By Costas Papachlimintzosc.papachlimintzos@athensnews.eu

S NEW Democracy (ND) leader AntonisSamaras adds the final touches to his economicprogramme, expected to be presented on April22 in Zappeio Mansion, the two main brainsanalyse the key points in what the party callsthe “plan for the exit from the crisis”.Christos Staikouras, 39, and Notis

Mitarakis, 40, are jointly alternate directors ofeconomic policy for the party (with Samaras aschief policymaker). They are widely expectedto hold related government positions if theparty comes to power after national electionson May 6. Staikouras, assistant professor at the

Athens University of Economics and Business,is running for parliament in central Greece’sFthiotida prefecture, while Mitarakis, a formerequity research analyst with FidelityInternational in London, is running in Athens.The two explain to Athens News the way NDplans to reform the tax system and handlethorny issues, such as the privatisation of PublicPower Corporation (DEI) and the wage cutsthe troika of lenders is asking for.

Despite Greece’s sign-off on the memorandum,there is still room for improvement, say partypolicymakers; their proposals includeimproving state efficiency, reducing industryproduction costs and helping households dealwith their debts

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The ND plan to exit Elections 2012

Liberal academic heads party slateTHE ECLIPSE of Greek liberalism was acultural disaster for which the Greek people arenow paying a heavy price, as they face the riskof losing their last vestiges of economic freedom,democracy and sovereignty, according to GeorgeBitros, one of the country’s leading academicproponents of free-market capitalism.When former New Democracy minister

Dora Bakoyannis asked Bitros to join herDemocratic Alliance party (founded inNovember 2010) as head of its nationwide slate,he took the invitation as an opportunity tospeak out against the barrage of property taxes,which have made owners worry about thelegacy they can leave to their children. “Private property is the foundation of our

democratic freedoms,” Bitros told the AthensNews. “The present wave of over-taxation inthe midst of a deepening recession is nothingbut a form of mass expropriation, which I havealways opposed.”

Liberalism vindicatedA professor emeritus at the Athens

University of Economics and Business, Bitros isknown in academic circles as an independentand outspoken critic of the economic model

pursued by the dominant political forces.In fact, Bitros blames the founder of

conservative New Democracy, the lateKonstantinos Karamanlis, for having enshrineda “dangerous form of statism” in the constitutionof 1975 which remains in force to this date as amajor barrier to private investments.According to Bitros, it was the same article

106 of the Greek constitution that allowedNew Democracy to nationalise the Andreadisshipping, manufacturing and bankingconglomerate in the 1970s “before the socialistPasok party of Andreas Papandreou destroyedmuch of the industrial base of Greece duringhis reign in the 1980s”.Bitros now feels sadly vindicated as “the

subsequent economic stagnation and over-indebtedness have ushered in the fiscal andpolitical malaise of the past two years”.The Greeks are now learning this lesson the

hard way, he believes: “While a free-marketeconomy without democracy can exist, theopposite is quite impossible in the long run.” “It seems inexplicable that so many citizens

declare themselves supporters of democracyand yet, simultaneously, they would welcomefurther government control or evenelimination of free markets,” he added.

Poll stakes It is therefore ironic that such a small party

like the Democratic Alliance (DA) faces aHerculean task of “driving a wedge betweenthe two poles of the Greek political divide”,as he puts it.On one end of the spectrum are ND and

Pasok, “the two parties whose reckless termsin office in the past 30-odd years” have broughtthe country to the brink of default and theworst economic slump in recent history.“Both of them are incorrigible servants of a

clientelist and thoroughly corrupt statism thatis incapable of carrying out the structuralreforms that are necessary for economicrecovery. They pay lip service to a bailoutprogramme which they don’t believe in but lackthe courage to rectify,” Bitros says.On the other end of the spectrum, a host

of smaller parties from the left and right claimto oppose the bailout plan without spelling outa coherent alternative that is feasible withinthe eurozone. “These groupings exploitpeople’s grief and despair, regardless of theperil that a possible exit from the eurozonewould entail,” Bitros warned.Together, these two poles offer Greek voters

an untenable dilemma, he said, explaining hisdecision to join the DA. He sees the party as theonly political force that offers to cooperate fromthe outset with whoever wins the next electionson the basis of a consensus “aimed atovercoming the present impasse, as well ascorrecting several flaws in the execution of thebailout programme in the past two years”.

