• “2012 was a very tough year for my country. It was the fourth consecutive year of recession. The recession was even deeper than the years before. In the first six months of 2012, a lot of question marks were raised about Greece’s potentially exiting the Eurozone. This was extremely harmful to economic activities, but the population has also gone through very tough times. I am glad to say that now, with the decisions that were taken, both by our European and international partners, but also by the Greek people in the elections in June, the issue of a possible exit from the Eurozone is over.”
• “It suffices to see the damaging effects of the debate about the exit from the Eurozone to understand why this exit would have been a catastrophe. I think there are very few people, and perhaps nobody anymore, who believe or can prove that a Greek exit is better than what we are doing now – I mean to remain in the Eurozone. But in any case this debate is now over.”
• “All this has contributed to a new situation, where not only the debt but the Greek economy is sustainable, and we already see the first positive signs. We have regained a large portion of the competitiveness that we lost in the first years after we entered the Eurozone, because our salaries both in the public and the private sector went up too quickly, more quickly than productivity, and this is now reflected in the fact that our exports, despite the overall recession in the Eurozone – which is our main export market – our exports are increasing.”
• “There is a very concrete plan for the year 2013. The expected value of private capital that we will invest in the privatization is about 7 billion, and then for the year 2014 and 2015 another 7 billion and 8 billion.”
JOURNALIST: Thank you for being with us.
D. KOURKOULAS: My pleasure.
JOURNALIST: In the last year the topic over in the European Union was if Greece will still stay in the monetary system or leave the Eurozone. The Greek Parliament voted in painful budget cuts and also a labour market reform to receive the bailout money. Now Greece seems to be, at least in the market, much better than six months ago. What do you think about that?
D. KOURKOULAS: You are right, 2012 was a very tough year for my country. It was the fourth consecutive year of recession. The recession was even deeper than the years before. In the first six months of 2012, a lot of questions were raised about Greece’s potentially exiting the Eurozone. This was extremely harmful to economic activities, but the population has also gone through very tough times.
I am glad to say that now, with the decisions that were taken, both by our European and international partners, but also by the Greek people in the elections in June, the issue of a possible exit from the Eurozone is over. It is now certain that Greece will stay in the eurozone. Greece has adopted, as you said, very tough additional austerity measures, in order to comply with the conditions for the bailout that was decided in December, which is the biggest in economic history.
So, these measures have been adopted by a large majority in the Greek Parliament and they are being implemented and we are confident that even in 2012 we are going to reduce the deficit even more than predicted by the forecast.
So the deficit has been reduced dramatically; in two years we have reduced it by nine points of GDP, which is a historic record, and we hope that in the middle or at the end of this year, we are going to have, for the first time after many years, a surplus, a primary surplus in our budget.
At the same time, we see some positive signs. We see that our exports are increasing quite rapidly. Tourism is going well and will go even better this year. But the effort that has been made to put the Greek budget on a solid track is producing results. Of course, the recession is continuing, but we hope to have a turning point to growth by 2014.
JOURNALIST: 2014 is the year that you expect to grow again?
D. KOURKOULAS: Yes.
JOURNALIST: How are the Greek people doing right now? Because, as you said, it is the fifth year of recession right now and the unemployment rate is about 20%. People must be suffering a lot in Greece, and that has political consequences in terms of – sometimes you suffer so much that you want to throw everything away. What are the risks of the measures you are taking in terms of political issues?
D. KOURKOULAS: Greece has been a success story in economic terms over the last 40 years, and also after our accession to the Eurozone a few years ago, Greece had growth rates higher than the average European country. So, it was a success story and the Greek population, the Greek citizens, were used to living better than the previous generation, for four generations, so it was a shock to everybody.
Unemployment is even higher than 20%, it is 25%. So it was very hard for people, first of all, to understand what happened and why this happened. Then people – although they are ready and they understand that they have to sacrifice short-term interests in order to secure their own future and the future of their children – they did not have, till a few months ago, a very clear plan for how to get out of the crisis.
I think now the plan is there, the sustainability of the Greek debt has been guaranteed, thanks also to the assistance of our European and international partners, and, although the actual financial situation of a Greek family today is worse than a year ago or two years ago, because there is this plan, this perspective, I think that people are more calm now.
