1                       SPEECH BY THE PRESIDENT        OF THE NEW DEMOCRACY PARTY ANTONIS SAMARAS                         ...
2      I however am interested in the language of Greece. The way out thatwe propose today concerns each and every Greek c...
3       First of all – reduction of tax rates! Boldly and decisively!        It has to be done immediately so that it is e...
4brought the construction sector to a standstill. The construction sector was the„locomotive force‟ of the economy in Gree...
5       - small and medium-sized undertakings can freely choose between thepresent system or an imputed tax system. The im...
6          The fifth step of the Restart: the State is to pay off its debts to           private individuals, which is th...
7        -- The programme to improve home energy conservation, if appliedproperly and not with half-hearted measures as to...
8The total cost for both of these measures does not exceed 2 billion Eurosannually.      I will now explain the total cost...
9        Slide 10 shows overall economies that can be made. The measurescoincide with a number of those proposed by the go...
10       -- By way of indication I am referring to the obligation of the state toprovide all documents required electronic...
11        --The sectors of agriculture, animal husbandry and fisheries. You maybe aware that Greece imports 65% of its req...
12      Land use must be determined as well as a utilization co-efficient togenerate added value.     Thereafter it must e...
13       Here we need to see what we are selling off in each case, at whatprice, with what prospects, and when. What is ou...
14the Hellenic horseracing organization (ODIE), the salt mines and touristproperties we will promote their immediate priva...
15      Can this in any way be compared to our Memorandum?      Look at the new centre right government of Edna Kenny in I...
16       -    Such as the Eurobond for example already being discussed,            although for the time being there are f...
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Speech by Antonis Samaras, Key Points, Zappeio II (12/5/2011)

  1. 1. 1 SPEECH BY THE PRESIDENT OF THE NEW DEMOCRACY PARTY ANTONIS SAMARAS Key PointsThursday, May 12, 2011Dear Friends, I find myself in the same place where, 32 years ago, as a youngmember of parliament I watched Konstantinos Karamanlis sign the “start-up”of our country‟s European Journey. I address you in all sincerity, in allhonesty, honouring my debt as I perceive it. The people of this country are demanding that we take at fresh look atGreece, with a new Constitution and new institutions. - With a new politicaland public ethos. The demand is that we finally cast off the image of awounded Greece, of a Greece of insecurity and panic.I am not addressing you therefore in the language of yesterday because I feelthe anxiety of people and the demand from me that I be very clear-cut in mywords.We have a government which incriminates itself!We know that recourse to the International Monetary Fund began some timeago when the international markets was still extending loans to Greece withease. The government of PASOK tried at the time to achieve what othercountries were trying to avoid. Nothing was ever subject to negotiation.Some countries point out today that they achieved a „Memorandum‟ on betterterms than we did. But I will not talk about the past today. We do not need to because, what we had said in the past, has nowbeen corroborated by even the most authoritative voices from abroad that lastyear were criticizing us. To cite one example: The Economist last year criticized us severely lastyear when we voted against the extreme austerity of the Memorandum.Today it admits that what we had said was precisely what has brought us tothe present impasse. See slide 1 „The Limits of Austerity‟. -- «The objectives (of the deficit) were not reached chiefly due to ‘arecession deeper than expected». -- And: «there is the fear that more cuts (today) will take Greece intodeeper recession». This was what the conservative and liberal Economist said.
