CNN | Interview with Fareed Zakaria

PRIME MINISTER’S PRESS OFFICE
SUNDAY, 16 MAY 2010

MR. G. PAPANDREOU: Thank you very much, Mr. Zakaria, for hosting me on your program.

MR. F. ZAKARIA: You have committed yourself to an almost draconian set of budget cuts and increased tax collection. You are going to take the deficit, you promise, from 13% of GDP to 3% of GDP. To my knowledge, that is the most dramatic budget reduction in modern history. Can you really do it?

MR. G. PAPANDREOU: We are determined to do it, and we already have results. Just in the first quarter of this year we have cut the budget by 40%, compared to last year. So that’s on target, I would say beyond our target, 10% up in revenues from VAT.

And I think this determination is not just mine; it’s not just my government’s determination. It is the Greek people’s determination to turn things around, make big structural changes.

MR. F. ZAKARIA: You say that the Greek people support you, but the images we see are of protests, of people striking, of even violence. This seems like it’s going to be politically very difficult.

MR. G. PAPANDREOU: I would say in the polls, the opinion polls, even though people are unhappy about the measures we have a majority that are supporting these measures, understanding that it’s for the salvation of our country and our economy.

MR. F. ZAKARIA: One of the reasons Europe was reluctant was that the Germans who are, at the end of the day, going to put up the bulk of the money were, I think, and I mean the German public was somewhat aghast to discover what kind of benefits the average Greek worker, particularly a worker for the public sector, had. They were paid 14 months of salary for 12 months of work. Some of them could retire at 55.

Now, the Germans looked at this and thought they had just gone through painful cuts of their own; their retirement age had been raised to 67. And so they were in effect being asked to use their taxpayer dollars to subsidize this rather cushy Greek life. Don’t they have a point?

MR. G. PAPANDREOU: Well, let me answer to that. First of all, let me make sure that this is not money which is free. This is a loan.

So there is a wrong picture sometimes which is saying we’re handing out money to Greece. That’s not so.

We are paying back the loans we are getting.

MR. F. ZAKARIA: But Mr. Prime Minister, the loans would not be available to you at the rates that they are available to you without the German backup.

MR. G. PAPANDREOU: That’s right. I think some of these comments have been unjust.

Also there is an image of Greece. We have a great tourist season, where not only Germans but many people from around the world come to Greece. And they have a lovely time. There is dancing, there is food, there is sun and the sea.

But that’s not the avareage Greece that we live in. We work hard. We are a hardworking people. We are a proud people. And this is very easy to scapegoat Greece and engage in Greece bashing, which would very often get entangled in local and regional politics.

So what we are saying is we are ready to make the changes. Greece is a proud nation. We have made our mistakes. We are living up to this responsibility.

But at the same time give us the chance; we’ll show you.

MR. F. ZAKARIA: You know, you are in some ways the bellwether for the Western world. You are the first Western country that is going to try in a comprehensive way to pare back some of the excessive guarantees, commitments and expenditures of the welfare state.

Do you think you can do this and survive politically? I know that you made a reference to taking a voyage like Odysseus, and a Greek columnist said yeah, but it took Odysseus ten years. All his comrades died, and he ended up naked and washed ashore in Ithaca. Do you think you’ll have a few more people than Odysseus did, when this journey is over?

MR. G. PAPANDREOU: Well, we know that these journeys are not easy and there are casualties. But we also know we can reach this goal.

What we lived through in the last few months was also somewhat of a paradox, because – and again I am not trying in any way to get away from our responsibilities; we are fully aware of our responsibilities and what we must do – but there are also the financial markets.

In 2008 we had actually the governments coming in to bail out the financial markets and the banks. They had to accrue a huge debt very often, for stimulating the economies, so that we don’t go into not only a recession but a deep depression.

Now you have banks funding hedge funds. They are actually then betting against governments that had actually helped the banks.

So this is a paradox, and I think this is where we need to also regulate markets.

MR. F. ZAKARIA: Do you think that Greece was a victim of the American investment banks?

MR. G. PAPANDREOU: We right now have a parliamentary investigation in Greece, which will look into the past and see how things went the wrong direction and what kinds of practices were negative practices. There are similar investigations going on in other countries, and in the United States.

This is why I think yes, the financial sector – I hear the words ‘fraud’ and ‘lack of transparency.’ So yes, there is great responsibility here.

MR. F. ZAKARIA: Could you imagine going after any of these banks legally? Do you see that you have some legal recourse?

MR. G. PAPANDREOU: I wouldn’t rule out that this may be a recourse also, to go into this legally. But we need to let the due process proceed, and then make our judgements once we get the results from the investigations.

MR. F. ZAKARIA: And do you think you will make it, like Odysseus, in the end, personally, politically?

MR. G. PAPANDREOU: I am doing what is best for my country, and I think that’s the best way to make sure that this country does get to its destination, which is Ithaca.

What happens to me is of less importance, as long as I feel that I am doing what is best for my country and I can sleep well at night, with my conscience clear, that maybe taking very tough decisions and decisions that very often hurt, not only me but also many of the Greek people, but in the end knowing that this is the best.

MR. F. ZAKARIA: Mr. Prime Minister, we wish you well on what is a hell of a challenge. Best wishes, and I hope we’ll see you again.

MR. G. PAPANDREOU: Thank you very much, Mr. Zakaria. Thank you for the opportunity you gave me to speak to you and your audience.