I am not saying that there are no social tensions, but less than what we saw a year ago. At the same time, there is a political stabilization of our system. In the last elections, three parties from the center-right to the center-left formed a coalition government. They are cooperating very closely together and all three parties are determined to guarantee the stability of the government until Greece is out of the crisis.
JOURNALIST: But also you have SYRIZA and also you have the new Nazis Golden Dawn.
D. KOURKOULAS: Of course, if you lose 25% of the GDP and you have to cut wages, or you have such high unemployment, and then people are turning against the politicians and blaming them for not having taken the necessary measures to protect Greece from this crisis, it is normal, inevitable I would say, that you have a rise of political extremism or populism, both on the right and on the left.
We have the extreme right, which is a fascist Nazi party, although Greece has never had such a phenomenon before. We suffered ourselves from fascism, from Nazism during the Second World War, from fascism during our dictatorship, and there is no substantial part of the population that agrees with this ideology.
People are voting for Golden Dawn because they are fed up with the traditional politicians and because they are afraid about their future.
I think SYRIZA is a different kind of thing: they have said to the people that there is an easy way out – they have spoken about other models, other ways, referring to Argentina or to other countries that have gone through a debt crisis – but I believe that people are starting to recognize that the way that we are proposing, the government is now proposing, with the cooperation and the assistance of our European partners and the IMF, is the less expensive for everybody. An exit of Greece from the euro would have catastrophic results for Greece.
JOURNALIST: Also for Greece?
D. KOURKOULAS: First of all for Greece.
JOURNALIST: Why?
D. KOURKOULAS: Some people say that it might also be very bad for the Eurozone as a whole.
JOURNALIST: Of course.
D. KOURKOULAS: But according to very serious studies and calculations, this would have in one day or in one month reduced the level of economic prosperity in Greece by 50%, and we have seen this in other cases, and Greece is a unique case, because Greece cannot devaluate its currency.
JOURNALIST: Yes, you cannot.
D. KOURKOULAS: Only by going out of the Eurozone. But it suffices to see the damaging effects of the debate about the exit from the Eurozone to understand why this exit would have been a catastrophe. I think there are very few people, and perhaps nobody anymore, who believe or can prove that a Greek exit is better than what we are doing now – I mean to remain in the Eurozone. But in any case this debate is now over.
JOURNALIST: Is it over?
D. KOURKOULAS: Both in Greece and, most importantly, in our European partner countries, they have understood that this is not in anybody’s interest. All the measures of this very important bailout have been agreed and Greece has promised and is delivering what it has promised in terms of achieving the objectives of the deficit reduction. The debt, as I said, has been made sustainable by a haircut that happened a year ago, of the debt that was owned by private…
JOURNALIST: Investors.
D. KOURKOULAS: …investors. All this has contributed to a new situation, where not only the debt but the Greek economy is sustainable, and we already see the first positive signs. We have regained a large portion of the competitiveness that we lost in the first years after we entered the Eurozone, because our salaries, both in the public and the private sector, went up too quickly, more quickly than productivity, and this is now reflected in the fact that our exports, despite the overall recession in the Eurozone – which is our main export market – our exports are increasing. Also, Greece is becoming more competitive as a tourist destination, because tourism is a very important sector for our economy.
JOURNALIST: The privatization agenda is going very slowly from what I have heard. I remember that you were supposed to sell different state-owned companies for 50,000 or 50,000,000,000 euros, and that is not happening. Are you feeling the pressure from the IMF and the European authorities about selling them?
JOURNALIST: From the Troika.
D. KOURKOULAS: No, there is a decision, which is supported by all the political parties in the government, in the coalition, for this huge privatization…
JOURNALIST: State-owned companies…
D. KOURKOULAS: …programme, which goes till 2020 and even beyond. Nobody has ever said that we are going to sell 50,000,000,000 of assets in one or two years.
JOURNALIST: In one day.
D. KOURKOULAS: There is a very concrete plan for the year 2013. The expected value of private capital that we will invest in the privatization is about 7 billion, and then for the year 2014 and 2015 another 7 billion and 8 billion. So, there is a progressivity. You cannot do it in one shot. There are some very important assets where the tendering procedure is very advanced, and the decisions will be taken in the coming weeks, like our natural gas company, which is very important, other tourism assets… but some of the assets need to be well prepared in order to be privatized.
