CNN | Interview with Christiane Amanpour

February 15, 2010 | categories : Interviews, Prime Minister

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Moscow, 15 February 2010

Christiane Amanpour:    And now we are going to go to Moscow, where we have re-established audio contact. And hopefully, Mr. Prime Minister, George Papandreou, you can hear me now.

George A. Papandreou:    Yes, Christiane, and thank you very much for hosting me on your show. The last time you interviewed me was in Sharm el-Sheikh, just before the Iraq war.

Christiane Amanpour:   On a very different subject, exactly. And we’ll get to that in a second. We’ll get to the idea of you being Prime Minister and Foreign Minister at the same time, in a second. But let me first ask you this. You are in a major crisis at home in Greece. Many are saying, if you want our help, you are going to have to take some very painful measures, which it seems your country is not prepared to do and your government is not prepared to do. Am I correct? Big budget cuts. Rethink spending. Rethink buying.

George A. Papandreou:   We are ready to take any measures necessary to move out of this crisis, and also create the credibility, both with our partners in the European Union but also within the markets. And I would like to see this crisis as an opportunity to make some major changes, to really turn the page in the Greek economy. But not only the Greek economy, but also change some of the bad practices that unluckily we have had in the past, for example corruption and lack of transparency, clientelistic politics.

We, with the measures we are taking now, will become, I believe, a model country in transparency. For example we will be putting up signatures of all expenditures on the Web. So these are things we will be making. So I see this crisis as an opportunity.

Christiane Amanpour:   Well, I admire your optimism, and I admire the way you are talking about it. But exactly what, since the German Chancellor Angela Merkel is saying, you know, the price for us to help you now is much bigger budget cuts. What are you exactly going to do, and how are you going to convince the people who are already pushing back and who are in the streets back at home in Athens?

George A. Papandreou: Well, we have an agreement that we will need to cut our budget by 4% – now, that’s a big number – in 2010, and then another 3% and another 3% in the next two years, to get down under the 3% Maastricht criteria, so that we have this reduction of deficit and reduction of debt.

So 4% this year, and we will do whatever necessary. We already have moved ahead in specific measures, such as attacks on gas, a wage freeze, the cutting of top-ups on civil servant wages. We are moving for a pension reform. We have just tabled a tax reform.

These are very, very important and big, major changes, and they are cutting down a lot of the waste. But also, as I said, we have some endemic problems such as tax evasion and corruption. There was a lot of waste there, and hitting that, which may take some time, but we are doing it in a very, very systematic way, and that I think is going to create a sustainable…

So from our side, from our part of the deal, we are ready to do what is necessary. And I think the European Union now has decided that they also want to make sure that this is a positive thing for the eurozone.

Christiane Amanpour:   Well, what have they said to you? Do you know what is coming out of those meetings? Is Germany going to bail you out? Is there that kind of help on the horizon, do you think?

George A. Papandreou:   Well, first of all we have not asked for financial help. What we have asked for is the support and in fact to have the necessary time and political support to implement our program and whatever necessary measures we need to take.
That is the so-called stability and growth plan, which according to the Maastricht Treaty each country has to table. We have tabled it.

If necessary, we will take new measures also, if we are seeing that we are not reaching the 4% deficit reduction.

We have said that what we are asking for basically is the support of the eurozone so that we can borrow on the markets, as every other country, basically with the same rates that other countries are borrowing.

And that’s not a bailout. That’s basically simply help, which is saying if push comes to shove, if push comes to shove, yes, the European Union will stand by Greece.

Christiane Amanpour:   Let me ask you this. You mentioned attacking the lack of transparency. One of the reasons for this crisis that you are facing is the creative, some might say the chicanery, the manipulation of the financial statistics. And the Greek statistics man, Manolis Kontopirakis, has been accused of being the source of this crisis, of providing faulty figures that more than tripled your country’s budget deficit overnight. I mean, you know, how is that possible, really, in a European country, that this kind of thing can go on, the manipulation of such figures that caused this huge crisis?

George A. Papandreou:   Well, that’s a good question, Christiane. And as you know, we are a new government. We took over only a few months ago and inherited this crisis. We have been very critical about these kinds of practices.

And I wouldn’t put the onus only on that one person who was head of the statistical bureau, but on the previous government. But that’s a squabble we have to deal with inside Greece.

We have said first of all we are making an investigation, to make sure that whoever is responsible will have to pay for this problem.

But secondly, we are now creating a completely independent statistical bureau, a new body within the Parliament, so that there is a check and balance on the budget.

And this is just one more measure of how we are saying that we want full transparency, because we are going to be going by the book.

