PBS News Hour – Jim Lehrer | Interview with Judy Woodruff
March 8, 2010
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JUDY WOODRUFF: Prime Minister George Papandreou, thank you very much for talking with us.
PRIME MINISTER GEORGE PAPANDREOU: Thank you for having me on your show.
MS. WOODRUFF: Many countries around the world are having serious debt crises right now. Why has your problem in Greece created such turmoil, do you think?
PRIME MIN. PAPANDREOU: Well, that’s a good question. First of all, we do have a debt problem, which, I found out about when I took over as prime minister just a few months ago, that was much bigger than we had expected.
Obviously, partly of our own making; some mismanagement; problems of how we invested our money; tax evasion; a number of issues which were part of our problems of our Greek structures and how we deal with our economy.
But obviously, we were affected by the international situation, also. But Greece being a smaller country, people were wondering, well, will it be able to deal with this deficit problem? And then we became a target. And that could happen to pretty much any country, as it happened to a bank here in the United States when Lehman Brothers basically closed. So this is what happened to Greece and it came to the focus of attention.
MS. WOODRUFF: You are doing a lot of traveling in recent days – Europe and now the United States. How worried are you that problems in Greece could spread elsewhere, including here?
PRIME MIN. PAPANDREOU: Well, I am worried and that’s why, first of all, we took some very stringent measures to make sure that we’re putting our economy and finances into a much better and viable road; very strong austerity measures so that we cut down our deficits. And that has had a positive response both from the markets and from the leaders and partners in the European Union, but also from the United States government.
But what happens is if you have one country, even a small country, like a bank, failing in one way or another, creating problems, this would create problems in Europe, it would create problems for the euro zone, of which we are a part – the euro zone is the euro currency – a common currency we have in the European Union – that could create fluctuations.
And on the world currency market, it could create, for example, a change in parity between the United States and Europe. And this could also affect, for example, not only the deficit but also the growth potential, the export potential of the United States. So even though we’re only 2 percent of the GDP for the European Union, that then could become a tipping point for metastasizing to other parts of the world.
MS. WOODRUFF: In a nutshell – you’re here in Washington – what are you asking from the United States?
PRIME MIN. PAPANDREOU: Well, obviously, I’m here for a number of reasons. We have good bilateral relations, we’re talking about the region, talking about our cooperation in the Balkans, how we move forward on Greek/Turkish relations, how we help solve the Cyprus problem, and of course, European and world issues where we are all involved.
But on the economic front, on the financial front, we are saying is that, okay, we are in a period which is quite volatile because of the crisis we went through last year. And because of the crisis last year, we have to get some lessons.
And one of these lessons is that you can be doing what’s correct, you can be moving along as an economy, but if there’s a lot of opaque and nontransparent markets – for example, speculation – the so-called CDSs, the swaps –
MS. WOODRUFF: Credit default swaps.
PRIME MIN. PAPANDREOU: That’s right, credit default swaps where, in essence, you could also – you could sort of bet against your neighbor, ensure against your neighbor, and then if his house gets on fire, you get the money –
MS. WOODRUFF: And that’s already started to happen.
PRIME MIN. PAPANDREOU: And that’s what has happened – was starting to happen with Greece, where people were betting against Greece. And that didn’t help us because what that basically made – the difficulty that it created was that Greece would then go out on the market to get some loans – as every other country very often needs – and our loans would then be very expensive or would be difficult to get.
MS. WOODRUFF: So how do you prevent that? What are you asking the U.S. and others to do? You were just in Germany, France. You said you weren’t asking for money.
PRIME MIN. PAPANDREOU: That’s right.
MS. WOODRUFF: What do you want them and us to do?
PRIME MIN. PAPANDREOU: What we’re saying is, we’re doing our part. We’re putting our finances in order and we’ve taken some very difficult measures. Now, what we also wanted to make sure that the markets are regulated in a sense so that they don’t speculate against countries. And I have been in touch with Angela Merkel, the chancellor of Germany; the president of France, Nicolas Sarkozy; the president of the Euro group, so-called Euro group, which is the euro currency, Jean-Claude Juncker.
And we together are now taking initiative to push for worldwide regulation on this issue. And that is what I’ve brought also to the United States and I just had a discussion with head of the State Department, Hillary Clinton.
MS. WOODRUFF: And are you getting the support you need? Is this going to happen? And if it doesn’t, what does that mean, if it doesn’t happen?
PRIME MIN. PAPANDREOU: Yes, we are getting the support. First of all, there are two forms of support; one is, well, Greece as a particular case, if we do go out into the market and we have problems getting loans – which I hope we don’t have that problem – or we have very high interest rates beyond our capacity to sustain this then there will be a certain intervention from the European Union discussing the type of instrument so that the markets respond positively and won’t profiteer on Greece’s misfortune, if you like.