JOURNALIST: Fair price…
D. KOURKOULAS: But we are on track also on this. Now there is a very concrete programme, agreed with our partners and creditors. And so far the government has kept and is determined to keep to the programme and will even try to accelerate, because we believe privatization is not a punishment that is, you know, being imposed on us; it is something that is in our own interest, because by privatizing these assets, you create more growth, because investors will come, will invest more, and although at the beginning, especially for public companies, you might have a decrease in employment, in the medium term I think privatization is a good thing for employment as well, because it will create sustainable jobs.
JOURNALIST: But, now, to maintain Greece in the Eurozone, you have to agree to more austerity measures, but also your society is under pressure, so how do you find the balance between both things?
D. KOURKOULAS: I mean, in this period of acute crisis, it was not possible to have a balance or to find the right balance, and it is true that austerity brought on excessive recession and excessive unemployment, which we have never seen before in my country.
But this was a crisis situation which, you know, has to be answered with exceptional measures. Of course it is not the objective of anybody in the government to have such austerity measures every year, in the next years. We believe and we hope that through the structural measures that we are implementing, by making the labor market more flexible, by creating a more business-friendly environment, by cutting corruption and bureaucracy, we believe that we are going to increase our competitiveness and thus we are going to be able also to increase, later on, the social benefits that have now been cut drastically.
But this is not something that will happen in one or two years. But it will make our economy more extroverted, more outward looking, because Greek growth was based in recent years, after our participation in the Eurozone, mainly on internal demand, and this was not sustainable, because this was based on loans and on public debt.
We are also reducing the part of the economy which is occupied by the State and by state bureaucracy. We are trying to make the state institutions and the public administration more efficient, and there are very concrete measures, especially to create a business-friendly environment, and the World Bank in its last annual report on doing business has upgraded the ranking of Greece by 22 positions, which is really very important in terms of how friendly the environment is for doing business in Greece.
JOURNALIST: I was thinking, when you were talking, that the Chilean history of growth became true after a very big crisis that we had in 1982. GDP fell by 14% and there was a big devaluation afterwards, and after that we learned a lot from the crisis. On the other side, you have Argentina. They had a crisis very similar to the one you have right now, in 2001, but I can say that they didn’t learn anything, and the Argentinean economy after a boom is just like it was before. Do you think that the takeout of this crisis is an optimistic view; Greece will be a better nation in terms of the economy and overall in five years time than it was five years ago?
D. KOURKOULAS: Yes, I think you are perfectly right and the Greeks I think have already learned a lot. As I said before, they were used to continuous growth, which was real one, and they were very proud and are still very proud.
We started after the Second World War as a totally destroyed country, we had huge human loses during the German occupation. We were an agrarian country without infrastructure, without anything, and we became in 40 years the richest country of the region by far, with the per capita income of a Greek a few years ago as much as seven citizens of neighboring countries in Southeast Europe or the Balkans. It was a success story. We never thought that the crisis could be so strong and so deep. We were caught by surprise and of course very serious mistakes in policy making have been made, but now I think the majority of the population – because there are still some dreamers that believe that you can escape from this crisis just, you know, by wishful thinking – I think the big part of the political spectrum, both in the Right and in the Left, they still have their differences but they all agree that fiscal consolidation is a precondition for whatever, for social policy, for growth, and the reforms have been delayed for so long in Greece that, now that they are introduced, I am sure that once we turn to growth, growth could be very substantial and very rapid, because for too many years Greece has not done its homework.
The private sector in Greece is very dynamic. Greeks, contrary to the stereotypes, are very hard-working people, and I think that once the forces of the economy are liberated, this will give very positive results.
JOURNALIST: That is good. So, crisis is an opportunity in that sense?
D. KOURKOULAS: Yes, but again, even the next two years will be very hard for the people.
JOURNALIST: The confidence must come back to Greece.
D. KOURKOULAS: I think confidence has already come back.
JOURNALIST: The stock market is doing great compared to some months ago.
D. KOURKOULAS: Yes, and also from our European partners, we hear less and less criticism and more positive words, which is very encouraging.
JOURNALIST: Good. Mr. Kourkoulas, thank you very much for being with us here for this interview and have a nice stay here in Chile.
JOURNALIST: Thank you very much, Mr. Kourkoulas.
D. KOURKOULAS: My pleasure, thanks for inviting me.
January 29, 2013