Sky News Interview
Greece has fully completed with its obligations. “No other country has managed to reduce its deficit by 6% points in two years and no other country has suffered a 40% decline in wages and purchase power”.
Mrs Katseli attributed the shortfall in tax revenues to the acure recession and called on both the EU and the Greek Government to “carefully review the fiscal policy mix“.
Transcript
Murnaghan 29.01.12 Interview Louka Katseli, former Greek Economy Minister
DERMOT MURNAGHAN:
With Greece on the brink of a default, Christine Lagard, the head of the IMF, this weekend said that a new fiscal compact would be signed by European Union members tomorrow to centralise budgetary powers. Well giving up control over its budget could be the price that Greece is forced to pay for its one billion pound odd bailout. In a moment I’ll be speaking to the country’s former economy minister, Louka Katseli, in Athens but first let me tell you who will be tweeting for us today, watching throughout are our Twitter commentators, they are James Kirkup, deputy political editor for the Telegraph, Craig Woodhouse, political correspondent of the London Evening Standard and the Times political correspondent, Anushka Asthana. They’ll be providing their reactions via Twitter which you can read on the side panels and you can follow on our website, skynew.com/politics, you can join in of course as well, just use the hashtag #murnaghan. Well let’s say a very good morning then as we go to Athens, to the former Economy Minister there, Louka Katseli. How would you react and indeed how would the Greek people react if a special eurozone commissioner were appointed to oversee tax and spending in Greece?
LOUKA KATSELI:
This is in our view an unacceptable proposal. Unacceptable because it runs against any EU regulations and speaking of compliance, there is full compliance to what we have promised to deliver, there is no other country which has managed in two years to reduce its budget deficit by six full percentage points of its GDP, there is no other country in the OECD which has had 30% reduction in wages and pensions and if tax returns have not been what people have expected, well it is because of the recession and it is the deep recession of minus 7% of growth rates that has produced kind of a decline in tax returns which is something that European leaders and the Greek government should carefully assess as we move forward to the new plan.
DERMOT MURNAGHAN:
Okay, I want to ask you more about austerity in a moment or two but just staying with the issue of sovereignty, it almost already is the case that Greece doesn’t have full control of its powers with this troika from the EU, the ECB and the IMF overseeing affairs within Greece.
LOUKA KATSELI:
Well that’s true but this is a process of negotiations, of hard negotiations. We have, it’s a partnership, it needs to be seen as a partnership based on trust and I think both parties have an interest in making it successful. To do so, we need in my view to look first at the jobs crisis and at the real economic crisis that we have and to see how we can resume growth in the economy so that the fiscal consolidation which is essential can be realistic and can be achieved.
DERMOT MURNAGHAN:
So that means end the squeeze, you’re questioning the depth of the austerity programme and the size of the recession it has caused.
LOUKA KATSELI:
Well we question, and I have questioned from the beginning, the mix of policies and as Mrs Lagard has very correctly said in Davos, each country with its own characteristics needs to choose the special measures that would work in the economy, would not produce a deeper recession but would actually bring about the best results in terms of the fiscal budget and the fiscal situation. For example, in a country like Greece where small scale industries predominate, it is essential that we do not take measures that close more shops, that produce a deeper recession, we should look again at the whole tax policy and be careful not to over-burden the households and the businesses with so many taxes that in fact they cannot pay.
DERMOT MURNAGHAN:
If that doesn’t happen do you predict worse unrest on the streets because it seems whatever you say in Athens doesn’t really count any more, it’s what they say in Berlin.
LOUKA KATSELI:
That’s not true and I hope it won’t be the case because there is an experience now for two years. I want to be optimistic that in the new medium term programme that we are about to sign, there will be wisdom on both sides, there will be high negotiations but more importantly, that there will be effectiveness in the measures that we take. I think that both sides have an interest to make the programme work so that we can manage our debt and we can produce the results to reduce further our deficit to manageable levels and to produce a primary surplus this year which is what we expect to do.
DERMOT MURNAGHAN:
But Louka Katseli, if that doesn’t happen, we’ve seen the problems on the streets for several years now in Greece, is the social fabric of Greece now, well it clearly is under great pressure and it could get worse.
LOUKA KATSELI:
It could if the troika insists on more wage cuts and pensions. As I said before, there is already, a middle class family has had a 40% cut in its overall income for a family of four due to lower wages, lower pensions, unemployment, higher taxes and higher cost of living so this cannot go further and I don’t think that’s productive or effective any more so we should look very careful and our friends in Europe really should look over the measures and the policy mix because this, the continuation of the same policy mix, is completely unrealistic and ineffective.
DERMOT MURNAGHAN:
Louka Katseli, thank you very much indeed, the former economy minister in the Greek government there in Athens.
LOUKA KATSELI:
Thank you.
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