Close to tipping point
Greece would appear to be close to the tipping point over decisions as to whether it can be supported, whether it remains in the Eurozone and whether it is allowed to default.
In an action packed weekend, Prime Minister George Papandreou cancelled a visit to the United States to chair an emergency Cabinet meeting prior to a conference call with EU and IMF representatives today to discuss the release of more funds.
With just enough money to last one more month German Finance Minister, Wolfgang Schaeuble warned Greece that it had to make decisions about whether it wanted to stay in the Eurozone and if it did then it should recognise its obligations.
Meanwhile, opposition and New Democracy Party (ND) leader, Antonis Samaras, has called for a snap general election.
Perhaps the most interesting event of the weekend was an enlightening insight into the thinking of the PASOK government. Deputy Prime Minister and Minister of Finance, Mr. Evangelos Venizelos released the text of his statement to the Cabinet emergency meeting. The text is in full below as extracted from the Wall Street Journal.
“Today, I briefed the governmental committee that came together under the chairmanship of the Prime Minister, on everything that took place during the Eurogroup and Ecofin meetings in Poland, most importantly on the bilateral meetings I had with my counterparts and talks with institutional delegates.
The conclusion from that meeting, which made it necessary for the governmental committee to come together, is that a fluid and nervous situation has taken shape within the Eurozone and the international economy at large, which creates multiple problems and allows the profiteering elements of the global market, those who speculate against the euro and other currencies, to constantly organize attacks on the heart of the euro. And this concerns us deeply as a country, it concerns all Greek citizens.
It is very crucial that Greece protects itself against such a tense background. We should not be the scapegoat or the easy excuse that will be used by European and international institutions in order to hide their own lack of competence to manage the crisis and give a definitive and complete answer to the attacks against euro, the world’s strongest currency.
The Government takes full responsibility for the implementation of the agreed program, but this responsibility must be also taken by all European institutions, all member-states, because the July decisions, the decisions of the European Council have an existential significance for the Euro Area.
Of course, this concerns Greece, but it also concerns all other member-states, it concerns a lot the bigger countries that are in the heart of the Euro Area and whose size affects the developments in a great degree. In contrast, the size of our own country is too small to play any significant role. But the Government that takes the responsibility to manage the crisis and take the tough decisions is not alone in this country.
What many question abroad, what stands as a negative stereotype for Greece, is the ability of the country –not the Government. They are not even sure whether Greece, as a society, as a nation, has the will to do all that must be done to escape the crisis and take the competitive position it deserves within the European and the global market. Unfortunately, this stereotype is constantly fuelled by many who, easily and without second thoughts, raise their voice in public, undermining thus the country’s credibility. And this is ultimately used as an argument by international circles in order to hurt Greece’s image and question its decisiveness and ability to proceed with the implementation of the program and the Eurozone’s July decisions.
This cannot go on. Those of us with a public standing, whether they are politicians, journalists, analysts, entrepreneurs, academicians, must have in mind that what they say can be used as arguments against the country.
And this mainly concerns the leader of the main opposition party. Mr. Samaras was briefed by me yesterday, immediately after the end of the Eurogroup meeting. The briefing I gave him was exactly the same with that of the Prime Minister or the governmental committee. I cannot hide from you that, personally, as a citizen of this country, I was taken aback and I was hurt when I heard Mr. Samaras’s speech yesterday in Thessaloniki and today in his press conference. When I heard him saying all that, after having being briefed on what’s happening in Europe, what’s at stake, what are the issues I discussed with my colleagues and the representatives of the biggest international financial institutions.
It is indeed unpleasant to hear such things that cost the country a lot by someone of such an official statute. These are the things that are immediately turned into arguments undermining the efficiency and effectiveness of the very critical decisions and measures we are taking. Every time someone says something irresponsible or unsubstantiated, the country may have to face grave dangers that have financial consequences over the state budget, the incomes and properties of each citizen, each business and each household.
Some easily announce tax-exemptions, facilitations and benefits, at a moment when we need to finalize the 2012 State Budget, at the peak of an intense and laborious effort, at a time when we use Greek citizens’ savings in order to cover the ground towards the deficit target. It is only fair to say then that they lack awareness of the situation.
If Mr. Samaras has the impression that he can go ahead and charm his European interlocutors by presenting a program that totally contradicts all internationally held views, within a balance of power which is very burdensome for the entire Euro Area and the entire Greek economy, then I regret to say that he has no idea what he will face, what any Prime Minister, any Finance Minister of any Euro Area country or member state –even large Euro Area member states- face.
What proves the criticality of the situation is the presence of US Secretary of State Timothy Geithner’s in Eurogroup and Ecofin in Poland, the discussion which took place and the different approaches that exist.
We would gladly introduce a tax-exemption or benefits program, especially for the vulnerable groups of society. What we want is for the Greek economy to be in a position to restore, as soon as possible, such injustices and promote such policies. But if we want this to happen any time soon, we must be serious, determined and honest. There is only one language, the language of truth and that language was not spoken today. Mr. Samaras and the rest of the opposition leaders knew and were informed of the situation and therefore they don’t have the benefit of excuses like “I wasn’t aware of that” or “I wasn’t informed of that”.
If we want to stabilize the situation, avoid default, always be within the Euro Area’s hard core, have the country stop being blackmailed and humiliated –because no Greek citizen must tolerate the country’s humiliation- then we have to make three grand strategic choices which constitute our national strategy:
– First, we must fully achieve the 2011 and 2012 fiscal targets.
– Second, we must achieve primary surpluses as soon as possible; that means a balanced annual fiscal administration so that we don’t produce debt and don’t request our partners for assistance –not only for previous debts but also for the debt that we produce yearly due to deficient management. The primary surplus will shield the country against any development or blackmail.
– Third, we must promote, and we do, all the structural changes that will allow the country to become competitive and productive. Those changes will bring to an end this unacceptable situation in regards to the current account deficit. This is a 10% deficit attributed to the fact that the country borrows in order to sustain itself, and buys imported goods.
This is a situation that leads to nowhere. The governmental committee formulated today a clear framework which will guide me tomorrow during my teleconference call with the representatives of the Troika, the European Commission, the International Monetary Fund and the European Central Bank, aiming at coming to an agreement on the fact that we need to meet our fiscal targets for 2011, to formulate a 2012 State Budget that leads to primary surpluses and to show that we have made progress and that we will take even faster and more determined steps in the field of structural changes like those announced by the Cabinet in its September 6 session.
Of course, in order to achieve all that, some very specific policies need be implemented. All those policies are included in the already enacted Medium-Term Fiscal Strategy 2011-2015 which is in use.
The Medium-Term Fiscal Strategy is the law of the state. Of course, those policies have to be specialized, together with the 2012 State Budget and the accompanying law. Also, there are measures in the MTFS that have been voted and are in effect. They must be implemented and accelerated, in order to achieve the end result that I previously described: To take the country out of the position of weakness and stop being blackmailed and humiliated.
I think that the Greek peoples’ pride and the need to protect the post-war achievements of the country and the things that Greek men and women laboriously achieved over the past 60 years –and not merely the past 37 years since the restoration of Democracy in 1974- are the kinds of criteria that force us to act in this way. And we will.
Following tomorrow’s discussion with the troika, the governmental committee will convene again and analyze all the decisions that move, in any case, within this safe and clear framework which I now present before you, which at the same time constitutes the decision of the governmental committee.”