Winds of changeBitros argued that the emphasis of

economic policy should be shifted away fromhorizontal tax hikes and pay cuts that havedecimated the private sector and pushedunemployment to record levels.“The reform drive should aim towards

shutting down all the wasteful activities of thestate without further delay while simultaneouslycreating conditions for a recovery in privateinvestment and growth to absorb the rise inunemployment,” he stressed.Wage cuts are counterproductive, “as they

exacerbate the problem of a marketcontraction while demoralising the workforceand hampering productivity”.The same goes for over-taxation on which

the DA platform proposes a unified taxbracket of 20 percent with a parallel reductionof VAT leading to the creation of a stable andflexible taxation system applicable to everyonewithout exception.Bitros’ most innovative proposal hinges

on the utilisation of bank recapitalisationfunds to create a “bad bank” where all non-performing loans of the private sector couldbe transferred, as an incentive for both lendersand borrowers to kickstart widespreadeconomic recovery.But for such reforms to gain momentum,

Bitros maintains that “the Greek constitutionmust be rewritten along the lines of other EUcharters to allow economic freedom to flourishagain in the cradle of democracy”.

Dimitris Yannopoulos

It seems inexplicable that so many citizens declare themselvessupporters of democracy and yet,

simultaneously, they would welcome furthergovernment control or even elimination

of free markets

Notis Mitarakis: The reforms will not be easyAthens News: Hope is a key word in ND’s pre-

election campaign. What hope can your offer to acountry which is in its fifth consecutive year ofrecession and faces spiralling unemployment?

Notis Mitarakis: As you rightly noted, Greece hasnow entered the fifthconsecutive year of recessionand most analysts predict atleast another, a sixth, to come.Following five years ofrecession, the Greek economyhas shrunk by 18 percent.Despite considerable sacrificesby the Greek people, theprogramme has failed to meetits own targets. Greece now needs growth-

enhancing measures, alongsideefforts for fiscal consolidationand structural reforms. We needto keep the young people in thecountry. Obviously these reforms are

not easy. There are many gapsin productivity andcompetitiveness - such as thestructure of the economy, which discouragesinvestments and businesses growth; a large publicsector; a narrow use of human resources etc. The new government should increase the

attractiveness of Greece as an investment destinationin order to give hope and confidence to the people.We need to become business-friendly. To achievethat, we need to focus on three main targets.

First of all, we have to restructure the publicsector, increasing what the markets would call “returnon capital employed”. Emphasis should be given onimproving efficiency by simply asking “How muchmoney are we spending?’’, why, where and what is

the return on our investment.To achieve that, we need toimplement the zero-basedbudget approach. Secondly, thestate has the obligation toprotect society, especiallypeople who are in need. Todaywe are experiencing a suddensocial disintegration and anincrease in poverty. Thirdly, we should focus

our efforts on economicdevelopment, by attractinginvestment and increasingproductivity and competitive -ness. Economic development inGreece needs to be sustainablein order for the next generationto have a hope for a betterfuture.

As government, would youtake any measures to ease the burden of heavilyindebted citizens and businesses who cannot repaytheir bank loans?We need to recognise that the environment has

rapidly changed. Incomes have deteriorated, whilethe tax burden has increased. In such conditions,banks need to make more extensive loanrestructurings. We have proposed that repayments

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the crisisATHENS NEWS FRIDAY 20 APRIL 2012 6-7

Athens News: Is there any room for the nextgovernment to implement a different economicpolicy than the one described in the secondmemorandum?

Christos Staikouras: Evaluations always takeplace during the implementation of economicprogrammes and most of the times amendments aredeemed necessary. Therefore, in the programmewhich is being implemented in Greece there is roomto introduce amendments andto implement more efficientpolicies, without diverging fromthe general framework of thefinancial targets.

The financial tidying up ofour country’s finances and theattainment of the target ofprimary surpluses is a keynational priority. However, inorder for the policy of tidyingup to be financially efficient andsocially fair and in order for thesacrifices of the citizens no to bewasted, as they have been to this day, this policymust be run in tandem with the general effort torestart the economy and enter a virtuous cycle ofsustainable development. This modification isfeasible. Besides, IMF officials like [mission chiefto Greece Poul] Thomsen and [chief economistOlivier] Blanchard have noted that there is no doubtthat the programme must be adjusted during theimplementation period.

ND has repeatedly contested the public deficitnumbers for 2009, which was the spark that ignitedthe debt crisis. Do you believe that the deficit wasintentionally inflated and, if yes, why?

In 2009 in our country, as well as in the rest ofEurope, there was a significant widening rift of thepublic deficit because of the unprecedented worldeconomic crisis. ND, which was the governing partyfor three-quarters of the year, committed inFebruary, March and June to pushing forward apackage of measures reducing the deficit. Thosemeasures were unpleasant, but necessary, and in factthey may not even have been sufficient.

