Excellencies,
Dear colleagues in the Government,
Ladies and Gentlemen,
Dear friends,
I welcome you and I thank you for being here and accepting the invitation extended to you by the Foreign Ministry, especially by the General Secretariat for International Economic Relations.
I welcome this excellent initiative of my Secretary General Mr. Mihalos, which is aimed at creating a new institution, a new forum for communication between the Diplomatic Corps and the Greek economy – specifically, the Greek business community.
As you know, the Foreign Ministry’s services are always at your disposal. We have numerous bilateral contacts, as well as B2B meetings, but this new forum gives us the opportunity to present in a concise manner the overall state and prospects of the Greek economy. And it really will be useful for us to have this meeting annually as a permanent institution.
The first six months of 2014 are a time of intensive activity for the whole world, for all of Europe, and especially for Greece.
It is an intensive time throughout the world because crises are increasing at an alarming rate. We started with one major pending crisis, a humanitarian crisis in Syria and a chance for peace in the Middle East, but there is currently the risk of our finishing this semester with the break-down of the Middle East talks, with a new crisis in Ukraine – which is provoking tensions in Western-Russian relations that we haven’t seen since the end of the Cold War. Our whole region – the EU’s Eastern and Southern Neighbourhoods – is facing the strain of various crises.
Nevertheless, there does appear to be a window of opportunity in the Cyprus issue – a window that we cannot ignore. Suffice it to be understood that we are guided by two criteria: international law and the European acquis.
Greece is always a factor for stability. Greece always participates in the mainstream of the European Union, as an old member of the EU and as a very old member of NATO – since 1952. This semester, as I said, is very critical for Europe, given that we are facing a variety of new currents of Euroscepticism that are appearing – but originating on the left as well as the right and extreme right.
And naturally this semester is very important for Greece, first because it is the semester of the Hellenic Presidency of the Council of the EU – our fifth presidency since joining the European Communities in 1981. A semester that is shorter in parliamentary terms, because the outgoing European Parliament’s term has already come to a close. But a semester that is more intense politically, because we have to manage the challenge of the European elections.
European societies are seeking a new narrative for a Europe that re-embraces its great core values; a narrative for a Europe of democracy and consensus, of culture, of innovation, of competitiveness; a Europe of solidarity, of the social state, of employment. Because the young people of Europe cannot accept a Europe of recession, austerity and unemployment.
Our Presidency has very clear priorities that you are familiar with. We have presented them on numerous occasions. We believe that, thanks to our rich institutional memory, we have managed and are continuing to manage this Presidency successfully. And already, with the end of the outgoing European Parliament’s term, we can show a long list of achievements, particularly in the EU legislative process:
• The salient example is the Single Resolution Mechanism, as pillar of the Banking Union
• We also saw the adoption of the Regulation on investment in innovation,
• The Directive on Maritime Spatial Planning, and the
• Regulation on surveillance of the Union’s external sea borders.
But allow me to say that these six months are the semester of the Greek economy’s turnaround. The Greek economy is turning a new page. Following a seven-year recession, following a profound crisis, a debt crisis, a deficit crisis, a crisis of competitiveness, and following the hard sacrifices of its citizens, Greece is returning to normalcy. Fortunately, the sacrifices are paying off. We can show a fiscal adjustment programme that is unique in history; a fiscal adjustment that Eurostat confirmed just a few days ago.
Greece in 2010 started with a primary deficit of some 12.5 points of GDP, a total fiscal deficit of 15.7% of GDP, and we are now showing a primary surplus of more than 1.5% of GDP – the best in the world – let me underline that in terms of structural deficit, in terms of cyclically adapted deficit, our surplus is 6% of GDP - the best worldwide- better than in Singapore and a fiscal deficit of 2.1% of GDP, well under the European Stability Pact ceiling of 3%. To achieve this fiscal adjustment, we took some €75 billion in measures, the economic and social cost is very high.
But in this way Greece is standing on its own feet again, regaining its essential equality within the European Union and the euro zone. But it is not just the fiscal adjustment that is impressive. Equally impressive are the structural changes in public administration, in the labor market, in the social security system, in the opening up of the market and professions.
According to OECD ranking criteria, Greece is first among OECD member states in terms of structural changes. We have worked our way back up the international competitiveness rankings.
Equally important is the fact that Greece recapitalized its banks. In fact, the second phase of recapitalization is being achieved exclusively through private capital, with very strong international investment interest. This is the international market’s vote of confidence in Greece, through our banks. We are thus maintaining a reserve of over €11 billion in the Hellenic Financial Stability Fund; a reserve that, in the end, we are not providing for the recapitalization of the banks. From this point of view, our performance greatly exceeds the projections of the adjustment programme for the Greek economy and especially for the sustainability of the Greek public debt. The fact that we have a strong, re-capitalized banking system is an extremely positive omen for Greece’s real economy, for the funding of businesses, for a return to positive growth rates.
