Let me first thank our distinguished host, Prime Minister of Malta Laurence Gonzi, a political leader that we all hold in very high esteem, because of his strong statesmanship, his staunch support to the European project and his very timely initiatives to project European influence on the historical changes taking place in our southern neighborhood.

We all recognize that Malta is perfectly placed to play this role, given its strong ties with all countries and cultures in the region.

After all, Greeks share with Malta a common Mediterranean background throughout history as well as common geopolitical challenges at this present conjuncture.

Now that we are all visiting Malta, I feel we are on a pilgrimage to the heart of a whole region, where most of what define us as Europeans was born.

The Mediterranean is more than the sea and the sunshine. It is the focal point that brought people together throughout the centuries, becoming the birthplace of at least three Civilizations the values of which have spread all over the world.

Now we are at the center of it! The most suitable place indeed, for our very important discussion.

The general title of our meeting today is really intriguing:

– The answer is More Europe!

But what is the question?

Well, it turns out that whatever the question we ask today, the answer is still: More Europe!And this is the idea I want to elaborate today…

Let’ us start with the subject of this session:

– Completing the Monetary and Economic Union: towards a European Federation of Nation States. Exactly!

This seems self-evident to all of us, in the PPE.

But for some outside this room, it is not as evident.

– There are some political fractions who want to abolish the nation state.

– There are others who want to avoid the federation perspective altogether.

We are standing in the middle and we want both!

* Nation-state is the basis of our European tradition. It is nation states that shaped up Europe as we know it in the last 4 centuries. It is our nation states that became the cradle of modern democracy in the last two centuries. If we were to abolish them, we would neglect who we are. We would lose are identities…

* On the other hand, national conflicts have separated us for centuries. In many instances national conflicts have unleashed destructive powers among us.

So we have to provide a framework within which nation states can converge, national economies can integrate, nation societies can grow beyond their limits and national cultures can really merge together.

This is a political “Big Bang” that can unleash the tremendous potential of Europe in the 21^st Century. And can only be achieved in a European federation of nation states.

The basic requirements of such an ambitious project are there.

Our cultures, defining our identity, are mutually compatible and complementary.

We share the same tradition of democratic ideals, Christian values and Roman law. This is the common historical basis of our cultures. We already have a common cultural denominator.

In addition to that, we already have a common political denominator. Our union’s flag and our common European institutions together with our common currency, the euro, already bind us together, vis-a vis the rest of the world.

So a “European identity” is not something that we have to device and develop from scratch. It is already in the making, a common source of unity and pride for all of us.And this brings us to the next question:

What is the next step of our Integration?

–We don’t join a Union to add up our weaknesses.

–Instead we need our Union to multiply our strong points and our synergies.

Our Union should grow more efficient, more flexible, more competitive, more secure, more responsible on the part of each and every member state and more solidarity oriented to all member states; especially the ones that need more the help of their partners.

– “More effective” means that our prosperity will be enhanced if we stick together, much more than what each one of us can achieve by himself…

The right common context can make everybody thrive.

The absence of any common context could marginalize everybody.

–“More flexible” means that we have to respond faster to changing conditions or unforeseen problems. Rules and regulations are indispensable. But bureaucratic rules and over-regulation can harm everybody.

We have a lot to learn about how to combine stable rules that are absolutely necessary for our Integration, with flexibility which also indispensable if we are to face new challenges in a competitive world.

– “More competitive” means that we have to exploit all our comparative advantages, to win new markets for our products, both at home and abroad.

World competition is the “name of the game” today. And we have only one choice: to fight it at all fronts and win it.

– “More secure” means that we can jointly protect ourselves much better than each and every one of us can protect himself. Countries like Greece and Malta, being on the European border line, perhaps understand better than others the common security issues. Security is not only about defending oneself from outside dangers. It is also about promoting stability beyond your borders. Proactive policies of stability can achieve much more if they are jointly pursued on a multilateral level, than on an individual level by each member state.

– “More responsible” means that common rules are to be respected. By all! Otherwise, we will be exporting our individual problems to each other, rather than solving them separately so that we can grow together.

– And “more solidarity oriented” means that we have to help each other at times of need; which brings us to the last point I want to make:

As you know my country, Greece is currently going through very rough times.

In 2009 our deficit really exploded! Now, after three years of sever austerity, we will brought it down by about 8 percentage points of GDP. Such a correction in only three years is unprecedented.

But it came at a very high price. Greece has already lost about 25% of its GDP in the last three years. Such a contraction is unprecedented at times of Peace.

To achieve deficit cutting of about 8% of GDP, we implemented austerity measures adding up to 25% of GDP!

And we just voted, last week, for additional austerity measures of another 7% of GDP for the next two years.

At the end of this program the deficit will be almost eliminated, prime surpluses will grow up to 4,5% of GDP. However, Greece will have lost at least 40% of its pre-2009 standards of leaving!

At this point, my country is going through the 5^th consecutive year of recession. Next year is going to be recessionary as well. The economy came close to a full paralysis, social cohesion is in serious trouble, and still the Greek people are demonstrating patience in their ordeal and perseverance in their efforts to get out of the crisis.

At truly moments of crisis we were supported by all our partners and we appreciate their help. And our partners appreciate and recognize now the sacrifices made by the Greek people.

Despite all the hardships, we committed ourselves and we stand by our commitments. We made an agreement and we fully implement it. We bring the program back on track and move forward to meet our targets and get our country out of the crisis.

But what is, perhaps, more important, is that we all learned something out of these dramatic recent years.

* First, that a monetary union should have a mechanism to avert such crises and a mechanism to resolve them if they happen. We had neither of these “safety valves”. Now we are developing both.

* Secondly, austerity brings recession. And when imposing austerity measures we must simultaneously try to offset some of its recessionary effects. In other words, we need to encourage recovery right from the beginning. Without a recovery, deficits will become persistent despite austerity, and overall debt will explode.

* Thirdly, we must also sustain and uphold social cohesion. If we neglect it, we might end up with a self defeating strategy; because no program can succeed in a society that is falling apart.

So austerity is necessary but it should be complemented with recovery measures, growth enhancing structural changes and social cohesion priorities.

After all, adjustment programs are not lab experiments. They don’t pertain to “naked numbers”. They are applied to societies of human beings.

As far as Greece is concerned, I am now optimistic that we have seen the worst of the crisis and things will start to improve from now-on…

We have repackaged the whole program so it can work now.

And hopefully, from late next year we will see the first signs of recovery.

So we have all grown wiser during this crisis, indeed.

Greece is a medium size country within our Union, totaling less than 2.5% of European GDP. Yet the Greek crisis had very dangerous contagion effects over a much larger range. Now we are reversing that: A Greek success story, from now on, will have much broader positive effects. It will become a European success story…

It will prove that the European Union and the euro are here to stay. That they can resolve their problems, learn from their mistakes and move ahead.

As we all know, success is a trial and error process, once you are able to survive your mistakes and learn from them.

We in Greece are trying to grow out of our debt problem by drastic structural changes both to our economic model and our political system.

The European institutions are trying to transform the whole common context of our Union, so that systemic risk is minimized, so that there will be adequate early warning signals to avoid similar crises in the future, as well as adequate tools to face them promptly before they have such dramatic repercussions.

It is not – I repeat not – a question of whether we want to “transfer resources” from one member state to the other. No country wants to live on borrowed money; because all countries cherish their freedom and dignity above all.

It is only a question of sharing: sharing a common future and a common framework of cooperation, so that we will all be able to unleash our immense potential.

At different points of History different parts of Europe have played a leading role worldwide.

Now we are facing the challenge to play a leading role again.

Most Europeans understand now that this time we can only do it together.

And us, in the PPE, understand, perhaps better than others, that we need more Europe, as a federation of nation states.

So I conclude offering an equation that sums up everything:

More political integration, plus more responsibility by each and every one of us, plus more solidarity among us, plus more competitiveness,

equals more Europe, more prosperity within its limits and more world influence beyond  its borders.

This is the “Big Bang” I was referring to earlier.

It is a historical challenge for all of us.

It will be the “comeback of Europe”.

As our founding fathers of an Integrated Europe foresaw it

As we owe it to our children.

Thank you.

Distinguished Guests, Ladies and Gentlemen,

In this unique opportunity where we are celebrating the 125^th Anniversary of a historical paper, the International Herald Tribune, I want to share with you some thoughts. Relevant with the problems my country faces today; but also relevant with the big challenges Europe faces as a whole.

After all, the “Tribune” has always been a unique forum for European and transatlantic discourse. And what a better way to celebrate its anniversary than addressing major challenges that our common to all of us, although for some of us they are truly dramatic.

As you all know, I come from a country that has not paid attention to the dimension of competitiveness since it joined Europe. And know it pays the price…

But Greece is not alone. Many people across the European Union suffered from the illusion that quantitative growth along with redistribution policies was enough to guarantee prosperity and a better future.