Pasok, then the main opposition party, votedagainst those measures and fought furiously againstthem both inside and outside parliament. While itknew what the true state of the economy was, itchose to deceive citizens and promise that “there ismoney”.

After October 2009, by its actions and omissions,it raised the deficit numbers, trying to place soleblame for the state of public finances on the NDgovernment and being indifferent to the

repercussions this choice would entail for theeconomy and society. It is more than obvious thatthe 2009 public deficit would have been much lowerthan the one that was finally reported were it not forthe mistakes, acts and the omissions of Pasok.

The European Commission has suggested thecreation of special economic zones in Greece. Doyou agree with this proposal?

ND plans to create special economic zones inborder areas of our country inorder to create compellingconditions for the recovery ofthe economy. Institutionalisingthem within a framework of taxand investment incentives is animportant and immediatemethod of attracting local andforeign investment, creatingjobs and promoting localdevelopment.

Do you agree with thepolicy of internal devaluationdictated by the troika and

what are your counter-suggestions? The government of Pasok has implemented a

policy of consecutive cuts across the board in wagesand pensions. This policy has not led to a reductionof the price of goods and services. It did not avert abig drop in the living standards of Greek citizens.Therefore, during this period, there were nocoordinated procedures for internal devaluation.ND believes that the policy of cuts across the boardin wages and pensions has reached its limit andcannot solve the problem the Greek economy faces.We must implement structural reforms immediatelyso that competition in the market is strengthenedand prices of goods and services are reduced.

If in government, how do you plan to handlethe issue of the Public Power Corporation (DEI)?

The irrational policies of the past two and a halfyears have brought about unpleasant developmentsin the wholesale and retail electricity market,including a rise in the price per kilowatt hour. Thisrise is directly imposed on the cost of production inindustry and crafts sectors, as well as on householdexpenses, as businesses shut down, workers get laidoff and everyone’s revenues have dried up.

ND has made clear that it will privatise DEI inthe most modern, healthy and transparent way thatpromotes development. At the same time, we willabolish the absurd privileges public utilities (DEKO)have. DEKO belong to the Greek society. No tradeunion can have a proprietary relationship with them,nor can it have exclusive privileges compared toother Greek citizens.

do not exceed 30 percent of household income.

We also need to support small businesses.Increasing liquidity needs to be a priority. Nowsolvent companies go out of business for lack ofliquidity. As a priority, the government should payback all internal debts andnegotiate funding. The economyneeds the immediate paymentof internal state obligations,either in cash or by setoffs. Thelack of liquidity is also adverselyaffecting the privatisationprogramme.

Evangelos Venizelos, whileserving as finance minister,said that the equivalentmeasures ND promises tointroduce as replacement forthe memorandum ones areunrealistic, citing as exampleSamaras’ inability to plug a325m euro gap in extra budgetsavings, during negotiationswith the troika in February.

We made a specificproposal that Pasok did not accept. In these electionsit is important to view problems in an objective way,to face facts and carefully examine the evidencebefore making the next decision. Samaras hasproposed equivalent measures to cover the “gap” of325 million, such as the taxation in gambling ratherthan further reducing wages and pensions.

As the most recent finance minister, Venizelosdidn’t implement the mandatory fiscal reforms and

didn’t increase the revenues either. So going forward,the new plan for Greece needs to be both crediblein its design and implemented without delay.Unfortunately, there is no time to lose.

What are the first growth-enhancing measuresthat ND plans to vote on, ifelected in government?

In the last two years we haveseen numerous changes, a veryunstable environment andhigher tax rates. However,despite the current high taxrates, revenue declines and thedeficit remains stubbornly high.

Needless to say, tax evasioncannot be addressed in such anenvironment. To combat taxevasion effectively, we needattractive rates and modern toolscombined with a simple andstable tax system. We proposeda corporate flat rate tax of 15percent. We also need simplicityof regulatory processes, toimprove the country’s

competitiveness. The result of these changes would be to increase

government revenues. Our purpose is to restart theeconomy. Also, we have to take advantage of theEuropean Regional Development Funds (NSRF, orESPA, in Greek), to enhance capital repatriation andminimise state arrears to suppliers. Moreover weneed to emphasise liquidity, economic and politicalstability, security and social cohesion.

Emphasis should be given

on improving efficiency by simply asking

“How much money are we spending?’’, why, where and what

is the return on our investment.To achieve that, we need

to implement the zero-basedbudget approach

We must implement structural reforms

immediately so that competition in the market

is strengthened and prices of goods

and services are reduced

Christos StaikourasPasok ignited the crisis in 2009

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ND leader AntonisSamaras will present the

party’s economicprogramme on April 22