But, on the other hand, what we’re now doing is also taking this a step further by asking further regulation. And this is, I think, where this will come up, in the G-20, the so-called G-20 in the next meeting where the United States, of course, will participate and will have a voice, a very strong voice on this issue.
MS. WOODRUFF: About these speculators, though – I mean, these are people who are betting against Greece’s success, but aren’t they looking at the data and the history and saying, this is really the way it has been and we’re not sure you’re going to be able to turn it around? How can you convince them that they’re wrong?
PRIME MIN. PAPANDREOU: Well, if we can convince major players and very important institutions – whether they are our partners in the European Union, whether they are the European Central Bank, whether they are the International Monetary Fund – all have said that what we’re doing in Greece is spot on, is right; we’re doing the right thing.
But what happens with the IMF if somebody goes to the IMF is that they say, okay, in order that we don’t have speculation, we’re going to put money on the table. It’s sort of like putting a gun on the table saying I may not use it, but it’s there as a threat and making sure that there won’t be speculation against Greece.
Now, Greece is not – Greece is in the euro zone so we’re not asking to go to the IMF, although we would have to if the euro zone wasn’t there to help us. And that’s what I’ve been discussing right now, that if we do need some special kind of intervention into the markets so that there is now speculation, even though we’re doing the right thing, there could be speculation. And that’s the point that I think you’re asking; that, therefore, are we able to counter this speculative attack on Greece.
MS. WOODRUFF: Some are asking what’s taking so long. I mean, Greece has had these endemic problems – you mentioned corruption, people not paying their taxes, this huge load of debt – for years and years. You yourself have been in government – in and out of government for –
PRIME MIN. PAPANDREOU: That’s right.
MS. WOODRUFF: – what, 20-some years, 25 years. So why should people believe now it’s going to be different. Your predecessors have tried to do something about all of this.
PRIME MIN. PAPANDREOU: Well, I think there were certain endemic problems, but in the last five or six years unluckily the previous government, rather than dealing with these endemic problems, exacerbated them.
So corruption became more rampant, lack of transparency, where you use the money – because sometimes you have debts, but it depends on where you’re investing. If you’re investing in productive areas, which, then you have a return, which is a very positive return. If you invest in, let’s say, helping out your friends and voters and so on, which is not a productive investment, and that just bloats the public sector, then you’re in trouble. And that’s what happened in the previous government. That also just was exacerbated by the international financial crisis, which brought out this problem even on a more and more clear way.
So what we have said is, now, we have reached the point – we have reached the bottom, if you like. Now is a crisis which we can use as an opportunity to make changes, which we have not made over the years.
MS. WOODRUFF: But what makes you confident that you can make those changes, George Papandreou?
PRIME MIN. PAPANDREOU: Well, first of all, I’ve decided to do so. Secondly, we came in on a mandate of change. A few months ago, we were elected with a wide majority and people said, we want change. We want to fight corruption; we want to fight clientelism; we want to get into a new model of development; we want to make Greece a country where it is lucrative for investment, for example, and a green economy.
We’re all talking about the green economy. Well, the Greek Islands, the Greek wind, the sun can become a huge source of renewable energy – very important for investment. It could also be very helpful for tourism, for our Mediterranean diet, to create products of value. And this is all around a green economy.
So we secondly also have taken measures already which show our determination. We’ve done so with these austerity measures, but we’ve done so also with transparency. For example, we’re passing a law now that every signature, from mine to the last civil servant in local government, will be on the Web so that you fight graft, you fight corruption, you fight clientelism in a very easy and immediate way. So we have made some very, very important decisions.
MS. WOODRUFF: But how much is – excuse me – how much is ultimate success going to depend on you personally – your personal skills or persuasion in talking to other leaders and in talking to your own people?
PRIME MIN. PAPANDREOU: Well, obviously, this is a great responsibility one has when one takes on leadership of any country. And that is a big responsibility and I have taken on it at a time of deep crisis. But I have seen crisis in my life. I have lived through a dictatorship, seen my father and grandfather in jail. We fought for democracy very hard, to bring back democracy in Greece.
When I first took over in the ministry of education, it was during a teachers strike. When I took over the foreign ministry, it was when we had the worst of relations with Turkey, and I turned that around. We have, now, a different road of much more rapprochement. I’ll be meeting with the Turkish prime minister in the next few months.
When I took over head of my party, we were just before elections and we were certain to lose. I turned that around. So this is a bigger crisis, of course. It’s a crisis of Greece. It’s a major crisis we’re facing. But I think what I have is the strong support of a wide majority in Greece to make these changes. And they want these changes. And I think that’s a very optimistic sign for Greece and for our future.
MS. WOODRUFF: Prime Minister Papandreou, thank you very much for talking with us.
PRIME MIN. PAPANDREOU: Thank you very much.