  2. 2. 2 I however am interested in the language of Greece. The way out thatwe propose today concerns each and every Greek citizen wanting to grasp atsomething and to hope. I will demonstrate two things as simply as possible: -that we can overcome the crisis -that we can improve without returning to a dependent prosperityand the false illusions we had in the past. We need to stand on our own two feet again proudly. For us to becomecompetitive and outward-looking as befits the Greeks. We must never againpermit any foreigner to consider us as „an example to be avoided‟. First of all I call upon you all to exorcize the ghosts of past decades –the ghosts of popularism, of statism, of self-pity, defeatism, political corruption,bigotry and a facile „settling‟ of our national problems. In any event, PASOKhas now brought us to the point where there are no solutions any more.That is why we propose not simply another route for the Economy or adifferent logic for the country which, if adopted, will liberate the strength of theGreek people seeking a Self-confidence and Dignity Pact from us.Dear Friends, Let me just cite one thing – in the first four months of this year, asconcerns the main objective of public revenues, the government wasexpecting an 8.5% increase and ultimately there is a 9.2% decrease! Thedeficit on the other hand has increased by 14% since last year, despite theunprecedented sacrifices of the Greek people. What I am saying therefore is that emergency situations requireemergency decisions! I am referring to the decisions which activate the Restart of theEconomy, of the market, of expectations, of the morale of Society. TheRestart of Greece! The priority for saving the country! What does this „Restart‟ mean? It means that economic revival cannottake place alone, automatically. What you need is shock treatment. This iswhat restarting would be - a positive shock – a budgeted, modern and realisticproposal. What Greece has suffered due to disastrous policies is a paralyticshock. Of course developments are taking their course. Luxembourg hasvoiced our innermost fears. We have gone from being equal partners toalmost mere „borrowers‟. Whereas we were to have gone to the markets atthe end of 2011, the government is now seeking new loans, precisely becausethe markets it seems will be shutting us out for some time yet. Let’s see what the Restart Plan for the Greek Economy with a positiveshock is.
  3. 3. 3 First of all – reduction of tax rates! Boldly and decisively! It has to be done immediately so that it is effects the economy from thefirst day. It has to be in the medium-term also so that the general mood andthe expectations of the market are improved. [slide 2] -- we propose a 15% tax on profits for all companies – a flat rate – and15% dividends tax down from the present 25%. -- the highest income tax bracket will be reduced from 45% στο 40%initially with fewer tax brackets and in three years will not exceed 30%. -- as for VAT this will be set at 19% from the present 23% for the topcategory, 9% from the present 13% for the middle category and will drop to4.5% in sectors such as Tourism. The positive impact on inflation will also beseen very shortly. -- as to fuel tax, the increases imposed by PASOK will be removedwithin two years. We have the most expensive fuel in the whole of Europe. -- a reduction in employers‟ contributions by 25%. Ireland has alreadyconvinced its Troika and reduced employers‟ contributions. This willsubstantially reduce non-payroll costs to employers. Illegal labour will beseverely punished. The ensuing increase of contributions will balance out anylosses for Social Security Funds -- a gradual abolition of „taxes on behalf of third parties‟ over three tofour years.This all brings us to another enormous commitment - promotingEntrepreneurship which has been persecuted for decades where statism hasbeen rife in Greece. This persecution has hit large enterprises, but chiefly themiddle class which is mostly made up of small and medium-sized companiesand self-employed persons.Many will ask what will all this cost? I will come to this presently… for themoment bear in mind that all our neighbouring countries have low tax rates,some even lower. For us to survive we must make a decisive step and now isthe time to do so!The second start to the restart is to settle all outstanding issues and draw avery strict „red line‟ from now on.There are three points to note here: -- the abolition of a „means test‟ for acquiring a house for the next threeyears – be it the first or second home or country residence. This means testat the moment for the acquisition of a house does not punish those who havemade money illegally. All it does it to punish the economy because it has