Christiane Amanpour:   Mr. Prime Minister, stand by for one second. I want to bring in our experts. Joining me now is the former Chief Economist of the European Central Bank, Otmar Issing. And also we are here in the studio with Nouriel Roubini. Mr. Issing, can you tell me: You just heard the Greek Prime Minister talk about pledges to look at the structure of how they spend, the budget deficit, new measures to combat lack of transparency, etc. Are these sufficient measures, do you think?

Otmar Issing:   I would not like to comment on individual measures. The new Greek government certainly has to tackle with a tremendous challenge. And I think what the Prime Minister said goes in the right direction.
If it’s enough, I think this judgment will be made by financial markets, and if Greece can really present a credible commitment to break with bad policies of the past and to embark on good policies in the future, then I think the solidity, the trust in public finances in Greece will come back.

Christiane Amanpour:   OK, Mr. Issing, you know a lot of people talk now and focus on Greece. But there are equal numbers of economists, let’s take the Nobel Prizewinning Paul Krugman, who said the basic problem is the fact that the euro was an idea ahead of its time and that the continent simply was not ready for this single currency. Do you believe that, all these years after?

Otmar Issing:   t was a courageous step to start with the euro in 1999, that is true. To start with a large number of countries which did not form what we call an optimal currency area.

But no doubt after 11 years the euro is a big success, one of the biggest successes of monetary reform in the history of mankind. One should not forget that.

Christiane Amanpour:   Is it about to fail? That’s what everybody is looking at.

Otmar Issing:   This is not about the euro to fail. The European Monetary Union is at the crossroads; this is true. And I think the case of Greece is a test case. It depends how the Union deals with that.

And what is especially important is that the no bailout clause is not violated. This clause does not allow for any compromise. Once it is violated, a dam is broken.

You cannot deny such financial aid to other countries, once you have given it to one country, in this case to Greece.

Christiane Amanpour:   OK, we are going to go back to the Greek Prime Minister. While we are just getting him back from Moscow, let me ask you, Mr. Roubini: The no bailout clause, how vital is that?

Nouriel Roubini:   Well, it’s vital, but what Greece is asking essentially is not a bailout but essentially financial support and being able to borrow at the interest rates that are not very high, like they are in the market, as a way of avoiding… (microphone problems) crisis while they are doing the adjustments that are being undertaken.

Christiane Amanpour:   Mr. Prime Minister, I know you want to jump in again. Do you think the Greek economy is about to go off the rails?

George A. Papandreou:   Not at all. And I would just put in my two cents also about what Mr. Issing said.

First of all, he mentioned the question of credibility. I have said this again and again. Our deficit is more a credibility deficit than a financial deficit, and we need to bring back the sense of back the credibility. And this is my purpose as Prime Minister of Greece, to bring back the credibility.

We did have, in 2004, you remember, the Olympic Games, Greece being a very important power of stabilization in Southeastern Europe. So is absolutely a priority, and we will take whatever measures necessary.

Secondly, let Greece be also an opportunity for the euro, in the sense that yes, the euro was a very unique and historically very important decision by the European Union, by the countries who had actually joined the eurozone, Greece one of them. It has helped Greece immensely. I think that this needs to be continued.

Obviously, there are areas of the eurozone and the euro that hadn’t been foreseen, and we are now talking about the possibility of more coordinated economic governance. We talked about it on Thursday in Brussels, and I think the decision that we did take in the European Union was a very important decision, a watershed, to say that we are standing by the eurozone, we are standing by Greece and we will not let the euro fail.

Christiane Amanpour:   Can I ask you something? While everybody is looking at this and looking at the challenge ahead, people are also asking about you, and why one man holds two important portfolios, prime minister and foreign minister. And they are saying hang on a second. You know, you need to be at home dealing with this financial crisis. Why do you not have a foreign minister?

George A. Papandreou:   Well, actually I do have an alternate foreign minister, so there is a lot of work that is being done.

But actually it so happens that being around in different capitals around the world and talking with people is important right now, because this is not only an internal issue, and we have the respective ministers working on this to make the changes in Greece and make Greece again credible.

And I think there is great opportunity for Greece. We are talking about a green economy. We are talking about a sustainable economy. These are major changes we are making, a more transparent economy, cutting down bureaucracy.

And at the same time we need to bring a face to Greece which is credible around the world. And that’s what I am doing. I am here in Moscow today and tomorrow, doing that exactly.

Christiane Amanpour:   All right, Mr. Prime Minister. Everybody is certainly looking at this, because everybody around Europe, and perhaps even in the United States, is concerned about the fallout of this financial crisis in your country. Prime Minister Papandreou, Mr. Otmar Issing and Nouriel Roubini, thank you so much for joining us.