Thus the policy problem was, for many years, summarized in two sentences:

– How to maximize annual nominal growth rates.

– And how to redistribute it to the societies through the tax system and government handovers.

Competitiveness was forgotten under layers of bureaucratic red tape, barriers of entry, disincentives to innovation, all kinds of market distortions and dominant oligopolies in various centers as well as trade union power abuses.

At the same time, over the last decades other regions of the world made the decisive turn to competitiveness.

Stop and think for a moment: how much time does a new product or an innovative idea take to materialize and test itself in the market in other regions of the world compared to Europe?

The rest of the world is gaining ground in terms of competitiveness, while Europe in general is losing ground.

There are exemptions of course but Greece along with most of Southern Europe wasn’t one of them.

For decades we were trying to sustain a high level of nominal growth mainly though consumption and income redistribution policies. But when you are lagging behind in terms of competitiveness this can only produce high deficits both in the budget and in the foreign accounts. And when this happens, the only thing you can “redistribute” is borrowed funds to the detriment of future generations. This is exactly what happened to Greece for almost 30 years.

We are now trying to remedy all these wrongdoings. We are cutting government expenditures, eliminating red tape, buy passing bureaucratic inertia, fast tracking investments. We are moving ahead to a bold tax reform that imposes zero tolerance to tax evasion while providing incentives to investors. We are also moving ahead with an enhanced privatization agenda, capitalizing on idle public assets in a strategy that will make it possible to service our debt and launch our economy on a sustainable long term growth trajectory. In a nutshell, we are changing Greece at home and we are rebranding it abroad. There is a caveat to all this however:

Societies are not “engines” that you can turn off, change their defective parts and then put them back together again. People are not “spare parts”, or naked numbers.

Politicians are, maybe, expendable. But democracy isn’t.

Market distortions and government bureaucracy should be abolished. But social cohesion should be preserved.

Social pain is unavoidable at times of adjustment. But social turmoil and a break-down of law and order must be avoided.

Because, as history has proven times and again, if democracy collapses and societies disintegrate to chaos, no adjustment plan can survive.

So we are dealing with – as the economists often put it – a “constrained optimization” problem: how to maximize the efficiency of the adjustment plan, preserving social cohesion and democratic institutions.

According to our experience here is a list of what you must do right from the beginning:

* First, tell people the truth, the naked truth without playing political games, or petty partisan politics. This will give the government the high moral ground.

* Secondly, try to build the largest possible social and political consensus. In other words, fight hardships with a renewed sense of unity.

* Thirdly, show, right from the beginning, some light at the end of the tunnel. In other words, fight pain with hope.

* Fourthly, while imposing harsh measures, try to concurrently solve some other problems of society, like fighting crime, restoring public order, and creating a renewed sense of justice.

* Fifth, do not correct past mistakes by making the exactly opposite mistake. The opposite of something wrong is sometimes, even worse.

In the past, we wrongly assumed that “demand will create its own supply”. It would be equally wrong to assume now that the opposite will happen: that an improved “supply will automatically generate its own demand”. The truth is that economic automatism does not work in a crisis environment; as it never worked in the past, in an environment full of distortions.

* Sixth, at difficult times, rule by example. If you ask people to accept cuts, the Government as well as even member of the Parliament, should first impose cuts to itself. If you are asking people to work harder, the Government should work day and night…

* Seventh, be sure you make the proper association between key words defining the program: Fiscal discipline, competitiveness, restoring pride and establishing freedom and prosperity.

If you want to change the way people think, if you want them to brake away from bad habits of the past, then you have to inspire them to redefine their priorities.

Fiscal discipline should not be a “punishment” imposed by outsiders. It is a basic virtue that restores pride to the society as a whole. Nobody has pride, when relying on his creditors to keep him afloat every month.

And competitiveness should not be just another word. It is not only a technical term pertaining to efficient production of commodities. It is also a political prerequisite for a democracy to thrive and for a society to prosper. It is related to Freedom and Justice.

Restoring European competitiveness is defining who we are and where we want to go.

You probably noticed that talking about competitiveness I switched my main focus from Greece to Europe. This was not a “slip of the tongue”. It is my strong belief that competitiveness is also a crucial prerequisite for European Integration.

Competition requires a common context acceptable by all. Without it, competition will evolve to sheer aggression, a war of everybody against everybody, a bellum omnium contra omnes according to Thomas Hobbesin his Leviathan.

But competition also requires a driving spirit of constant challenge to prevail, an endless daring to fight, a trial and error process ending up in winning or losing. Otherwise, it becomes its opposite: apathy and fatalism.

I believe Competitiveness transcends ideologies and political stereotypes.

It is peaceful, since it relies on the coexistence of individuals within a common context; and it is alsoaggressive since everybody is trying to better everybody else.

It is conservative, since it always needs to preserve the common context within which competition takes place; and it is also progressive, since it always moves ahead to new forms, new ideas and new trends.

It is very orderly, since it has to obey strict rules; and it is very chaotic, since it always revolutionizes everything.

Competition is not synonymous to the law of the jungle, where only the “fittest” survive. It requires democratic rules, social safety nets, opportunities for everyone to win and second chances for those who lost. Competition is not the “prize of the winners”; it is the game that allows everyone to aspire that he/or she can win.

Competition is balancing individual incentives with social considerations of preserving the community, obstructing the strong from abusing their strength and allowing the “losers” of yesterday to become the “winners” of tomorrow.

Admittedly, in the last decades some of us forgot all about competitiveness.

Our debt crisis is to a large extent a competitiveness crisis. You can end up with a huge debt by many routes. But there is only one main highway to get out of it: Restoring competitiveness! And there is only one safe way to avoid a debt crisis in the future. Always keep on the edge of competitiveness.

Now, some might ask at this point: If competitiveness is the main target, why shouldn’t Greece leave the euro-zone, return to its national currency again, devalue and gain competitiveness instantaneously?

My answer is straight and blunt: We are ruling out, completely, the prospect of exiting the euro. We know that this is not an option for us. It is a total disaster!

Greeks have already lost 35% of their standard of living in the last 5 years. If they exited the euro now, they would lose another 70% from the current levels, in the next few months! No society can sustain that. And no democracy can survive it.

A “Grexit” would be very destabilizing for the Union as well. Once one member country exited, it is most probable that the international markets would target the next “weakest link”. Nobody knows where this could end. It would be very painful to everybody. And could prove fatal for many…

The truth is we cannot avoid the hard work to restore competiveness by a “quick fix”, like a breakdown of the Union, or the expulsion of some of its members.

It wouldn’t be a “quick fix”, in the first place. It wouldn’t be an “easy way out” for anybody. It would leave Europe less united and less hopeful. It would leave many of its members, hopeless and helpless…

Big political projects are driven by dreams. You never do something big without inspiration. If you kill a dream, you don’t end up with more realism; sometimes you end up with more misery; and a dead end.

If you take away a couple o pieces from a puzzle – or, better, a political mosaic – you are destroying the whole image.

Take it from us, who have learned it the hard way: There is no “short cut”, there is no “easy way” out – we should restore competitiveness! Not only for our economies to recover, not only for our societies to survive, but to preserve our Union and to prevail in a competitive world.

Greece is already reversing course. I am confident that Greece will make it. I am also confident that Europe can make it. We can come out of the crisis, stronger, wiser, more united, more self-confident and – above all – more competitive.

I am absolutely confident that in year from now, a Greek success story would be a boost for the European project as a whole. It will be correctly perceived as a major proof that Europe can solve its problems and successfully overcome its difficulties.

Some might think this is “a bit optimistic”. There is nothing wrong with that. After all, to be competitive, you have to be optimistic. To succeed in something you have to believe in it.

In any case, my belief in my country and in Europe is my positive message tonight. After all competitiveness is not about optimism. It is about optimization: Always optimize what you have, to win the game. Always believe in yourself and inspire all around you to get the best out of them. For the Common purpose!

And this is exactly what we are doing in Greece today…

Again, thank you all, and thank you Herald Tribune!

Dear Colleagues,

We all fight for the same cause: European Integration is our cause, but Integration with Freedom and social Market Economy Principles Prosperity, Competitiveness, Responsibility, Accountability, Justice and Solidarity.

All these ideals shape-up our common identity; they define who we are, what we stand for and where we want to go.

They determine our character, they determine our destiny; in Europe and beyond. These ideals are global; they transcend geographical or historical borders.

They are also inseparable: There is no Europe without Democracy; there is no Democracy without Responsibility and Accountability; there is no Prosperity without Competitiveness; there is no Democracy and Prosperity without Justice and Solidarity – Social Justice within society and Solidarity among our societies.

Dear Colleagues, dear friends

We are also fighting against common enemies: Populism and Extremism, to name just the two most important at this conjuncture.