  4. 4. 4brought the construction sector to a standstill. The construction sector was the„locomotive force‟ of the economy in Greece. -- no further increase on pre-set rates on property because this doesnot generate revenue but simply brings the construction sector to a halt. -- no means test on capital repatriation so as to inject money into theGreek financial system. All liquid and fixed assets abroad held by Greekcitizens are to be declared. All tax penalties will be suspended for one year. With the exception of those who are involved in „money laundering‟, in thisperiod all assets held in Greece or repatriated capital will be declared, afterwhich the most stringent rules will be applied throughout. The only exceptionhere will be for politicians! I propose that a means test should be appliedimmediately to all politicians who have held the post of Minister or DeputyMinister since 1974! And finally an assets register will be established for all Greek citizens. * the third step to the restart is a broader reform to the tax system.Foreign and domestic investors must be convinced that all these bold stepswill last and not be rescinded later on. We must therefore ensure a stable system which combats tax evasion.Despite frequent announcements to date, the results have been pitiful or eventhe exact opposite of what was expected. Slide 3 shows that in 2010 tax evasion increased despite theexpectations of the Memorandum! What we need therefore is a complete overhaul based on fourprinciples shown in slide 4. -- on the issue of tax rates being reduced we say that if you increasetaxes when there is a downturn in the economy this acts as an incentive fortax evasion. -- Secondly, a simpler tax system is needed. In the last year alone tentax laws covering 1718 pages have been introduced. Probably a worldrecord…. We intend to codify all tax provisions within a few pages and to haveone single tax law applying to private individuals, businesses, real estate andVAT transactions respectively. This would mean a single 50-page piece oflegislation for companies, rather than thousands of articles of law dating backto pre-war years… This in itself will be not just a reform but a revolution in a tax systemwhich we have not had for decades!! -- thirdly, strict penalties must be applied to anybody evading taxes or contributions because any further stealing from the state after taxes have been reduced deserves the strictest of punishments! We do not agree with the present government that assumes that citizens are evading tax and dishonest until proven otherwise. -- fourthly, face-to-face contact between taxpayers and tax officersmust be reduced to the minimum. Here we have three new elements:
  5. 5. 5 - small and medium-sized undertakings can freely choose between thepresent system or an imputed tax system. The imputed tax calculation will bebased on objective trends in the specific sector and region. For example, for a shop surface of 100 metres, an imputed cost will beset according to the area. For the prosperous area of Kolonaki there will be adifferent imputed profit compared to the worker area of Kokkinia… In the event that the taxpayer does not accept the calculation then a fullaudit will be carried out. - „external help‟ in submitting tax returns through auditing companies oraccountants‟ offices will be possible, whereby these third parties will beresponsible for the accuracy of the information submitted. The tax authoritiescan audit these offices and the taxpayer to exclude the possibility of collusion. The controllers will also be subjected to controls. -- Finally the Books and Tax Code will be abolished which is longoverdue. We are proposing a revolutionary reform of the system to make itsimpler, less bureaucratic and user-friendly to the honest taxpayer andpunitive for tax evaders. Slide 5 shows the expected increase in revenues due to a reduction intax evasion over the next four years, based on modest calculations. * The fourth step of the restart is the legalization of all buildingsconstructed without a permit. This has been the greatest outstanding issuesfor decades. Aerial mapping of the whole country will enable penalization forany illegal construction in the future. At the moment there are more than onemillion illegally constructed buildings throughout the whole country. This of course will not apply to buildings in archaeological sites, on theshoreline or those which constitute an environmental hazard. It is estimatedthat 70% can obtain regular property titles immediately, with the respective feepayable to the state over a period of three years. Legalization and the feepayable in order to acquire the title deeds shall be based on the region, thesurface area and the gravity of the offence. Slide 6 shows anticipated state revenues over a 3 year period from thefull legalization of illegal buildings. In the first year alone expected revenue will be 1.5 million. Contrary tothis government‟s approach of temporary legalization, we are advocating acomprehensive land and legalization policy. The state itself recognizes that it cannot proceed to demolishingbuildings, which in turn encourages illicit construction everywhere. A red line must be draw now. Most of the existing buildings will acquirea legitimate title but draconian prohibitive measures will be implemented fromnow on. Any future illicit construction will be demolished immediately at theowner‟s cost and with a heavy fine to pay... This will separate the chaff from the wheat and convince society that astop will be put to illicit building.
