Newsweek magazine | Interview with Stefan Theil
ST. THEIL: You say you’re doing reforms now that were not attempted, let alone implemented, for decades.
G. A. PAPANDREOU: Reform was long overdue. Greece is one of the richest countries in the world but was also one of the most mismanaged. The world financial crisis highlighted all our weaknesses.
ST. THEIL: What is the most significant and far-reaching reform so far?
G. A. PAPANDREOU: Drastically reforming our pension system was absolutely crucial in slowing down the rise of our debt. But the most lasting effect will come from what we have done to revamp the state, including our fight to cut bureaucracy and increase transparency. We’re digitizing everything. We’re putting every government action up on the Web, every line of every budget, every government expenditure. A government purchase will not be payable unless it is first published on the Web for all to see. A few months ago we still did not know how many civil servants we had. Now we have a full online survey of their duties and qualifications. The health system is being digitized, which will cut graft and increase transparency.
ST. THEIL: What big reforms are still in the works?
G. A. PAPANDREOU: Too many to mention. We are moving quickly to open up all the regulated professions, from trucking companies to pharmacies, where cartels and monopolies have kept prices high, service low, and are so tightly controlled that they keep our young people from getting jobs in these sectors.
Second, a new fast-track law will eliminate many layers of bureaucracy for new foreign and domestic investments.
The third big reform is freeing up the education system, eliminating central control over universities and schools. We have free education but will use a voucher system to make universities compete for students.
ST. THEIL: When you slash spending, raise taxes, and deregulate the economy, one of the biggest concerns is fairness. In Greece, the rich and the self-employed, like doctors and lawyers, have been notorious tax dodgers.
G. A. PAPANDREOU: This is crucial. If reform isn’t equitable, then there will naturally be a lot of resistance. We changed the tax system and put a higher burden on the richer. We are cracking down on our old disease of tax evasion, for example, by using satellite images to see who has real estate they’re not declaring. We have named and shamed some prominent tax dodgers and are planning to publish all tax filings online.
ST. THEIL: Most Greeks see only austerity and pain. They don’t see the vision of a more dynamic Greece after the reforms.
G. A. PAPANDREOU: Right now people are in limbo. Our drastic measures are still fresh, and people feel the pain. Reforms need time to kick in and show results. Already, we have a small but important increase in exports this year. Greek companies are starting to become more competitive and oriented toward competing on world markets. We are making it much easier to start a business and expect a lot of new entrepreneurship from our younger generation. Important foreign investors have already committed themselves.
ST. THEIL: Many view Greece as a singularly dysfunctional case. Is there anything other countries can learn from Greece as it reforms?
G. A. PAPANDREOU: Successful reform isn’t just about market orthodoxy. That’s part of it, but perhaps even more, it’s about good governance, about changing the structure of government and making it more transparent, effective, and efficient.