–Populism is turning people against themselves, and undermines their future.

–Extremism is tearing societies apart, undermining political unity and social cohesion.

I have come here to express my gratitude to everyone of you, but , also, to express the determination of the Greek people to fight hard, to correct past mistakes, to defeat populism and extremism, to make a spectacular come back.

Indeed, there were some people that were quick to “write-off” Greece. We heard them speaking repeatedly in public, about the “futility” of supporting Greece. In some instances, the same people were ready to write-off the euro as a whole and the European project altogether…

Some others were telling us that, for the euro to survive, Greece had to go; to be abandoned…

I am standing in front of you today and I am telling you that an exit from the euro-zone is not a choice for Greece; it is nightmare…

For us, it is not an option. It is a total disaster!

And it is not going to be easy, for the rest of our partners. Because once a country is out of the euro-zone, world speculators will start hitting the next “weakest link”! And then the next one…

To give you an idea, just think of Greece for a moment.

It has already gone through the fifth consecutive year of a deep recession, something unprecedented in Europe.

During these recessionary years, Greece lost more than 20% of its pre-crisis output, something unprecedented in the whole world during Peace Times.
And please remember, that we are striving through all these hardships in the middle of a destabilizing geopolitical environment.

Greece, Italy, Cyprus, Malta and Spain at this point share a disproportionate burden of hundreds of thousands of illegal immigrants fleeing away from civil wars and spreading social unrest in the doorsteps of Europe.

Dear colleagues,

All we are trying now is to respect our pledges and fulfill our obligations, bring recovery as soon as possible and sustain social cohesion.

Fulfilling our obligations is what we have to do.

Speeding up the recovery is what we need to do.

Combining them is both a challenge and a plan!

Before anything else we are eliminating our credibility gap. Greece respects itself, its signature and its obligation. There is a Program that Greece has to bring to fruition. There are targets that Greece has to meet. All these are priorities for us.

On the other hand, Greece can “grow out” of its problems. It has all the potential and the competitive advantages, the resources and the assets – human and material – to make a spectacular come back; a growth come back. Through enhancing entrepreneurship, fighting bureaucracy, eliminating red tape and corruption; fighting tax evasion; opening up the economy; pushing ahead with privatization projects, sustaining social cohesion and bringing out the best of our people.

This is exactly what we intend to do.

We will turn a tragic instance to a success story. An economic crisis, to a growth model. A social crisis, threatening to spread all over the European south, to a turning point that will bring Europe together; proving to everybody that Europe can resolve its problems and come out of its crisis stronger, more united and more resolved to survive and thrive.

Just imagine what a big boost a Greek success story will be for Europe as a whole, and for all people, all over the world aspiring our ideals of Freedom, Democracy and Justice.

I stand here, in front of you and I am telling you: we are going to make it; the Greek people are going to prevail; and our success story at this point of time, will be a message of hope, transcending borders way beyond Greece; and beyond Europe for that matter…

How did your meeting with European Central Bank President Mario Draghi go yesterday?

We talked about the need for liquidity. It is a prerequisite for us to start the much-expected recovery. Without liquidity, you cannot give money to small, medium or large enterprises through the banks, and you cannot allow the system to breathe. And we need a lot of breaths at this point.

Did Draghi tell you anything specific?

We proposed different things to him: The ECB provides liquidity, either through bonds or through the Emergency Liquidity Assistance program. Other countries have access to the markets, whereas Greece does not. Therefore, we have to get liquidity through the ECB.

Did Draghi give you hope?

Draghi, like everyone else, is talking about the need to first see the troika report.

Reportedly, the troika is demanding that your government come up with spending cuts of about 11 billion euros and additional tax revenue. Do you believe you can do this and get your coalition partners to agree? Can you get it passed by Parliament?

Our determination is given. It is 11.7 billion euros in expenditure cuts. All 11.7 billion has to do with making the government smaller and the whole system more efficient. Through cutting more expenditures, the economy becomes weaker because [there is] a GDP decrease. In the last five years, our GDP decreased by 20 percent. If we are to add this additional 11.7 billion, our GDP will decrease by about 25 percent. This is too big to swallow.

But you are going to go through with the reforms?

We have to make sure that we abide by what we have signed because we believe that what they call “Grexit” [a Greek exit from the euro zone] is not an option for us — it would be a catastrophe. In 2013, we are going to have a country in the sixth year of a recession with unemployment above 22 percent and rising.

We are here to fulfill our obligations, to meet our targets. We only insist upon that missing ingredient, which is to bring recovery soon. How? Liquidity.

If you get the troika money all at once, wouldn’t you use it to recapitalize your banks?

Yes, if we get the next tranche, which I hope will be in October, it will recapitalize the banks and provide us with more than $6 billion of arrears, which is money the government owes the private sector. This will enhance liquidity. But the IMF has already estimated that the next three years will find Greece still in a recession. We have to avoid this by any means. We have to make sure that instruments like the ones that can be put forward by the ECB will be activated for Greece.

Like infrastructure funds?

These are funds already earmarked for Greece that are still [frozen]. These funds and two other factors will serve as a fiscal stimulus. The first is we have to fight tax evasion. We have to reform the tax-collecting mechanism and to ensure there are harsh punishments for those who evade. The other element is privatization. . . . But we need to conclude this deal fast.

The troika is in continuous talks with the minister of finance and other ministers. We have to get to that 11.7 billion and be sure that both agree on the numbers.

Isn’t the troika demanding that you pass the cuts through Parliament?

I have to pass it through Parliament, and it will pass Parliament because we all realize the No. 1 prerequisite for our future is to stay in the euro zone.

But it is a four-year program, not something we can do today.

But you asked for a two-year extension, didn’t you?

We are asking for enough time. Instead of the 11.7 billion euro package taking place over two years, it would be best if it were to take place over four years.

Two years — up until 2014 — has been accepted by the troika. We are talking about an extension to 2016.

Why would they give you an additional extension when Greece has never met a target?

I believe it is reassuring for them to see the numbers. Yesterday, we had the statistical evidence that in July and August, expenditures fell by 17.5 percent compared to this time last year. . .  We are taking steps that show that things have changed in Greece. We have decreased the salaries of everybody who partakes in politics, from the president to the prime minister to the MPs [members of Parliament]. We have cut expenditures that have to do with Parliament. Everybody knows we are serious.

People say that you are pro-reform now, but for two years, when you were in the opposition, you were opposed to the very reforms you advocate now. Did you make a mistake?

I have always believed that this idea of having a nation go through this very painful five or six years of continuous recession with high unemployment would be detrimental for the economy and the society. . . . Very serious mistakes were made by previous governments, and Greece was ready to be abandoned by its partners and to leave the euro zone, which would have created total catastrophe. When this was imminent, we came in and helped change the government and asked for quick elections so that we could finish the job.

But outsiders criticize the lack of structural reforms in Greece — a lack of willingness to fire public employees, the unwillingness to open up these so-called closed trades where you prohibit competition.

Most have been opened up by laws. We voted for them. This will not be a problem in the future. Most of it has been fully liberalized.

Are you concerned about potential social disorder due to the enormous difficulties the Greek people are having to endure?

There are going to be a lot of problems with social cohesion. We are already cutting down everything to the bone. Unless there is light at the end of the tunnel, then yes, I am very concerned. So we have to get light at the end of the tunnel. That’s my primary policy. And hope cannot be there unless we get the next tranche quickly so we can have recovery.

We are a pivotal part of the European Union. Any destabilization of Greece would totally rock the boat. I wake up every morning and say, “Has anything happened to Syria today?” If something happens in Syria, thousands of people would be flowing into Greece. Illegal immigrants are already a very big problem for us. We are already taking big steps to disallow illegal immigrants from coming in. Imagine if that number is multiplied by 10.

Many U.S. businessmen believe that Greece will exit or be exited from the euro zone. Are they wrong?

They are absolutely wrong.

Are you getting good signals from the Europeans? From German Chancellor Angela Merkel, for example?

If you look at the signals a month ago and then look at them recently, they are very different.

What changed?

They saw what we are doing and that we are determined.

Given the depth of your financial difficulties, it is hard to understand why no government has touched the public sector.

That is by the constitution.

Doesn’t it make it very difficult to run a government when you inherit a large, untouchable public sector, much of which is uninterested in pursuing reform?

During the socialist period, the government became too big. That created a crowding-out effect in the private economy, and it gave everybody the need to pay more taxes in order to finance this big government. We are against big government. We want a smaller and more efficient government.

But your GDP has shrunk 20 percent in the past five years. Isn’t it slated to go down another 7 percent this year? How do you break this cycle?

You start increasing the GDP through liquidity methods, through structural funds, through privatization and through investments.

Foreign direct investment?