  6. 6. 6  The fifth step of the Restart: the State is to pay off its debts to private individuals, which is the „domestic debt‟, the payments due by the state to citizens. This includes returns on VAT, subsidies, lump-sums on pensions, payments on contracts with private or legal entities for services rendered as well as construction. These obligations can be met by immediate payments, by state bonds, or offset against any outstanding dues of taxpayers to the state. This should mean a market liquidity of about 5 million euros. The State cannot be seen to spearhead the movement of „I‟m notpaying‟! Nor can the state apply severity when it does not itself meet up to itscommitments. * The sixth step to the restart. From now on banks are to commit tooffering the real economy some part, say 20-30%, of the guarantees theyreceive. Over the past three years they have received 63 billion. A newprovision was ratified recently for a further 30 billion.Each bank uses this money to cover the outflow of deposits, the increase innon-performing loans and the exclusion of Greek banks from the interbankmarket. This in itself has created a liquidity squeeze on the market. No bank can reverse the trend alone, but if liquidity is created on themarket by all the banks, then the market will be given a breathing space andtheir assets and capital adequacy will improve and capital flight will stop. From the new guarantee installment a separate account is to becreated to be earmarked exclusively for the real market. This would be chieflyfor enterprises in the export, tourism and mortgage sectors. One quarter ofthis will come back immediately to the state coffers in the form of taxrevenues. The emergency measures to boost bank liquidity must be extended, asI discussed with Mr. Trichet, beyond 2011 and for the whole of 2012. This isone of the first measures I will negotiate with our lenders to create greaterliquidity. The market is full now of post-dated cheques being extendedcontinuously. Tens of thousands of undertakings are in danger of folding, notbecause they are not operating but because they are unable to recoupreceivables! Other thousands of shops are without a single customer all day. The seventh step: all the above measures change the general moraleof the market and the measures to boost the economy increase benefits witha zero or minimal fiscal cost due to this breathing space I have beenproposing over the past eighteen months. Slide 7 shows five of these vital measures:- -- First time home-owners to receive a 2% subsidy on loans to bring inup to 2.5 billion euros in the first two years. The construction sector is still thelocomotive force of the economy!
  7. 7. 7 -- The programme to improve home energy conservation, if appliedproperly and not with half-hearted measures as today will also bringsubstantial revenue to state finances in the first two years. -- If European Union Funds are utilized properly we can go back to fifthposition in terms of absorption as in 2009 or even higher, and not 17th or even lower as today. -- The government has put a stranglehold on public investment. Eachtime Mr. Papaconstantinou needs funds, - which is an ongoing situation- hemakes cuts to the Public Investments Programme. It is worth however notingthat this programme has the highest multiplicatory effect, reaching a factor of5. This is a very powerful tool that the government has to combat recession! -- Major investment programmes are needed for permanent holidayhomes. Wherever such areas can be found, titles should be cleared and thenput up for auction for holiday or permanent residences. This is a very realisticprogramme which has been successfully implemented in other Mediterraneancountries and does not impinge on the hotel sector. What is even more important is that such programmes can bring inpermanent revenues for the state even before completion through preliminaryfinancing and other means. All these „relief‟ measures can bring in more than 8 million in staterevenue immediately within the first two years. There are a number of important examples of measures that can bringin additional state revenue without needing expenditure: for example, byappropriate utilization of the Egnatia Highway, the promotion of the“Development Routes”, the five major motorways which are the verybackbone of our country, but with progress now almost at a completestandstill. Another example is the type of concession given for the Piraeus PortAuthority being extended to regional harbours and airports throughout thecountry, or waste management and the extension of the Suburban Railnetwork. This will bring direct revenues and development. This government has brought everything to a halt however. Slide 8 sets out all the possibilities of this package.Apart from a Restart to the economy there is another priority – society mustsurvive! For it to survive, we must remedy the injustices done: One injustice must be rectified immediately – those receiving lowpensions of up to 700 Euros. They have had their meager pensions cut by25%. We will reinstate these as a matter of utmost priority as soon as wecome to power because it is not only the right thing to do but also becausethey are the ones who spend their money on the market.We will reinstate child allowance to large families, which were curtailed by thisgovernment, to the same levels as before and incorporate this into our firstbudget.
