The new Greek government
Prime Minister Lucas Papademos
has no party affiliation
Added on November 23, 2011 at 16:03 Italian time
Finally, the Greek ND leader
Samaras has changed his mind and is now in
“full” support of the austerity and reform measures as requested by the EU. The
letter to the EU, the Eurozone group, the ECB and the IMF was made public
today. Without a written statement by all Greek leaders, the EU threatened
not to pay the next 8 billion euro in aid needed by December 15 in order to
Article added on November 10, 2011 at 13:41 Italian time
Finally, the new Greek unity government has become a
reality. Lucas Papademos (*1947) is the new prime minister. Papademos has no
party affiliation. From 1994 to 2002, he was the governor of the Bank of
Greece. From 2002 to 2010, he was the Vice-President to Jean-Claude Trichet
at the European Central Bank. In his position as Vice-President of the ECB,
Lucas Papademos warned EU countries, including Greece, of the dangers of
excessive sovereign debt. Together with Trichet, he was instrumental in the
ECB's buying of sovereign debt of eurozone countries heavily affected by the
debt and financial crisis. Papademos acted as the head of the Bank of Greece when his nation joined the EU zone with
manipulated data. Despite those
“mishaps”, notably the ECB leaving the field of monetary policy for the field of
fiscal policy and increasing the European towers of sovereign debt, turning
the ECB from a monetary into a political institution, Lucas Papademos is
considered an able economist. As head of the Greek government, he financial
expertise will be in high demand. However, even more importantly will be his
assertiveness skills, his enforcement capacity to carry through the
structural reform Greece needs. Described as an affable, kind person,
Papademos will have a lot to do. Greece - much like Italy - does not lack
ambitious plans, decisions and laws. It lacks the practical implementation,
the enforcement of reforms.
As Prime Minister, Lucas Papdemos will be the key figure to carry through a
program of debt reduction and revitalization of the Greek economy. Greece
has to become more competitive by adopting even lower salaries and pensions.
The companies need to produce with lower unit production costs. The quality
of products and salaries has to increase. Foreign direct investments by
competitive companies are desperately needed.
There is no more time for Greek hobbies such as tax evasion, corruption and
strikes. The shadow economy has to be reduced.
VAT and other taxes cannot be further increased. The rich with their villas,
pools, yachts, fancy cars and bank accounts in foreign countries will have
to pay their fair share in taxes in other to improve the infrastructure,
including schools and universities.
The tax authorities need to get their act together, buy new computers and
hire competent employees who can bring order into the bureaucratic mess. A
land registry for both public and private properties is needed to assess
both the taxes to be paid as well as to know what the state owns and
therefore can sell aka privatize.
Greece has to reduce its bloated bureaucracy. State enterprises have to be
privatized. State buildings will have to be sold to raise capital. The new
government of national unity can only start further political, economic and
financial reforms. On February 2012, early elections will take place and
lead to a new political constellation.
The countries of the eurozone are no longer ready to support the Greek
theatre without consequences. Already a few days ago,
after a meeting of the finance ministers of the eurozone, the leader of the
Euro-group and Prime Minister of Luxembourg, Jean-Claude Juncker, made clear
that the new Greek government would have to give written guarantees that it
will continue on the path of austerity and reform measures as agreed in the
bailout. Without the fulfillment of the agreed savings and reform targets,
there would be no new credits for Greece.
With its public debt at 165% of GDP, the Greek future won't be sweet and candy.
The Eurozone reform plan for Greece with its voluntary 50% haircut of
privately held Greek sovereign debt is far from being ambitious enough. The
cut on the overall public debt should reach 60% to 70%. This would
allow Greece to bring its public debt down to roughly 60% of GDP as
requested by the Maastricht Treaty. The eurozone countries themselves will
have to adapt to reality too.
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