It is very important. There are many people abroad who want to help, who want to invest. In the past, they used to come here, and they found a negative environment. Today, instead of red tape, we will give them the red carpet treatment. We want them to realize that this is a land of opportunity. It always has been so, but we never allowed foreign investment to come into this country. . .  We made it so difficult for them. They got sick and tired of it.

Was that partly to protect Greece’s own businessmen?

It was a culture that business is something bad — it was a leftist-oriented psychology. We have to break this. We are pro-business. We want entrepreneurs to come to Greece, see the opportunities and invest. We have to capitalize on tourism and the maritime industry. The previous governments abolished the Ministry of Tourism and the Ministry of Maritime Affairs. It is as if Saudi Arabia abolished the Ministry of Oil.

Do you think the Greek people will rally behind you?

I think that people are ready to take that leap forward with us, yes.

Are you ready to do it even if it is not politically popular — even if you get defeated?

Absolutely. It’s not me. It’s not my party. It’s not my friends. It’s my country, and I don’t play with my country. I won’t do that.

Are you saying you can’t just have austerity alone?

Exactly.

Does the troika understand that?

I think the troika and everybody else understands it after seeing that Greece has been in recession for six consecutive years.

Do you think they are willing to go easier on your country?

Expectations were that we were doomed. It would be a matter for the Europeans to solve as to whether to accept us or not, with very high chances of us being kicked out of the euro zone. I cannot allow a third party to decide on my country’s future. I have to make sure that we are changing things so this alternative for the Europeans is not there. Some of them would love to have a Greek exit. I do not want Greece to become the negative paradigm for the others — i.e. “make sure you follow exactly what we tell you, otherwise you will be like Greece.”

We have to make sure we do not leave the euro zone and that we are safely within Europe. Many leaders abroad today realize this is the best not only for Greece, but also for Europe. The consequences are unknown as to what would happen in Europe were Greece to leave. What would be the reaction of the markets? They would hit the next nation.

They would hit Spain?

They’d hit some country for sure. Nobody knows the consequences. But I cannot rest assured that since the others know this, maybe they will not kick us out. I have to make sure this does not happen. You don’t play with death, and this would be deadly for Greece.

«Mr. President, dear friends,

It is a great pleasure and an honor to welcome you all in Greece.
And what a suitable place, with so many Greek Americans and a great friend of Greece, literally at the shadow of the Parthenon, the most prominent monument of mankind that identifies with Freedom, Democracy and the ideals that make us all what we are and what we stand for.
But it is not History what I want to mention now. History is all around us. You just have to feel it.
Since the thirties, we know what we have to do for problems with economy, which is instigate recovery, jump start the economy and move ahead with sweeping reforms to bring back competitiveness for our country.
But I want to explain to you that Greece is now going through a crisis unprecedented in times of Peace.
I mentioned to you that we are already in the fifth year of a recession and all these bring about bitter memories of the Great Depression in the United States. This is exactly what we are going through in Greece. It is our version of the Great Depression.
And what we intend to do is exactly instigate recovery with the support of the Greek people as expressed in the fresh mandate it gave to our tri-party coalition government, which represents a very broad part of the Greek political spectrum.
We intend to do it with the support of our European partners with whom we share a common currency, common obligations and a common sense of solidarity, which is valuable to us.
And, of course, with the endless support of many prominent leaders from our vibrant communities of the Greek Diaspora, whose energies, initiatives and ideas, are always welcomed and always helpful, more than ever today.
We all know that in difficult times, Mr President, people need strong leadership and hope. We intend to provide both:
Strong leadership, meaning: decisiveness, fairness and sense of duty.
And hope, meaning that sacrifices are not in vain and, as I told you before, there should be light at the end of the tunnel, that everyone can see.
We know that it is not easy. But we are decided to succeed.
And let me say at this point, Mr. President, that you are a source of inspiration to us. Your initiative, the “Clinton Global Initiative” is universally recognized. Your values, your principles and your actions have significant influence world-wide. So we greet you here as a proven friend and also as global personality with whom we share common ideals.
I want to thank you for this initiative. We deeply appreciate your profound interest for Greece and your solid support to our efforts. We also deeply value our relations with your country, the United States of America and we are looking forward to enhance our ties, based on the principles of Freedom, Democracy and human rights. Those ideals, Mr President, were initiated in Greece about two and half millennia ago. The same ideals inspired the birth of the American Nation, and the rebirth of our Nation, about two centuries ago.
Our nations share so much from the past.
I am sure they will share even more in the future.
And I want to thank you Mr. President for being here with us, thank you all. We appreciate it».

Dear President Barroso,

Following our very fruitful meeting on 29 February 2012 and your subsequent letter of 6 March 2012, and in view of the forthcoming European Commission Communication, I would like to address some of the key issues we have been discussing that can significantly contribute to supporting growth and employment in Greece. Let me focus on the following priority areas which the Greek government has pursued in recent months, namely: financial support for SMEs; advancing major infrastructure projects; reducing youth unemployment; the privatisation programme; policies in the energy sector; the absorption and effectiveness of the EU structural funds.

1. Financial support for SMEs

With your backing, and that of Commissioner Hahn, an agreement was reached with the EIB on the basic parameters of the Guarantee Fund for the support of Small and Medium Sized Enterprises (SMEs). This agreement, which was signed on 21 March 2012 and entails a Guarantee of €500 million, should increase the available financing to the real economy by €1 billion. The new Minister of Development, Competitiveness and Shipping, Ms. Anna Diamantopoulou, continues to lead this initiative.

In addition, the Greek authorities have adopted further measures in order to address the shortage of liquidity in the banking system.

These measures include several financial instruments mainly managed by ETEAN (National Fund for Entrepreneurship and Development). The contribution of National Strategic Reference Framework (NSRF) funds to these measures is in the region of €1,189,000,000, and should constitute a significant driver for increasing liquidity in the economy. In this context, the role in leveraging EU funds of the European Investment Bank and European Investment Fund is pivotal and should continue with greater intensity.

The Greek government is also focusing on the identification and removal of obstacles that have hindered the disbursement of available financing from existing instruments to the SMEs. The Ministry of Development, in cooperation with credit institutions and the EU Task Force for Greece (TFGR), will monitor the situation and take measures aiming at substantially increasing the credit flow to the SMEs, and, more generally, the real economy.


2. Advancing major infrastructure projects

Progress is being made towards advancing major infrastructure projects. With regard to the five highway concessions, four of them were interrupted due to the extraordinary impact of the economic crisis on funding and toll revenue. A number of problems have been tackled to ensure the finalisation of the infrastructure projects and their financial viability.

After agreeing on the general principles guiding the negotiations (also presented to the European Commission) and identifying all the relevant technical, legal and financial issues in detail, the negotiations are currently focused on three topics, namely:

(i) the possible reduction in the size of the projects and the conclusion of agreements on requested
compensation due to delays;

(ii) the achievement of an internal rate of return (IRR) that makes the projects economically viable for
both the state and the concessionaires. This will partly depend on the cost of the available debt financing
for the projects and the contribution of the Risk Sharing Instrument, which will be key in this regard;

(iii) the way banks will address their exposures to these projects, which depends on the ability of the
concessionaires and construction companies to service their debts at a reasonable cost.

These negotiations would be significantly facilitated by the deployment of the Risk Sharing Instrument which would provide capital provisioning to the EIB that would enable the extension of loans or guarantees to co-finance infrastructure and other investment projects. The negotiations are likely to be finalised by summer 2012 and the revised Concession Agreements could be approved by the Greek Parliament in October 2012.

The Risk Sharing Instrument would also enable the financing of other important projects, such as energy and waste management projects. The Greek authorities are currently working in close co-operation with the EIB, DG REGIO, DG COMP and the Task Force for Greece (TFGR) in order to identify the portfolio of projects to be financed by this Instrument. The Greek government has made a proposal to the Commission services indicating those NSRF resources that could contribute to the Risk Sharing Instrument.

3. Reducing youth unemployment

The reduction in youth unemployment is a high policy priority for the Greek government. A key initiative in this regard is the Operational Programme “Human Resources Development” co-funded by EU structural funds (ESF).

As you know, this programme aims at:

(i) subsidising enterprises so that they may offer work experience and help enhance the professional skills of young unemployed aged between 16 and 24;

(ii) subsidising insurance contributions for private sector enterprises;

(iii) implementing community service programmes;

(iv) creating new jobs under the supervision of municipalities; and

(v) developing vocational training programmes in relation to the “green economy” and the tourism sector. The total beneficiaries of these five programmes are estimated at 158,000 young persons up to 30 years of age, and the total budget of the programmes is € 786,580,000.