  8. 8. 8The total cost for both of these measures does not exceed 2 billion Eurosannually. I will now explain the total cost of the Restart to the economy andwhere the money will come from. It must be noted at the outset however that these measures will notonly incur costs in the budget but also bring in revenue for the state. There is a cost involved but there will also be revenue generated fromturnover on the market due to increased development. This will beconsiderable with the first „safety net‟ being the money brought in which willexceed the cost. Slide 9 sets out the cost-benefit analysis from all the Restart measuresand the re-establishment of social cohesion based on the most modest ofcalculations. You can see clearly that even in the most modest case, from the veryfirst year the revenues for the state are in excess of costs. Consequently, there will be benefits to be derived right from the star -with a reduced deficit of about 2% of GDP in the first year, even with the mostconservative of estimates. This net benefit is our first „safety net‟. This is not the only one however, because we will move on toadditional cuts to squandering of public finances. These are real cases ofsquandered money as follows: -- Hospital costs to be based on results of successful state hospitalsabroad so as to set a guide to detect waste of financial resources. -- A modern, computerized system of management to automaticallydetect any attempt at embezzlement in the Public Health Sector. -- A computerized system of medical prescriptions. The delay inintroducing this system is costing half a billion Euros each year! --A ceiling on the amounts of prescriptions serviced by thepharmacies, according to the area. We cannot tolerate enormousdivergences of thousands of Euros from the annual average… --A premium for savings in Public Procurements for companies offeringsubstantial decreases compared to prices to date. --A freeze on recruitment for three years. The only exception is foremergency requirements. Thereafter the rule will be that for every fiveemployees pensioned off, one new civil servant will be recruited, but noredundancies! What should be applied is the institution of a „labour reserve‟for organizations abolished or merged. -- Cuts to be made to incomes paid at the higher level especially in thepublic utilities companies. See slide 8 for more information. The government is supposedly trying to make real economies inwidespread waste, but is this really true? Certainly not! Slide 9 shows thatPASOK has inaugurated a new round of waste where once again the partyhas taken over the government…
  9. 9. 9 Slide 10 shows overall economies that can be made. The measurescoincide with a number of those proposed by the government in its Medium-Term Programme. In the measures we are proposing however there are no„horizontal‟ cuts, but rather operational economies and severe cuts toprivileges at the higher income level. This is the second „safety net‟ in our policy – additional economies tobe made. Within one year we can make savings of 4.2 additional billion bytargeted cuts to expenditure and income increases. Within 2 years, 9-10billion in savings and within 4 years, 18 billions overall, without recession. This will be once the Restart programme has begun... Slide 11 shows the Restart Programme overall compared to theGovernment‟s Programme. The pickup to the economy ensuing initially and the development lateron, along with the two „safety nets‟ will substantially reduce the deficits asfollows: -2% in the first year from the first „safety net‟ and 1,9% in the secondyear. This gives a total deficit reduction of 3,9% of GDP. During the next few years the economy will move into a pickup phaseand will begin to produce increased income for state coffers. The deficit willthus be reduced by more than 7% of GDP within two years. Once the economy moves from revival to development the deficit willbe reduced even further- much more than foreseen in the medium-termprogramme of the government, - as much as 11% in three years. Within three years of implementation our programme reduces thedeficit to 1% and thereafter generates a surplus. This will enable us to have a balanced budget within just over threeyears because, as of last year, things have changed, where the recessiondeepened substantially and the paralysis on the market has worsened. No „miracles‟ will be wrought but just consider that the austerityimposed by the Memorandum so far is in excess of the total deficit of 2009.With the Revival of the economy we will instigate, these cuts will „take effect‟.So far recession has „swallowed up‟ these cuts, as the government itselfadmits. Rebooting the economy is an immediate objective, but to achieve itadditional measures are needed, of an institutional nature not financial. Slide 12 shows some of our top priorities apart from the offsetting ofamounts owed to the state against what the state owes.
  10. 10. 10 -- By way of indication I am referring to the obligation of the state toprovide all documents required electronically and not for people to have to gofrom department to department. -- The fast track must be extended to all enterprises not only to thelargest and not only foreign enterprises. -- All judicial conflicts to be settled with one year at the most. This willbe like a legal „fast track‟ which requires an institutional reform in the wayjustice is meted out. --A „Zero base Budget‟ will mean a re-examination of every budget line.Slide 10 sets this out more analytically. I will cite just two of the mostimportant aspects: -- The encouragement of entrepreneurship. This means, among otherthings, the abolition of any extra emergency payments on profits. These onlydiscourage entrepreneurship with minimal revenue. These one-off paymentscharged to businesses have become a permanent fixture and is the greatestexample of persecution suffered by this sector today. This must be stopped. - A resolute political decision must be made to stop illegal economicactivity because it is a death blow to true trade. By putting a stop to illegaltrade the climate on the market will be improved immediately and will bringimmediate revenues to both business and the state. One thing should be clarified: All seven steps to the Restart presented must be taken simultaneously,not individually or piece-meal.Otherwise we will not be able to have that positive shock we need. So let‟s Restart! Let‟s move ahead with all necessary measures for the Revival to reallytake place and not to fizzle out overnight. It must lead smoothly to viableDevelopment thereafter. There is also a third priority: a change to the model of development.We must move ahead with our country‟s renewed competitiveness, looking tothe outside world. We must boost Exports therefore. Restart –Revival and then Development and a change in the model ofdevelopment. At one and the same time we must speed up fiscalconsolidation. Slide 13 shows some important steps to change our model ofdevelopment. --For example a drastic change in the tax system we have alreadymentioned. --For Shipping and Tourism we will re-establish the respectiveministries with a full reinstatement of their competences, to come directlyunder the Prime Minister.
