Greece has now attained political and financial stability, although one precondition for the real recovery of our economy is to achieve “reliability surplus,” says Deputy Minister for Foreign Affairs, Dimitris Kourkoulas, in an interview for the Crisis Observatory. Mr. Kourkoulas, who is currently preparing Greece for the forthcoming presidency of the E.U. in the first half of 2014 – i.e. the period when the most crucial European elections of modern European history are bound to take place, believes that “the institutional deficiencies of the Eurozone, which indeed exist, are not sufficient to account for the crisis in Greece. Similarly, neither could Greece be held accountable for the crisis in the Eurozone.” Nevertheless, he believes that the way to overcome the crisis has to go through the institutional reconstruction of the E.M.U. [Interview date: 5 June, 2013].
How would you assess the current image of the Greek economy abroad, one year away from the 2012 election?
I think that any observer acting in good faith would recognize the progress made in the last 12 months. Apparently, we have not yet managed to overcome the crisis, but nobody could claim that no improvement is apparent. One year ago, many analysts were persuaded about the “inevitable” (according to them) bankruptcy and exit of the country from the Eurozone. Such possibility is now remote, whereas the economy may well bode gradual escape from the crisis. This is not accidental, as it reflects the fact that Greece has, in the meantime, made progress with regard to concrete and decisive steps, which are recorded from abroad as well.
What are these steps? First of all, with the successful completion of the P.S.I., that is the largest haircut of loan agreements in world history, Greece has been relieved of a tremendous weight, worth €107 billion. At the same time, the dynamics of our debt have shifted dramatically. The maturity period of the new securities is due in 2042, thus we have an extension of the average maturity of the debt, a much lower average interest-rate and much lower annual service costs. As every borrower knows, the total amount is of little importance. What is important is for the debt to be sustainable and for the installments to be manageable. This is what we achieved through the P.S.I., and the markets are now aware of its results. With the advantage of hindsight, one could suggest that this has been a turning-point. The second important step has been the establishment of a functional governmental cooperation. Until recently, we were persuaded that no coalition-government could ever be possible in Greece. We now have a government that is backed by three parties, while it has proven that it can function effectively. This is an unprecedented evolution in the post-dictatorship times. Thirdly, the outcome of the national elections of 2012 was a clear message, showing the will of the overwhelming majority of the Greek people for their country to remain in the Eurozone, for participation in the European processes, for political stability and for economic reforms.
Georgios Papandreou had said, however, that it is possible that numbers prosper while people suffer; when are we finally going to see the first signs of recovery in the real economy?
Allow me to note that improvement of aggregates is an important condition for improving citizens’ daily lives. It is reasonable for people to expect recovery to make itself visible in an impressive manner. The truth is that things do not really function this way. Both the international and the Greek experience indicate that recovery is a gradual process. The economy needs to get stable first and then growth will come. When recovery starts becoming more widely felt, we will have left the crisis far behind by then. In any case, the first signs are already here, for those who are able to interpret them.
Among your responsibilities is the portfolio of the European Union, as well as of the economic diplomacy. Do you see any remaining interest in investing in Greece?
Of course there is interest, which is increasing further as long as people realize that Greece has moved away from point-zero. We can already see the results by looking at the privatization of O.P.A.P. However, the feeling that I get in my meetings is the inescapable need to ensure a minimum reliability-surplus. Nobody will come to invest his money in our country, if Greece is unable to secure conditions of political and economic stability. Stability is the common denominator of any successful effort to attract investment. Unfortunately, as we are all aware of, the image of Greece abroad has suffered major setbacks in recent years. This has started to change and this is why we see an increasing interest in investing in Greece.
What about exports, though?
The interest in Greek products is also high, when it comes to the sector of exports. The share of our exports has been on a steady increase in recent years. The support for Greek economic interests at bilateral and multilateral level, as well as the reinforcement of export-oriented entrepreneurship as a key policy-choice, are among the basic priorities of the Ministry of Foreign Affairs. Through selective action in areas of the planet which present special economic impetus, we have assumed the initiative to get Greek consumers to learn about Greek products, services, mainly tourism but also opportunities to attract investment.
One of our key tools is the Office of Economic and Commercial Affairs (OEY) of our embassies, through which we created a dense network in foreign countries of special commercial interest to Greek entrepreneurs. The benefits for Greek enterprises interested in developing exporting activity are obvious. With no charge, Greek enterprises have direct access to the services of a specialized trade consultant, who is a permanent resident in their area of interest, and has a good knowledge of the local market, its processes and local specificities. Greek enterprises are already making increasingly more use of the services provided by the OEY Offices. 15,300 requests have been recorded within 2012, compared with another 11,700 in 2011, i.e. a 30% increase. To my great satisfaction, I must also mention the fact that the Ministry of Foreign Affairs is able to keep a record of satisfaction rates with regard to the services offered, given that OEY is the only service of the Greek government certified by ISO. So, based on ISO, Greek enterprises are satisfied by 95% with the free services they receive in our Offices.
In approximately six months from now, Greece is bound to take over the Presidency of the E.U. Are we to expect specialized initiatives, within this framework, for overcoming the crisis?
Overcoming the crisis will certainly be the focus of European policy during the Greek Presidency as well. We are determined to act as an upright ombudsman for finding common positions and compromises between member-states, which will promote growth and employment. Greece will be judged according to its ability to negotiate solutions effectively, which will be acceptable and useful for all member-states.
In this context, we consider it crucial that the initiatives concerning the combat against recession and unemployment, including the European Council’s commitments with regard to the Pact for Growth and Employment, through the process of the European Semester and the Strategy “Europe 2020,” do finally come to fruition.
Would you agree with the opinion that the architecture of the E.M.U. shares part of the responsibility for the development of the crisis? What kind of initiatives should we expect for improvement and towards what direction?
Any institutional weaknesses of the Eurozone, which are existent, did not cause the crisis in Greece by themselves. Similarly, neither is the crisis of the Eurozone attributable to Greece. Greece does not renounce its responsibilities for the state it is currently in, nor is it looking for scapegoats.
The truth is that the institutions of the Eurozone were unprepared for the effective management of the debt crisis in the European South. The Eurozone has never been an optimal currency area. Still from its founding, it fulfilled very few of the characteristics typical of such a union (synchronization of economic cycles, full freedom of movement of labor force, price flexibility, common fiscal policy, effective management of community budgetary resources through transfers).
There is an ongoing process for planning the E.M.U. integration process, under the pressure of the debt crisis, which actually started in June 2012. The discussion is based on the final report on the future of the E.M.U., which was drafted by the President of the European Council, Mr. Van Rompuy, in cooperation with the presidents of the European Commission, the Eurogroup and the E.C.B, as well as on the draft conclusions of the European Council, which reflect a clear roadmap for the completion of the E.M.U. To supplement the conclusions, the draft positions (blueprint) of the European Commission are expected to be taken into account.
It is still too early to make conclusions as to the new form of the E.M.U.; however, the Greek side supports an increased level of integration. This also implies improvement of and strict compliance with the rules on budgetary discipline, with the parallel functioning of solidarity mechanisms, though. At the same time, we favor the position that the creation of a two-speed system, especially in the banking sector, is to be avoided. We have to develop a common banking system with a common supervisory mechanism. Greece also considers it necessary that the new architecture of the E.M.U. has an increased degree of democratic legitimization and accountability. Therefore, we are asking for a more active participation of the European Parliament, as well as of national parliaments, in the process concerned.