In the immediate future, a number of additional programmes will be activated covering:

(i) the National Network of Social Intervention for the Social Inclusion and Support of Vulnerable Social Groups;

(ii) subsidising enterprises for hiring unemployed university graduates aged up to 35 years;

(iii) workplace training for youth; (iv) vocational education in developing sectors, implemented through the training voucher system;

(v) community service programmes in the culture sector; and

(vi) promoting social entrepreneurship. The beneficiaries of these additional programmes are estimated at 46,700 young people, and the total budget is €352,750,000.

In order to achieve the objectives of these programmes and ensure the effective implementation of actions that will lead to longer-term job creation, it is important to devise a broad strategy that entails innovative and flexible solutions. In this context, the Ministry of Development, in colaboration with the Ministry of Labour, is developing an “Action Plan for the promotion of entrepreneurship and boosting of youth employment” to be launched in the first semester of 2012.

It aims at:

(i) fostering synergies between the three Structural Funds (ERDF, ESF, EAFRD) in order to attain the highest possible utilisation and value-added of their resources;

(ii) focusing on supporting sound and extroverted entrepreneurship, as the main source of job creation;

(iii) using ESF funds earmarked for young entrepreneurs and existing financial engineering instruments, mentioned under section 1, to enhance the financial position, viability, development and competitiveness of enterprises; and

(iv) supporting the primary sector of the economy and the processing of primary sector products.

The envisaged Action Plan, to be completed by end June 2012, would reach a total funds appropriation of €4.3 billion until 2015, with the objective of strengthening growth and job creation. The competent ministries estimate that such a plan could achieve the creation of 170,000 additional jobs, while securing 85,000 existing SME jobs. Some 36,000 beneficiary SMEs and 350,000 individual beneficiaries (work experience, vocational training) could take advantage of the Plan’s resources.

The Action Plan includes the continuation of existing measures that work well, the creation of new actions that can respond to the crisis-related needs of the Greek economy, as well as the adoption of a series of measures that focus on SMEs (such as improving the business environment to boost entrepreneurship, providing support to innovative firms or streamlining banking procedures). Beyond the funding available from the ESF programmes outlined above, this Plan hinges on the successful and rapid implementation of legislation such as the recently adopted Law 4072 of 11 April 2012 on Business-Friendly Greece.

Indeed, at a time when one out of three firms is shutting down and one out of five Greeks is unemployed, conventional approaches to supporting entrepreneurship and tackling unemployment may not be sufficient. In addition to measures that will enhance the growth potential of the economy in the medium and longer term, we need to devise solutions that are able to directly kickstart the process of job-creation.

In this context, it would be worth considering the following practical steps which could facilitate the successful implementation of the Action Plan:

For ESF-financed programmes: greater flexibility and expansion of ESF eligibility criteria, such as financing the maintenance of jobs and welfare-related actions.

For the programmes supporting youth entrepreneurship: a reduction of the business contribution rate in the co-financed structure (e.g. to 20% of the total investment cost); expansion of eligibility of operational expenses, for a certain period of time (e.g. the first 2 years of the new business); review and redirection of EU structural fund resources not yet absorbed, in favour of new entrepreneurs; more flexible terms for new enterprises with regard to the maintenance of job positions; amendments to the procedures for calls for expression of interest (rolling invitation) and for proposal assessments.

For the programmes supporting entrepreneurship in general: rewarding genuinely innovative entrepreneurial ideas and the creation of high value-added enterprises; investigating the possibility of providing loan guarantees and enabling low interest rate loans with simple procedures, at least for NSRF action-eligible recipients; expansion of the limits for state aid carried out under de minimis.

4. Privatisation programme

In March 2012, steps were taken by the Hellenic Republic Asset Development Fund S.A. (HRADF) regarding the second international tender procedure for the Hellenic State Lotteries, and the invitation for expression of interest for the privatisation of Hellenikon S.A. The relevant provisions on Hellenikon were adopted in Law 4062 on 27 March 2012.

More generally, the regulatory framework and EU state aid provisions remain a key component of the privatisation programme: it is important that assets under privatisation enjoy the highest possible legal certainty according to European law, and that privatisation is implemented in a manner that does not raise issues of state aid or other uncompetitive practices.

To ensure legal certainty and compliance with state aid provisions, the HRADF has submitted, and will continue to submit, to the Commission services information concerning the legal and financial status of assets under privatisation, as well as information on the privatisation process envisaged for each asset (i.e. privatisation structure and tender procedure).

This will allow the Commission services to identify potential state aid issues that might arise, and ensure that such issues are addressed in a timely manner1.

Against this background, I expect that the privatisation programme will continue to receive the guidance and approval of the European Commission from a state aid perspective.

With respect to the privatisation of assets such as motorways, regional airports, ports, lotteries, water and sewage infrastructures, certain public policies need to be developed and regulatory reform is necessary before the transfer of such assets to private operators can take place. The Greek authorities are making progress in this regard to ensure the successful conclusion of the privatisation of the relevant assets.

Additionally, the transfer of state monopolies to the private sector has to be accompanied by the strengthening of the relevant regulatory regime, as also foreseen in the second economic adjustment programme. In order to further develop public policy and to ensure technical soundness, the Greek government has requested technical assistance from the TFGR in several relevant aspects.

5. Policies in the energy sector

Greece’s energy sector is of strategic economic importance and can play a key role in fostering growth over the medium to longer term. With regard to the “Helios” project, this has significantly progressed in all its aspects (financial modelling, land availability, grid connectivity, licencing process), with intensified meetings with the European Commission, the German Environment Ministry and the EIB. The Greek government has appointed financial advisors for the project who have worked on the financial modelling.

A solar Geographic Information System (GIS) has been developed, and available public and municipal land for the project has been identified. A collaboration agreement was signed between the EC Joint Research Centre and the Ministry of Environment, Energy and Climate Change, on technical assistance in determining optimal transmission routes and the necessary infrastructure investments for full-scale deployment. The Helios legislation (Law 4062/2012) provides for the creation of Helios S.A., the management of the project, licencing procedures and land parcels selection issues.

As regards the functioning of the energy market, Greece was among the first member states to adopt the third EU energy package. In electricity, Greece has chosen the ITO model as a first step to full ownership-unbundling that is planned over the coming years. Over the last two months, the new Transmission System Operator company (ADMIE, a 100% subsidiary of PPC) has become operational and has assumed the ownership, control, operation and planning of the High Voltage System. At the same time, the new market operator LAGIE (a successor of the previous grid and market operator company DESMIE) has started operating the day-ahead wholesale market.

At the end of March, the new distribution operator (DEDDIE) was also established so that Greece now has separate entities for the operation of the transmission and distribution networks, and for the wholesale market. In the retail market, Greece has been stepwise deregulating the PPC tariffs since the end of 2010. At present, the only tariffs still regulated are those of Low Voltage clients. The final deadline for fully deregulating these tariffs is June 2013, in line with the second economic adjustment programme.
Regarding the natural gas sector, Greece has pursued the development of pipeline projects that cross the country (ITGI, IGB, South Stream, TAP) which will increase liquidity in the gas market.

For a Greek gas hub to be established, it is necessary that more participants become active in the gas market. This goal is also served by the expansion of the existing LNG storage facility in Revythoussa, to be completed by 2014. The gas hub needs also price signals and this is currently served by the monthly average gas price published by the regulator. The first amendment of the gas Grid Code last autumn has also increased transparency in the grid access, facilitating the use of the grid by an increased number of market participants.

The gas sector will be further transformed following the privatisation of DEPA currently underway (17 companies have expressed interest). At the same time, Greece is also actively engaged in exploring its hydrocarbons potential through seismic surveys and tendering using an “open door” policy.

6. Accelerating the absorption of EU funds

With regard to the faster implementation of the National Strategic Reference Framework, the aforementioned Law 4072 of 11 April 2012 also foresees measures to speed up the funding of ongoing projects held up due to regulatory bottlenecks, bank liquidity shortages and firm financing constraints. In addition, a general action plan initiated in June 2011, as well as an action plan for technical assistance, were drawn up and addressed to the Commission and TFGR services, consisting of concrete administrative measures to reduce bureaucracy and streamline procedures relating to new and ongoing projects.

These measures were already implemented with significant results at the end of 2011; new measures are being implemented, with deadlines between April and September 2012, and are expected to further enhance the flow of existing funds into the economy. They relate to the simplification of the Management and Controls System of the NSRF and include:

- Speeding up the screening of projects and the amendment of checklists, thus reducing the time spent for proactive checks while improving the quality of tenders (schedule for completion: end of July 2012).

- Clarifying and standardizing the cases where amendments of approval decisions are necessary (schedule for completion: end of April 2012).

- Reducing the budget lines per Operational Programme (OP). At the moment, there are over 250 budget lines used under the Public Investment Budget and the target is to reduce them to 27 lines, saving time and effort for Management Authorities and beneficiaries (schedule for completion: national regulatory changes expected by end 2012).