  11. 11. 11 --The sectors of agriculture, animal husbandry and fisheries. You maybe aware that Greece imports 65% of its requirements for porkmeat and 90%of its beef consumed. This is inconceivable in terms of financial logic andmust change. --Processing and standardization of quality products is an area ofenormous potential for us, but we are still performing ineffectively. --The re-declaration of the Exclusive Economic Zones which PASOKregrettably fears. The exploitation of our mineral resources must finally beaddressed after years of inactivity…. --Research-Technology-Innovation. These are areas that are not theexclusive preserve of others. We too can excel in them! More details on this can be seen in Slide 11. What is also intangible, but important for cultural Greece and which cancontribute to a change in the psychological climate: In the new national objective to save our country we will activate privateinitiative as well as the omnipotent Greeks abroad. Here I refer tofoundations, sponsorships and volunteerism. All these can have a hugeadded value and are part of our tradition of great national benefactors. We need to organize ourselves as for an Olympiad. We need to callupon the powerful – in an organized fashion- to contribute to special projects,for example to our main museums, which without help lose their value and donot contribute to our cultural and tourist development. The role of thePresident of the Hellenic Republic could be instrumental here. All the sector development strategies will be addressed on a futureoccasion. We will then proceed to our specific policies and present ouranalytical programme with the competent sector chiefs for Shipping, Tourism,Energy, Processing, Agriculture, Trade, Environment, ICT, Research as wellas the specific 1Χ13 programme which gives the specific developmentpriorities for each of the 13 Regions in the country. For the moment however, I insist on our priority of restarting theeconomy. Without this there is no point in any further discussions. There is however something we must clarify over and beyond theRestart. This is linked to the immediate change in the climate in Greece andthe change in our image abroad. We must utilize the public assets toimmediately reduce our 50 billion in debt. This is the reason we raised the issue last year. We knew that with theimpasse of the Memorandum, Greece‟s debt would spiral out of control. Thiswould in turn raise the issue of insolvency, or „restructuring with a haircut‟,which is equivalent to a controlled bankruptcy. When we proposed this last year to the government we were derided.Today the Troika has set this as a condition for borrowing… That is why we proposed it last year – to avoid the present situation. Ittakes time however, because the state needs to legislate, it needs to clear thetitles to the assets and thereby create value.
  12. 12. 12 Land use must be determined as well as a utilization co-efficient togenerate added value. Thereafter it must examine how the assets will be utilized. This willconvince any potential buyer that no problems will arise later on. There mustbe a stop to ridiculous fiascos such as with the Astakos project which harmour image and the climate on international markets. Once this is done the various utilization modes for the state assets aremanifold – from the simple, traditional modes, such as leasing and public andprivate partnerships, and more complex modes such as Mutual Real EstateCapital, Holding Companies, SPV‟s, which are special investment vehicles toexploit natural resources as well. The state can thereby be paid in advance for part of the value againstfuture exploitation and to have bridge financing for the intervening periodbetween liquidity and investment revenue expected in the future. This will mean cash in hand without necessarily ceding ownership ofassets. We must be wary of fixed notions – some properties can be sold, butadded value should not be given away and any sale of important state assetsmust be ratified by Parliament. We can also have utilization of Church assets. This must be done infull transparency and respect of the role of the Church and its CharitableMission. A Church that has its own assets is strong, and the Church inGreece does have assets, but no financial resources. Do not expect me to indicate which „prime‟ properties or land should beutilized in what way. There is no reason for me to do this and I am not anestate agent... Making good use of state assets means convincing people to invest,but nobody will invest in an economy that is in a state of paralysis, in a societyat unrest, in a country attacked every day by speculators preempting ourbankruptcy. This brings us back to the issue of needing to Restart… If we succeed in restarting the economy the 50 billion can be foundrelatively quickly. Without a restart, exploitation of state assets is in vain. This would bea case of „flogging off‟ our assets at cut price. The same holds true for denationalization which we are in favour of.We have repeatedly chastised the government for dragging its feet – not onestate enterprise has been privatized despite announcements to the contrary. At the moment the entire public sector enterprises on the stockexchange are worth less than 6 million as against 8 million they were quotedat in September 2009, which was also a year of international crisis. With a stock exchange in turmoil, if you announce mass sales of sharepackages then prices will plummet thus damaging your own assets.
