything and they are not far away from Greece. He offers China, the Balkans and North Africa as other potential markets. "Exports do not happen by themselves. There must be trade missions in those countries. Special export platforms are necessary as well. For example, China is seeking to base its production in Europe. Why shouldn’t it base it in Greece?" he suggests.
The American economist is famous for his awareness of economies in crisis since, in 1989, he was an adviser to the "Solidarity" union during Poland's transition from a planned to market economy. "Then my Polish colleagues joked and said that there were two ways for Poland to emerge from the crisis. The first was the usual way, namely that God should descend on earth, perform a miracle and emerge the Polish economy from the crisis. The second was the miraculous, namely that Poland should reform itself by going through the painful transition, thus becoming a stable developing country. Well, the miracle happened. Why shouldn’t it happen again in Greece?" he states.
The Columbia University professor recommends that Greek economists should not be too orthodox and conservative and that they should break all taboos if they want to emerge from the crisis. One of his revolutionary proposals is to reduce corporate taxes and to offset this by an increase in VAT and in the taxes on consumption and property. He even recommends tax holidays for new businesses because this is the only way for the country to cope with unemployment, which is 25%, reaching 65% in young people. According to him this is Greece’s most significant problem.
In general, the government is doing nothing to encourage private initiative; there must be Venture Capital, funds for small- and medium-sized businesses, tax breaks. The economist recommends financial engineering for troubled companies which are unable to pay their debts as well as a debt-for-equity swap (the assets remaining after the liquidation of the company and the clearing of debts to lenders). "The debt-for-equity swap is the better option than liquidation. Indeed, the company will change its owner but it will continue functioning whereas liquidation leaves people in the streets, thus causing unemployment," he said.
Of course, Jeffrey Sachs’ forecasts are not always correct. He was one of the opponents of the introduction of the currency board in Bulgaria in 1997. However, it is generally recognized that Bulgaria owes its macroeconomic stability namely to the currency board, which is one of the best decisions in the history of the Bulgarian economy. What is his forecast for Greece? "Greece will remain in the euro zone and it will not disintegrate. Greece will gradually get back onto its feet thanks to its own strengths and with the help of its friends. 3/4 of the effort will come from Greece and 1/4 from abroad. It is on the brink of financial collapse and will remain there for several more years after which it will recover," he said.
The lecture by Professor Jeffrey Sachs was attended by current and former ministers and deputies such as Filippos Sahinidis, Miltiadis Varvitsiotis, Thassos Yiannitsis, Petros Doukas, Petros Efthimiou, heads of branch organizations like chairman of the Hellenic Federation of Enterprises Dimitris Daskalopoulos, president of the Association of Greek Banks and president of the National Bank of Greece George Zanias, president of the Association of Insurance Companies and CEO of Eurolife ERB Alexandros Sarrigeorgiou, economists Miranda Xafa and Gikas Hardouvelis, diplomats, ambassadors and journalists.
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