- Simplifying cost structures mainly for ESF projects. Specific proposals on this subject have also been made by the TFGR (schedule for completion: end of May 2012).

- Signing power transferred from Deputy Minister to senior management level. This will reduce necessary signatures from 9 to 3, and the time needed for each payment from 1 to 3 months to about 5 days (schedule for completion: end of April 2012).

Implementation of these measures is expected to lead to an acceleration in payments for already contracted projects of up to € 2.3 billion in 2012.

Law 4055 of 12 March 2012 partly addressed relevant judicial procedures. In addition, as stated under section 1 above, the initiatives taken in cooperation with the Commission and the EIB to activate relevant financing instruments will help mitigate the liquidity shortage in the economy.

7. The continuing importance of EU structural funds

A broader issue of high importance for my country concerns the Multiannual Financial Framework (MFF) 2014-2020. As a number of the above points show, the Union’s budget, which co-finances EU structural funds, can be an essential development tool, especially in times of crisis. EU structural funds will undoubtedly help the Greek economy overcome the prolonged recession, implement the second economic adjustment programme, and return to a sustainable growth path in the coming years.

In this regard, as the MFF negotiations advance, I take the opportunity to highlight the need to find workable solutions especially for EU member states in extraordinary circumstances. One specific issue is the impending abrupt and very significant loss for Greece of EU funds due to, inter alia, the change of status of several regions.

The Attiki region in particular, which accounts for a large part of the Greek population and GDP, is facing an economic and social crisis. In the same context, the priorities of the EU Agricultural Policy in the new MFF should not lead to an abrupt interruption in the financing of a key sector for the Greek economy at this point in time.

In conclusion, I would like to make two additional remarks. It is well understood that the successful implementation of fiscal consolidation and structural adjustment crucially hinges on the far-reaching reform of the Greek state. The long-standing structural weaknesses of the public administration and. more broadly, the general government sector have been a source of misallocation of resources, diminished effectiveness of policy implementation, impediments to private sector entrepreneurship and. indeed, social injustice.

For this reason, state reform constitutes a top national priority and a key element of the second economic adjustment programme, with a strategic focus on areas such as: tax policy and revenue administration reform; land registry; regulatory and judicial reform; public administration and local government restructuring, and the establishment of a stable inter-ministerial coordination structure under the Prime Minister’s Office.

In all such areas, the government, with the valuable technical assistance of the TFGR. is implementing a fully-fledged reform programme, the successful completion of which will significantly enhance the policy capacity of the state and the growth potential of the economy.

Finally, I would like to express the Greek government’s appreciation for the ongoing, multi-faceted support of the European Commission to Greece. I would further like to underscore the importance of the aforementioned policies, which will also be addressed in the Commission’s forthcoming Communication. The implementation of these policies will be complementary to the growth-enhancing structural measures of the second economic adjustment programme.

The mutually reinforcing nature of this two-pronged strategy should bring forward the recovery of the Greek economy and forge the foundations for sustained growth.

Yours sincerely,
Lucas Papademos

Lucas Papademos: What has been accomplished recently – adoption of a new economic programme for 2012 to 2014, approval of a second financial package and the restructuring of public debt – should play an important role in gradually reducing uncertainty and boosting confidence among the Greek people and in the markets. The key element to restoring confidence will be to implement the new programme in a timely and effective manner. At the same time, it would be helpful to address the short-term negative side effects of the adjustment programme by complementing it with policy measures that can help support economic activity and employment over the short and medium term.

FT: Additional measures to what we have already?

LP: Yes, complementary measures. We all know that implementing some growth-enchancing reforms, as well as their effect on the economy, take time.

FT: Are you suggesting a Marshall plan?

LP: Well, different people use this term in different ways. What we are trying to pursue in co-operation with the European Commission and the European Investment Bank is a set of measures that can help address the shortage of liquidity in the banking system by utilising available [European Union] cohesion and structural funds as a guarantee that can allow the EIB to provide funding to the Greek banking system, which in turn can increase its lending to small and medium-sized firms. Similarly, we are exploring the use of a risk-sharing financial instrument that can improve the funding available for investment projects, including the large highway projects that have been stopped for more than one year. More generally, it will be necessary to improve further the rate of absorption and use of the available structural and cohesion funds.

FT: How much supplementary support might there be from the EIB?

LP: The magnitude that is being discussed regarding the financing of SMEs is about €1bn – so not huge but it could play an instrumental role in easing the liquidity constraints faced by banks and providing funds to SMEs, which have been severely affected by the credit crunch.

FT: Some economists and politicians believe a much larger-scale “Marshall plan”is needed, financed maybe by governments or private funds. Do you think that would help?

LP: Given the size of support received from European governments, I don’t think there is scope for additional government funding.

FT: The fear of course is that you will have a downward spiral of fiscal austerity, economic contraction, more fiscal austerity, and you have to break that.

LP: Yes of course, absolutely. How can we break this? Over a period of time the positive effects of the programme on economic activity will gradually become visible. However, in the short term we are still experiencing negative side effects: the continuing recession and the rising unemployment to very high levels. So, if the programme is complemented with some additional policy measures, it should be sufficient – if implemented effectively – to break what you call a downward spiral and to start a virtuous circle of structural reform, increasing activity and faster fiscal consolidation.

I think it’s important to highlight what the first programme has achieved so far because reality is much better than the image. First, with regard to fiscal consolidation, in two years the primary budget deficit was reduced by 8 percentage points of GDP. This is the largest average annual fiscal consolidation that has taken place not only in the EU but among OECD countries. Second, with regard to competitiveness gains, in two years 2010 and 2011 – and before the far-reaching labour market reforms that we are introducing now in the context of the second programme – the country gained competitiveness equal to about a half of the competitiveness lost vis-a-vis euro area partners in the nine years before. Third, according to the latest OECD Going for Growth report, Greece is listed as number one in terms of overall responsiveness to reforms.

Of course, a negative aspect of the first programme has been its short-term economic side effects. The weakening of economic activity and the increase in unemployment were greater than initially expected. I think this happened for three reasons. First, there have been implementation gaps, particularly with regard to the growth-enhancing reforms. Second, the external environment turned out worse than initially expected. Third, a major factor has been the reduced confidence and the increased uncertainty over the past year-and-a-half. That has not only affected consumption demand and investment activity, but it also had a major bearing on the banking system, because it encouraged outflows of deposits, therefore compounding the shortage of liquidity that the banking system faced.

If confidence is restored then we can move into a virtuous circle. I’m not saying this will happen in the next few months, but provided the policies are implemented fully then there is good reason to believe the economy will start gradually recovering in the second half of next year [2013].

FT: Why should we think implementation should be better now when the record has been so bad?

LP: There have been implementation delays and gaps – there is no question about this. Some steps have already been taken to improve implementation but their effects are not quite visible yet. Since last summer, Greece has asked for technical assistance from the European Commission. Recently, for example, important steps have been taken in order to improve public administration. There are other projects that aim to improve the effectiveness with which taxes are being collected and to streamline various processes that create obstacles to investment. The provision of technical assistance by the Commission and European Union member states should help improve implementation.

A significant factor that can help to this end is that now Greece’s two major political parties are committed to the new programme. I think this political factor can play a role in improving the efficiency and speed with which policies are implemented.

FT: Germany says you should delay the elections …

LP: There is no such issue. This government is now completing its mission and there is agreement with the political parties to proceed with elections by early May at the latest. When this government was formed in November 2011, there was an agreement among the parties that after a number of key objectives were achieved – adoption of a new economic programme, approval of a second financial package, the restructuring of public debt – elections would be held. The Greek people should now have the opportunity to express their preferences on key policy issues affecting the future of the country.

FT: Would you be prepared to carry on after the elections if you were chosen to be prime minister?

LP: It would not be appropriate before the election to disclose any such preference. I do not wish to be involved in the pre-election debate.

FT: What about in another capacity, as finance minister?

LP: The answer is the same.

FT: Was the lack of confidence in Greece exacerbated by the way the rest of the eurozone reacted to Greece – for instance the whole debate about “private sector involvement” in Greece’s debt restructuring?

LP: Different factors contributed to the gradual deterioration of confidence over the past two years. One reason was that policies were not implemented in a timely manner. An earlier implementation of policy actions at national and European level – essentially the policies that were eventually adopted – would have contributed to containing the intensity and the scope of the crisis and would have helped contain the deterioration in confidence.

FT: You were on record in the Financial Times as opposing PSI. Was it a mistake?

LP: I don’t think that PSI was a mistake. What I was saying in that article was that it was important to balance carefully the benefits and the risks associated with the private sector involvement. In the case of Greece, PSI was inevitable, given the size of the public debt and its expected dynamics. What was important was to understand the net benefits vis-a-vis the risks, and take steps to minimise the potential negative consequences.

FT: Do you think a further restructuring of Greece’s debt might be needed at some point?