  13. 13. 13 Here we need to see what we are selling off in each case, at whatprice, with what prospects, and when. What is our strategy? For example, the government‟s plan to sell of 17% of the public powercorporation is a huge mistake. This reveals cash flow panic. It has nobearing on energy infra-structure privatization and how it operates world-wide. We will proceed to privatizing the PPC in the most modern, financiallysound, transparent and developmental way. The modern concept of privatization everywhere begins with theliberation of the market: --Liberalising the energy market means first and foremost breaking thestate monopoly down into various companies and then choosing what to selloff. The PPC is not one single thing. It must be examined as a total groupof different company sectors. The distribution and transport networks for example must remain understate control. The remainder can be privatized. --Liberalizing the energy market also means that we must chose ourenergy mix which the country will produce in the future as well as theregulatory framework. The idea is not only to receive money now, but also to produce cheapenergy in the future to save good jobs. We will seek a strategic investor for those parts offered up toprivatization, - this is the only way to achieve any development… We will establish a regulatory framework to ensure public control oversocial resources, such as our water reserves which are so important for ourfarmers. We must also determine at the outset what the benefits for privateindividuals will be, the existing loans, the obligations for environmentrehabilitation in local communities that the PPC and the state haveundertaken. We must see what the new investor can undertake and whatmust be completed prior to privatization. The government‟s plan, I repeat, does none of this. What is valid for the PPC, which is a listed company, will prevail in adifferent manner for the non-listed Railways Organisation. Rail transport inthis country is 3% of total transport, whereas in Europe it is 70%. What is ourplan? What opportunities for investment are we opening up? When clearly determined it can lead to a substantial leap indevelopment through rail privatization. Otherwise we are simply selling a plotof land in the desert. For other state enterprises, such as the water companies in Athens andThessaloniki, with the water networks remaining under public control ofcourse, for the Hellenic Postal Service, the State Petroleum Enterprise, thegeneral mining and metallurgical company (LARKO), the casino, the lottery,
  14. 14. 14the Hellenic horseracing organization (ODIE), the salt mines and touristproperties we will promote their immediate privatization with a strategicInvestor. As for the football lottery (OPAP), we must remember that it brings inenormous revenue to the state, both directly and indirectly. We cannot cede state participation at a cost which is equal to two orthree years of revenue. That would not mean selling it off, but giving it away!! Finally before anything is privatized we must get serious. We mustchange the whole system of unfair privileges in the public enterprises. Herewe have a closed shop situation, where people behave as if they own thesepublic assets, shaking a threatening finger on television and hiding behind thegovernment – behind the government that nurtured them and that is allergic todecisions that it does not understand as a political party, nor can it manage asa government. It should be clarified that no trade union in state enterprises owns eitherthe energy sources or other public infrastructure. Trade union rights aresacrosanct, but there are no private privileges, nor can they have any and wewill not recognize any. The post-dictatorship regime has nurtured many „black spots‟ ofarbitrary action and public assets‟ abuse. If the modern state wants to makeoptimum use of the wealth of the nation so as to move out of the crisis these„black spots‟ must be expunged. Otherwise there is no use discussing. . To answer the last question: yes, in order for all this to succeed wemust change the conditions of the Memorandum!Perhaps some people are banking on our bankruptcy. But Greece is at acrossroads where unprecedented strife is in effect around us, threatening todestabilize not only this country but also other European countries around us. We have therefore a strong geo-political argument too – Greece cannotendure any further instability, when the whole region around us is in a state ofdestabilization. We also have the precedent of the Irish. They were able to achieveinitial negotiations – without a „gun on the table‟, and other political myths –much better conditions than in our Memorandum, maintaining their tax rates at12, 5% leading the country to economic revival today! When we see the final version of the Portuguese Memorandum we willall see that the Greek government did not negotiate a single thing. Alreadythe Portuguese are celebrating openly that they have achieved much betterconditions than Greece. To cite some of them- they did not abolish the 13thand 14th monthly wage. Pensions have been frozen apart from the lowest.Only pensions in excess of 1500 euros have been reduced. Also two thirds ofthe total amount borrowed will be paid out to Portugal outright.
