Brussels, 23/04/2013 (Agence Europe) - Three years after its initial call for help, Greece cannot yet see any light at the end of the tunnel for its economy, which is not expected to return to growth until 2014. Everything is now in place for the country to start planning for the future, explained Dimitris Kourkoulas, Greek Secretary of State for European affairs, in an interview with this newsletter on Sunday 21 April. Tourism is picking up, Greek banks are stronger and helping fund the real economy and a so-called “Grexit” has been averted. (EL/CG/transl.fl)
Agence Europe (AE): Athens is doing its best to achieve a primary budget surplus in 2013 in order to win a new debt writedown, but is such a scenario plausible?
Dimitris Kourkoulas (D.K.): Yes, but it's too soon to start talking about the details of any restructuring. This is a question for later, perhaps at the end of the year. I think that, first, Greece must continue to do its work and get results.
AE: What do you think of the austerity versus growth question that Europe is divided over?
D.K.: It is a big issue. Is the fact that our troika partners underestimated the negative impact on growth of the Greek programmes due to the fact that Greece was late in applying structural reforms or because the specific nature of the Greek economy hadn't been taken into account? There is no clear answer. It is true that the Greek economy was for a long time very inward-looking, based on local consumption with very low levels of exports. This was part of the reason why austerity had such a high negative impact on growth. But the important thing now is the future. Everyone agrees that there's no question of any more cuts in pensions and pay or any more tax rises. That is the government's view and, if I've understood it correctly, the troika accepts that too. The solution is to increase exports, tourism, privatisation and investment. And the government is determined to continue to make progress with structural measures, which will lead to positive results in the long-term.
AE: After six years of recession, Athens hopes to return to growth in 2014. What are the keys to economic recovery?
D.K.: One very important aspect, perhaps the most important, is making lending available for the real economy through the bank system. We hope that the current recapitalisation of the banks will lead to a change in the lack of financing, a lack that has been so damaging to the real economy. Another aspect is an end to talk about Greece having to leave the euro, talk that went on for far too long and nipped any plans of foreign or Greek investment in the bud. Nobody invests in an economy if they don't know which currency will be in use there in a few months or few years' time. Such talk coming to an end will help improve the country's prospects.
AE: What has helped Greece put an end to this talk?
D.K.: Firstly, the determination of the Greek people, and also the attitude of the country's partners, Germany for example, which said that there was no question of Greece leaving the euro. Greece's partners took the measures needed to make the Greek debt sustainable. From time to time, some MEPs racked up the cacophony by advising Greece to leave the euro, like the president of the Czech Republic recently. We trust our economists and don't need advice from the Czechs.
AE: Will the BNG/Eurobank merger be too big as a proportion of GDP?
D.K.: The important thing for us is to avoid surprises. People living in Greece have brought back into the country a large amount of the cash that they took out during the period of uncertainty. Some €19 billion, I think. We must not say or do anything that might reverse this trend. It is crucial to reassure Greeks and Europeans, too, that their economies are in good hands.
AE: What do you think the Greek government should do with the report it has commissioned on German reparations to Greece due from the past occupation by the Nazis?
D.K.: The government has decided to ask the country's legal department to study the issue and publish a report. We cannot speak about it until that is done. This matter is on the back-burner, but we are determined to preserve excellent relations with all our partners, including Germany.
AE: Jean-Claude Juncker says that the private sector involvement in the Greek debt writedown did not have solely positive results. What do you think?
D.K.: The PSI back then was necessary. Of course, there has also been a negative impact, but that was due to decisions taken by private banks to invest (or not invest) in high-risk areas. That wasn't due to a political decision taken by the Greek government or any other government. The responsibility lies with the management of certain banks.
AE: Do you fear that the Cyprus crisis will spread to Greece?
D.K.: The Cypriot episode has not been positive for the Greek economy. The manner and the speed with which Greece and the Greek banking system has reacted to avoid any spread - by incorporating branches of Cypriot banks in Greece into the Greek banking system - was exemplary and has kept costs right down. What is happening in Cyprus will not impact on Greek growth in the short term because our economies are not very closely connected, but I think that we have demonstrated that we are capable of getting over this unexpected crisis.
AE: Several Cypriot MEPs say that the eurozone solidarity demonstrated for Greece hasn't been given to Cyprus. Have the two countries been treated differently?
D.K.: The situation is different in each country. One could talk for a long time about the way the Cypriot crisis has been managed, firstly by Cyprus itself and then by the EU. The question of timing is very important. Any delays mean that tougher measures have to be implemented. We have always defended Cypriot interests and will continue to do so, in respect of the independence of Cyprus.