Also vitally important is the fact that Greece returned to the markets three weeks ago. The new five-year bond that we issued was met with enthusiasm in the markets, and we secured an interest rate that is better than the interest rate on Greek bonds before the crisis broke out and we were forced to leave the markets. In fact, this interest rate, this is very important and critical point, this interest rate – which is naturally higher than the average interest on the European loan – is comparable to the interest rate at which the International Monetary fund is participating in the Greek adjustment programme.
From this perspective, Greece is gaining a strong argument for a return to normalcy and self-reliance. All of this is linked to the sustainability of the Greek public debt. Let me make just one reference, Klaus Regling, the Managing Director or the European Stability Mechanism (ESM) – the European institution that made the loan to Greece – has repeatedly explained the reasons for the sustainability of the Greek debt; a debt that has a number of positive unique characteristics:
• 80% of the debt is in the hands of European and international institutions outside the market; that is, the debt is held by non-aggressive lenders.
• The Greek debt has a long average duration and a very low average interest rate on the order of 2.1%.
• It has the advantage of a very long grace period and very well-placed maturity dates.
And the hair-cut we achieved in 2012, which in terms of net present value comes to 80% of GDP, allows us to have a debt that is sustainable with small parametric changes, which can be made very easily because they create no political or technical problem, because we need obviously the political and especially the parliamentary consensus from the part of our European partners.
This means that Greece will need neither a new loan, nor a new programme, nor a new memorandum. And naturally Greece will not need new austerity measures, which neither society nor the economy are in a position to bear. In fact, Greece’s being a member state of the EU and the Eurozone now gives us much greater growth opportunities and new growth resources.
We have the New Community Support Framework, the new NSRF, we have the new Common Agricultural Policy, we have the new Institute for Growth, with the participation of foreign and private capital.
We are committed to the privatization programme. A characteristic example is the investment starting at Hellenikon, one of the largest parks in the European Union and a housing development space, which will create over 10,000 new jobs.
Work has already started on five road corridors, and to give you just one example from the energy sector – which is internationally critical, not just economically, but also geopolitically – construction is starting on the Trans Adriatic Pipeline (TAP), which is a major change on the energy map of Southeast Europe.
Greece is now focused on the national plan for recovery and reconstruction. We are focusing on the real economy and on regaining our competitiveness.
We presented the national recovery plan to the Eurogroup, and the reactions were very positive. And we now want all of this to constitute the national narrative, because we need national unity and social consensus.
Naturally, a national growth model is founded on the land and the people, and thus of vital importance to us is primary production, Greek agricultural and livestock production, which is interwoven with quality in exceptional climatic conditions.
A Greek national growth model is of course also based on historically established pillars: Tourism and Culture; Shipping; Food Industry; capitalization on education and training, on research, and on our intellectual capital in general.
Our geographical position enables us to play a very important role in the energy sector, and there is always a lot of room for infrastructure. The Greek shipping sector is number one in Europe and globally.
The confidence and optimism indices are changing. In my opinion there are 6 pillars supporting this national reconstruction plan.
• The first is the political and institutional pillar, which is based on governmental and political stability.
• The second is the social pillar, which is based on justice –social justice – and the cohesion of a society hard hit by the repercussions of the crisis.
• The third is purely growth oriented and is based on the promotion of the creative forces of the country and the Greek periphery.
• The fourth pillar is fiscal and is based on the data I set out for you regarding the primary surplus and the sustainability of the debt.
• The fifth is the financial pillar, which I talked about in terms of bank recapitalization and the dynamic role of the Greek banking system.
• And the sixth pillar is international and European repositioning of the country.
This is also very clear in the major regional initiatives we are taking. On 8 May, in Thessaloniki, the Hellenic Presidency is hosting a meeting between the EU-28 and the 6 countries of the Western Balkans. And on 10 June, we will have the pleasure of hosting, here in Athens, the meeting of EU and Arab League Foreign Ministers.
Greece obviously has its own responsibilities to bear for the crisis. The EU showed great solidarity, but with very great austerity. And Greece came in for blatantly unfair treatment in the public debate, in the form of propagation of unfounded stereotypes, all of which were disproved by the Greek people in their effort, and by all the numbers.
This constitutes Greece’s new brand. The new brand of a Greece that is overcoming the crisis. A Greece that is returning to normalcy and again standing on its own feet in the EU, in the Eurozone, and in the international markets.
April 29, 2014