  15. 15. 15 Can this in any way be compared to our Memorandum? Look at the new centre right government of Edna Kenny in Ireland – ithas been able to improve the conditions of its Memorandum. It has beenaccepted that if they stick to the same objectives of reducing their deficit anddebt then their Troika has no objections to the way in which that will beachieved.This is what we aspire to as well – a change in the conditions set in theMemorandum, so as to acquire flexibility and for there to be a restart to theGreek economy to move out of the Memorandum as early as possible.This is why we have created two „safety nets‟ for our proposed programme.We want to maintain fiscal consolidation planning but we want to change thepresent tack of the Memorandum which is leading us nowhere. Europe has other problems as well. It has created a PermanentSupport Mechanism which as top European stakeholders agree, perhapsallows speculators to weaken countries with problems more easily and alsoimpedes their return to the markets. I have mentioned this to my colleaguesin Europe on a number of occasions. International demand for European products is expected to drop.Countries such as China, due to internal inflation, are taking a stepbackwards. Under such circumstances all forecasts show an economic recessionand an increase in interest rates in Europe. European leaders mustunderstand that this will make it even more difficult for Greece in such aclimate to move to development so as to overcome its crisis. How is Greecegoing to succeed if the recipe that the whole of Europe considers a failure,continues? Let us not forget the daily bombardment by the international press as tothe possible contamination from the Greek crisis to the rest of Europe. This isa development they would wish to avoid but this fear has been changed intoyet one more argument as to our problem. There is therefore an iron-clad argument to achieve a change in policy. I will negotiate all the terms of the Restart mentioned above. I will negotiate another programme with other intermediary steps, withmore ambitious goals, but with more realistic means. I will negotiate new public debt repayment terms within Greece so as tohave an immediate reboot to the economy. I will also negotiate the extension of liquidity guarantees towards Greekbanks until 2012, so that part of the liquidity can be disseminated to the realeconomy. I will insist on this issue because with the present tight liquiditynothing will be left standing. I will negotiate every sentence and every idea which will provide reliefin managing our debt. There are also things that Europe can do to overcome its crisis:
  16. 16. 16 - Such as the Eurobond for example already being discussed, although for the time being there are forces blocking it. - Such as the possibility of buying up our debt on the derivatives market as well. This can reduce the overall size of the debt but also the cost of servicing it every year. The idea of a European Revival Fund for example, if established alongwith the proposal by Commissioner Baroso for major trans-European projectbonds which will boost economies in the European Union overall and not onlyin the most „problematic‟. This will also forge European solidarity. Perhaps the main loser in this crisis is ultimately European Solidarity.When under these conditions the member-states lend money and make aprofit from those in need this is a far cry from solidarity. This is harmful in thelong run and does not help European Integration. - One final issue. Many have planned or proposed a „velvet restructuring‟ of our debt. But for this to be beneficial we must have had a Restart. Without this all other measures are simply a temporary respite. Do not however think that a restart is always painless. There are manypeople in Greece today being paid by the state with bonds, and now facingthe possibility of ruin should there be an extension of payments. We need tokeep our eyes open… This means we must know what we are asking for, that we know wherewe are going. The Papandreou government is not able to do this, especially given thedisagreements and dissident voices, divisions and daily rumours of agovernment reshuffle and bickering between ministers. This government has not understood that the extension and newMemoranda are being discussed today precisely because all the forecasts for„saving‟ the economy made last year have failed. Restarting the economy is therefore imperative, come what may. Whether measures to facilitate us are taken or not the economy musttake off, society must stand on its own feet, and no „relief‟ in itself can ensurethat. We need to restart the economy to achieve economic revival anddevelopment.