CNN: “Quest means business” | Interview with Richard Quest

PRIME MINISTER
PRESS OFFICE
January 27, 2011

JOURNALIST: In Davos last year, my next guest, the Greek Prime Minister, said that perhaps Greece would manage to avoid assistance. Well, we all know that that does not turn out to be the case.

So first of all, Prime Minister, we have a lot to touch on, but should we believe the defiance of people like yourself and the President of France that the euro will never be let go.

G. PAPANDREOU: This is not only defiance. I think there is a very strong will today in Europe. There was, I think, some months ago where there was a discussion about two euros or a breakup or some countries leaving. I think that discussion has ended, and we have all the strong will to defend the euro, and do what is necessary to defend the euro, which obviously we have some things to do.

JOURNALIST: And yet one survey that I saw this morning say, you know, you saw this survey that say a lot of the people, there is a percentage of people that believes by 2016 at least one or possibly more countries will have bailed out.

G. PAPANDREOU: Well, maybe people will believe things, but that’s why we politicians are here, to put things on the right course. And there is the political will of our peoples and of the leaders of the European Union, to make sure that in 2016 and 2020 and on the euro will exist and will be in there.

JOURNALIST: The stability facility which has been used as the buttressing of the whole bailout program needs to be capitalized, greater capitalization. This is something that is going to be discussed quite soon at ECOFIN level. Your position?

G. PAPANDREOU: Our position is, first of all, we have, as you know, been given assistance, loans – we’ll be paying them back – and we are on track with major reforms and changes. Everybody has been very happy with what we have done.

But if we want to have a wider stability in Europe, obviously there are a number of issues that have to be dealt with. So this is not linked to Greece; this is linked to…

JOURNALIST: But what’s the key issue that has to be dealt with, do you think?

G. PAPANDREOU: I think there are a number of issues. First of all, yes, we, as member states, as countries, have to be fiscally responsible. So there is a question responsibility there. If people have over-deficits and debts, we have to see how we deal with this.

Secondly, there is the financial system, making sure that we really regain trust, with regulation or whatever, recapitalization possibly in some areas.

And thirdly, a strong – it’s called the EFSF, the fund – a strong fund, so that it does have the capacity, if there is another crisis. But that’s not the only thing. It should be able to be flexible enough to actually look at the bond market and look at the debt issues, so that it could have tools and rules, if you like, to make sure that we have the arsenal.

JOURNALIST: Binding tools and rules.

G. PAPANDREOU: Binding rules and flexible tools, I would put it.

JOURNALIST: Right. Let’s talk about the progress that your country is making. You have the most draconian austerity plan in place. It’s hurting the Greek people. There are prospects of further measures still to come, to try and get the deficit down. Are you comfortable with the progress being made.

G. PAPANDREOU: We have made very good progress, because we are on track and I would say even beyond. We have cut the deficit by over 6.5%, which is a huge cut, impressive: I’ve been told by many that very few countries have ever done this in the past.

We have changed our pension system; it’s now a viable pension system, one of the most viable in Europe. We have changed our tax system. It’s transparent, more effective, hitting tax evasion. Opening up professions, structural changes which will bring in new growth.

JOURNALIST: How much more can your economy take of this sort of pain? Because you are literally throttling it at the moment, aren’t you, to try and get the deficit down?

G. PAPANDREOU: Well, some of this pain which yes, because we had to cut things to cut the deficit, and we did cut it down, but the structural things we are changing are actually going to bring growth.

Now, opening up, for example, the professions. It’s considered that it could be a boon for helping GDP 4-5%. The new investment laws, investing in areas of green energy and so on.

So these are areas where we can see that there is a very positive thing. And this is, I think, one of the things where people ask me very often: Well, are the Greek people supporting? Well, the Greek people were not supportive if it was only dealing with the debt.

We are changing Greece for the better. We are making a better country, more competitive, I would say more just also.

JOURNALIST: Finally, there will be viewers watching who will say, and I can hear them saying, “He hasn’t asked him, ‘Will Greece have to either devalue, default or restructure the debt?’”

I have seen your answers on this many times, but it’s an opportunity for you to tell me: Can you categorically say that’s not on the agenda?

G. PAPANDREOU: Well, devaluation obviously is off the table, because we’re in the euro. But we are doing other things, in fact, to be able to become competitive inside the euro.

Now, as far as restructuring is concerned, what we are saying is very strong and very clear: We are on a track where we are going to be cutting our debt. It may go up a little bit as we still have deficits the next year or so. But then we’ll be getting a primary surplus. That means we’ll be cutting our debt, and with growth our debt will be cut.

Now, there is one thing that can be done, and this will be very important. the debt that we have accrued or the loans we have gotten from the IMF and the European Union, they will be extended so that we can repay them in a longer term, and maybe even on better terms. This will be very important.

JOURNALIST: But the existing debt that you came into the crisis with: you have no plans to restructure that debt?

G. PAPANDREOU: No, this is not on the books.

So this is something which is not on our plan, it’s not on our roadmap. And this is why we are talking about these other measures, which we think are enough to be able to make things sustainable. Obviously difficult, but we have been doing our work and we will be successful.

And I think Greece very soon will be showing, just to give you one idea: recently we had more than 20% increase in exports. Just one of the small signs of the positive things that are starting to happen in Greece.

JOURNALIST: Prime Minister, we’ll meet again, hopefully in Athens next time.

G. PAPANDREOU: Thank you. Yes, you’re always welcome.

JOURNALIST: Many thanks. Thank you.