LP: The full and effective implementation of the new economic programme should eliminate such a possibility. We will do whatever is needed to ensure that this was the last restructuring of Greek sovereign debt.

FT: Does it help confidence when the German finance minister now talks about a possible third Greek bail-out and there is a discussion about Greece leaving the eurozone?

LP: Well, I think this simply reflects the fact that one cannot predict with precision the exact time when the country can regain access to the markets. It may happen in three years, it may happen over a longer period of time.

If by 2015 market access is not possible then it may be necessary to rely more on official funding. It has been explicitly stated that euro area governments will continue providing adequate support and beyond the life of the programme until Greece has regained market access, provided of course that Greece fulfils its obligations. So what [Germany’s finance] minister Schäuble said is in line with what has already been stated and it is conditional on the access to markets. The intention of this government – and of future governments I am sure – is to implement the programme as effectively as possible so as to return to the markets as quickly as possible.

FT: In 2015?

LP: The timing cannot be predicted with precision. It is difficult to say now what the market expectations will be in three years. I am optimistic that, following what we have done, we are standing on more solid ground than a few months ago. I personally feel confident that the economic adjustment process and the efforts that are being made will be continued in the future. Why? Because this is the will of the majority of the Greek people. The will of the majority of the Greek people will be taken very carefully into account by the political parties that will form future governments.

Almost all opinion surveys have systematically indicated that a large majority of the people – I have seen figures ranging between 70 per cent and 80 per cent – very much support Greece’s continuing participation in the euro area and this implies that, despite the sacrifices and the short-term adjustment costs, they are willing to do what has to be done in order for the country to remain in the euro area.

Why is this the case? The country is in the fifth year of recession, unemployment is about 20 per cent, youth unemployment is close to 50 per cent, isn’t there an alternative way of achieving the adjustment? I believe that a large majority of the Greek people realises that the long-term benefits from Greece’s continuing participation in the euro area are much greater than the short-term adjustment costs. They understand that securing fiscal sustainability and restoring competitiveness in a permanent manner can be achieved more effectively within the euro area than outside.

A large silent majority – and they are not the people demonstrating in the streets – understand that the price stability that the European monetary union entails and the fiscal discipline that it requires imply benefits for the country, and that the adjustment process is going to be more effective within the euro than outside.

FT: But do the Greeks really want to be run from Brussels and isn’t there great resentment about pressure from Germany?

LP: Participation in a monetary union requires a certain loss of economic policy sovereignty, because fiscal policy in particular has to be compatible with the single monetary policy and therefore certain rules have to be applied and a degree of coordination has to be achieved. Otherwise there will be imbalances that will have adverse implications for the functioning of the economy. This is accepted by every country that has joined the monetary union.

A country like Greece, that is under a programme that receives financial support from its European partners, is subject to additional economic policy conditionality. But once the adjustment process has been completed this will end.

I believe, however, that one should make a distinction between loss of political sovereignty and a reduced degree of economic policy sovereignty.

In any event, the policies which are being implemented do not imply any fundamental loss of political or democratic sovereignty. Such a loss would be unacceptable and inappropriate. Both the first and second programmes were debated and approved by the Greek parliament – the latter one by a huge, two-thirds majority. On the basis of survey results, they have been supported by a majority of the Greek people.

The economic adjustment programme does not entail an external imposition on the political process. Democratic sovereignty has not been affected.

FT: When you were at the ECB, you argued that monetary union appeared to slow down structural adjustments in the eurozone. Does Greece not illustrate fundamental flaws in the eurozone?

LP: There is no doubt that the crisis demonstrated – let me put it positively – the need to strengthen the economic pillar of the economic and monetary union. It demonstrated that the fiscal policy framework was not sufficiently effective, particularly during a period of stress. In the light of the experience of the past two years, the euro area governments have taken a number of key steps in order to strengthen the economic pillar of EMU so as to enhance crisis prevention and crisis management and to ensure that the economic policies of countries in the monetary union are sufficiently coordinated given the constraints imposed by the monetary union and the integration of economic and financial markets.

FT: Otmar Issing [the ECB’s former chief economist] described the monetary union as an experiment? Is it still an experiment?

LP: It is an experiment because the economic and monetary union we established has no historic precedent. It started by placing greater emphasis on the single monetary policy and less so on a strong economic union and it was established by sovereign member states. But why will it work? Despite delays, significant steps have been taken in the direction of completing EMU so as to secure its more efficient functioning – and its future.

Markets and policymakers outside the euro area have underestimated the commitment of euro area governments to move forward and secure the future of the monetary union – despite the market strains, the economic difficulties and the political concerns expressed within the euro area.

FT: Can Greece remain within the monetary union given the scale of its challenges?

LP: In my mind there is no doubt that the country will remain in the monetary union. The overwhelming majority of Greeks believe that restoring fiscal sustainability and competitiveness can be achieved in a more effective and permanent manner within the euro area rather than outside. What is key is policy implementation and not to repeat past mistakes. If this is done, I see no problem. In the middle of an adjustment process it is inevitable that there will be painful output and employment costs. But I am convinced that this will be a temporary situation.

It is difficult to predict the exact timing of the recovery and the pace at which unemployment will be absorbed. But on the basis of available projections, in about two years the economy should recover. The IMF is predicting that in 2014 and in 2015 growth rates of 2.5 per cent and above will be realised. The policies being implemented will eventually restore growth.

I am convinced that we are more than halfway along the path to economic recovery – although the fiscal consolidation process will last longer. Positive growth rates should be achieved within less than two years down the road.

FT: Do you believe the leaders of the Socialist and New Democracy parties are really committed to the reform programme?

LP: Yes. They have explicitly stated and given written assurances that they are committed to the objectives and policies of the programme.

FT: You have sat down with them privately, do you believe them?

LP: Until November, there were different and opposing views on the programme. But over time, and perhaps this has been one contribution of this coalition government, we have forged a higher degree of consensus on the new programme – both on its objectives and the means of achieving them.

In mid-February, 43 MPs from both parties who voted against the programme or elements of the programme were expelled. So among the two main parties there is now greater cohesion in supporting the programme. During the election campaign you may hear some nuances, but I believe that there is an understanding that the only way forward is to pursue the policies that are included in this programme.

FT: Is it right that you are strengthening the office of prime minister?

LP: We have started the process of reforming public administration and one objective is to improve coordination between ministries and the surveillance of their work. This is going to be done from the office of the prime minister. It will require increasing the number of staff and creating a unit that will focus on the more effective surveillance of the tasks carried out by the various ministries.

FT: You are creating a chancellery?

LP: It is not going to be as large as in Berlin (laughter).

FT: Is the aim to ensure that your successor has to stick to the same policies?

LP: The aim is to improve coordination and ensure continuity of policy implementation. Lack of continuity is part of the problem. Some of the staff, particularly those involved in surveillance of policies, should be permanent and not change every time a new government comes into power.

FT: You said there was the political will in Greece to do what ever is necessary to stay in the euro area. Is that consensus there elsewhere in the eurozone? You are familiar with the debate in Germany, the Netherlands….

LP: My answer would be positive, without underestimating the tensions that have surfaced over the past two years. The last two years have not been, let’s say, “normal”. But some of the institutional and treaty changes would have been totally inconceivable two years ago. And the policies adopted in Greece – structural and fiscal – would also have been inconceivable two years ago. The crisis created an opportunity. Greece is changing. What is important is to persevere, so the sacrifices of the Greek people are not lost. I’m aware of the scepticism, but in the light of the policies adopted, I think you can be confident that the future of Greece in the eurozone is secure.

FT: How did it feel moving from being an academic economist and central banker to becoming a politician, a prime minister?

LP: It was definitely a new experience, there is no doubt. At the ECB, we had to face many policy challenges that were evolving over time. But the challenges that I have confronted over the past four months have been wider in scope and greater in intensity. This country was on the brink of collapse in November, and ensuring that we would avoid a catastrophe and that a new financial package would be agreed upon was an extraordinary task.

FT: Were you tough enough?

LP: I think that the process I followed turned out to be appropriate in the end, although in the first few months there were some difficulties in reaching a consensus on policy matters and ensuring the effective functioning of the government. But over time I have seen that not only has a consensus been built but also a sense of trust between members of the cabinet – as well as greater understanding between the political parties on the need for the policies that we have agreed. In this country there is no tradition of coalition governments – so this was also an experiment.

J.-M. BARROSO Good afternoon, ladies and gentlemen. It was indeed a great pleasure to have held this important, constructive meeting with the Prime Minister and our colleagues from the Commission and the Greek government.

Let me begin by paying a sincere tribute to Prime Minister Papademos, who has skilfully steered his country through incredibly rough waters these past few months.

