Professor Pissaridis is imperative that economic influx has to come from investment and debt restructuring; otherwise Greece cannot break out of the vicious circle of lowering income, pensions and increasing taxation. In order for Greece to progress economically it must create the right business environment, otherwise the country will have no option but to rely on continued external help.
Interview by Eugenia Anastasiou
Since you have been following the Greek economic crisis from Day One, which do you think would be the “new growth model” for the country in the years to come?
In this matter one has to consider the location of Greece and what advantages that holds for the country —primarily its natural resources—and what markets it can access readily; namely the EU. Greece should focus on a few sectors and try to do them really well, to provide products or services to a high standard. Greece does not have the capacity for large scale production, such as Germany, France, or Italy, but it should be able to produce top-quality goods, which should be marketed abroad aggressively.
A case in point are the country’s more successful SMEs which now have a presence internationally, companies such as Fage, Korres, Frezyderm, Aegean Airlines and others.
Greece must be able to organise a better way to market its agricultural wares and native foodstuff, such as feta and its fresh fruit and vegetables; if the Italian province of Sicily can do it, why not a country like Greece?
Again, Greece has the ideal location and climate, so tourism is its other great asset, but again it has to focus on offering a premium service to be able to compete and be more attractive than its other southern European neighbours. Shipping of course is another Greek strength. However, in all these cases and for businesses to develop in Greece, government must be kept out and red-tape has to be minimised for entrepreneurship to flourish.
Also, Greek links with China and their investment in the country, especially in much-needed infrastructure must be utilised to Greece’s best advantage.
Create the right business environment
Is Greece ready to make this transition in the fields of investment and exports, which are the main constituents of GDP? Or do you think that additional external “economic help” will still be necessary?
In order for Greece to progress economically it must create the right business environment, otherwise the country will have no option but to rely on continued external help.
For example, if you look at Cyprus, albeit a smaller country than Greece, there are lessons to be learnt there, especially since it came out if its MOU quite quickly, but it also created an environment conducive to business development and attractive to international investment—it is imperative that Greece creates the right business environment.
Greece will still have to rely on the EU for investment in infrastructure projects but creating the right business environment should be complementary to improving infrastructure.
The vicious circle
So far, there has been little or no discussion at all, regarding Greek public administration and the required transformation required “after the Memorandum of Understanding” era in the country. Do you think that this transition is completed or that it simply never happened?
Coming out of the MOU is difficult, especially since repaying the debt is through lowering income, pensions and increasing taxation, this has created a vicious circle. Economic influx has to come from investment and debt restructuring; otherwise Greece cannot break out of this circle.
The international institutions, such as the IMF, ECB and the EC cannot expect any country to repay its debt through taxation alone forever. Only four years remain till 2022 and Greece has to negotiate a strategy for debt relief which must also boost public investment, lower taxes to support jobs and encourage economic growth.
High taxation, even lower pensions and lack of employment are the most pressing issues concerning most Greeks these days. Can anything be done to reverse this depressing situation?
Greece desperately needs an economic ‘shot in the arm’ and this will have to come from foreign investment. If we take Cyprus as an example again, their improved economy came from Russian investment, however unfortunately there is a general lack of confidence in Greece.
Europe is fed up with Greece and there is a certain prevailing view in Europe that Greece blames others for its misfortune and is not ‘contrite’ enough regarding its situation or doing enough to remedy its state of affairs. However, the IMF, ECB and EIB must show conciliation in ensuring continued investment in Greece’s infrastructure projects.
The Scandinavian model
What about labour relations in the Eurozone and in Greece? Do you see conflict or a new social contract as the way forward?
There should be no room for conflict in labour relations in the EU; but neither should the situation go back to the old-style labour structure.
Concessions have to be made by unions with some flexibility on their part, but ultimately it is down to governments to reduce inequalities. The best example of this is the Scandinavian model, where good social services are guaranteed. Governments have to play a key role in providing good quality public and social services, as well as protecting the workforce and their rights. It has been demonstrated, especially comparing Scandinavian countries to other European countries, that greater employment protection and regulation can actually enhance economic performance.
In the case of Greece, the unions are often guided by monopolist and closed-shop policies, as well as their inability to let go of gains they have made in the past; they need to exercise a greater degree of cooperation.