The aim of this meeting was simple: to see how we can work more effectively together, to enable Greece to make the most of its cohesion funding at this critical time, and also to see how we can, with this reinforced monitoring and reinforced technical assistance, do more to create hope, hope for Greece. We want to seize this moment, to help get the Greek economy moving again.

I believe this is the right moment to step up our work on growth for Greece. The second programme has been agreed in principle; it will be formally launched next month, provided that these conditions are met, and the private sector bond exchange is successful. And I am very confident that this will be the case.

The second programme has a very strong focus on reforms that we believe will transform the capacity of the Greek economy to generate growth and jobs.

It is important that this is recognised, so that the second programme does not, like the first, suffer from misperceptions as being all about fiscal consolidation. Of course, fiscal consolidation is indispensable, but this is not just a programme of fiscal consolidation.

It is a programme for structural reforms, competitiveness and growth in Greece.

What we are doing is working with Greece to help address deep-seated problems of competitiveness, problems which have simply become unsustainable. This is a huge task. None of us underestimates the scale of the challenges or the obstacles that still lie ahead. But at least progress is being made.

But you must realise that, even if implementation is swift and effective, it will take time for the full benefits of these reforms to be felt. They are structural reforms that take some time to produce results.

And I believe that most of the Greek people, most of the people in Greece, understand that, as in other countries that are now very exposed they also understand that.

But the question now is: How can we accelerate some programmes that can give a concrete support for Greece, support for growth, support for the creation of jobs, and also to mitigate the social impact of some of the measures.

That’s why it was important to have this meeting today, not that the Commission’s support to the Greek adjustment efforts only started today. The task force for Greece, which I set up some months ago, is on the ground and is already making good progress, in providing technical assistance and helping to make sure that you make the most of the EU structural funds.

But I believe that more can be done. There are over EUR20 billion in structural funding available to Greece for the 2007-2013 period. We have already released more than EUR8 billion in payments, but there is scope for doing much more before 2013. And we are already giving priority to the payments to Greece.

This means also that you need to get essential growth-enhancing projects off the ground. We have identified a number of these, which could give a particular boost to investment and employment.

So helping Greece is not necessarily about increasing the financial envelope for the country. It is mainly about using effectively and swiftly what we have. And you should have no illusions. The crucial part of the solution is of course in the hands of the Greek government, the Greek administration, at the end of the Greek people.

The Commission is fully ready to help the Greek authorities in this regard. We also want to help ensure that funding reaches the real economy as swiftly as possible and it is not held up by administrative obstacles or not passed on to the real economy by banks.

That’s why we have discussed today many concrete issues: for instance, the SME guarantee fund, the risk sharing instrument, projects that are some more advanced than others, and we have committed, Prime Minister Papademos and myself, at the end of the next month of March, to make an assessment of progress in these and other areas, many concrete areas that were exposed on the Greek side and also by the different Commissioners and also the participation of the head of the task force and the several director generals.

To conclude, I know there are doubts outside Greece and sometimes also inside Greece about the success of this programme. But my question is the following: Why shouldn’t Greece be able to do it? Why not? I believe Greece is perfectly able to make this effort for structural reforms. We have seen in other countries that this was possible, so Greece can, I am sure, do it, and I am sure that we together can make it successful.

That’s why I want to conclude by thanking you very much, Prime Minister, and also expressing, I hope in my not-very-good Greek, the following: Ναι, η Ελλάδα μπορεί. Μαζί η Ελλάδα και η Ευρώπη μπορούμε. Thank you.

L. PAPADEMOS Let me start first by thanking President Barroso for his very kind words, and also to thank him for organising this meeting that focused on crucially important issues for Greece.

Over the years, the Commission has provided very valuable support to my country, and I would like to take this opportunity to thank again the Commissioners, the Task Force for Greece, as well as the Commission services, for their support to our efforts, especially over the last two very difficult years.

Now, as President Barroso said, during the meeting that was held today, in which a number of Commissioners also participated, we discussed a wide range of issues. But among these issues I would like to emphasise on two. The first was how to better absorb and effectively use the available EU funds, the structural, regional and social funds.

And second, we discussed the definition and elaboration of concrete policies and financial instruments that can support economic activity and foster job creation, especially over the short and medium term.

The new economic programme that was recently adopted by Greece and voted in the Greek Parliament, the second financial package for Greece that was agreed upon in the Eurogroup last week, and also the private sector involvement in the refinancing of Greek sovereign debt, are also very important steps that will improve the economic prospects for my country, and they will also establish conditions that are conducive to higher and sustained growth.

In particular, the new economic programme, as also President Barroso underlined, is comprehensive and appropriate, and it includes a wide range of reforms, some of which are very bold and far-reaching, that will improve efficiency both in the private sector and the public sector, will restore competitiveness, and therefore will foster higher sustained growth over the medium and long term.

However, in the short term, the fiscal consolidation process and the shortage of liquidity have adversely affected economic activity and employment, and have had serious consequences on social welfare, as well as for the effective implementation of the programme.

For this reason there is an urgent need to complement the policies and reforms included in the second economic programme for Greece, with concrete measures and other actions that can have an immediate and positive impact on economic activity and employment, and also help address the social consequences of the adjustment effort.

Now, during the meeting a number of the policies that were discussed and were agreed upon were, first, the establishment of a guarantee fund for small and medium-sized firms, using structural funds as guarantees and the leverage of the EIB; second, a risk-sharing instrument to finance infrastructure projects and other important investment projects, again using structural funds and EIB leverage.

We also discussed measures that will help accelerate the absorption of EU funds, by making the procedures simpler and more effective, as well as actions to be taken related to some very important strategic projects for Greece, such as the Helios project, which will exploit the country’s comparative advantage in renewable energy sources.

Now, the implementation of these measures will of course require strengthening the administrative capacity in Greece to absorb EU funding, but also it will require continued close collaboration between the European Commission and the Greek authorities. And we are looking forward, in the coming days and weeks literally, both in order to fully implement the new economic programme that has been adopted, but also to implement the complementary actions that have been discussed and agreed today, that aim at fostering economic growth and job creation in the short term.

So this government will do its utmost to implement fully and effectively both the programme and the complementary actions, and I want to thank you again for your initiative today and for working together in the future for supporting Greece. And I would add to your remark at the end: Μπορούμε, και θα το κάνουμε.

MODERATOR Thank you very much, President. Thank you, Prime Minister. We only have time for a couple of questions before the President and Prime Minister have to move on. Please state you name and the media you represent.

M. STEVIS (Dow Jones Newswire & The Wall Street Journal) I have a question regarding a proposal by Eurogroup Chairman Jean-Claude Juncker this morning. This is a question for both the Prime Minister and the President. Mr. Juncker this morning in an interview proposed that Greece get a restructuring, for a lack of better translating, commissioner, to oversee the return of the country to normality and growth. Is this a proposal that is interesting to you? Would you accept that, and how would that be implemented? Thank you.

J.-M. BARROSO I already answered this morning. It’s better to listen to the opinion of the Prime Minister of Greece, I believe.

L. PAPADEMOS Well, what I would like to say here is that the new economic programme for Greece will be implemented by the Greek government and the Greek authorities, and in doing that we welcome the support of the European Commission, the Commissioners themselves and the Commission services. And I think this is sufficient, our own work and the cooperation with the Commission ensure the effective and full implementation of the programme.

J.-M. BARROSO What I can be more precise on, in terms of the management of the programme by the Commission: We have here two lines. One is the reinforced monitoring of the programme, approved now by Greece and by the Eurogroup, following a proposal of the so-called Troika, so the Commission, the ECB and the IMF.

That programme was approved by Greece, the government and the Parliament, and was approved unanimously by the Eurogroup. Now, the Eurogroup gave a mandate to the Commission to an increased monitoring of this programme. We will do it, and we are doing it.

At the same time, we need to increase the technical assistance to the implementation of the reforms that are under way in Greece. That is why I have created, already some months ago, a task force, a task force here in the Commission, but that not only makes the coordination of the expertise of the Commission but also with member states experts that are willing and in fact are already participating in this technical assistance.

And so in terms of afterwards of the management, we need – and that was precisely one of the requests of the Greek government – we need to mainstream, we need to integrate those elements. It makes no sense in terms of management to be doing one thing with one hand and the other thing with the other hand.

The important thing is to make these reforms happen. The programme that was approved is not just, I insist, a programme of fiscal consolidation. It’s a programme of structural reforms, an extremely ambitious programme for relaunching the conditions for growth in Greece.

And internally in the Commission this task force reports directly to the Vice President of the Commission for the euro and to myself directly. I am making this a priority for the Commission, not only for one Commissioner, for all the Commission, because in fact, and as we have seen now just in this meeting, this touches many areas. This does not touch only one Commissioner. From the Social and Employment Commissioner to the Agriculture Commissioner, to the Cohesion Fund or Regional Policy Commissioner, to Energy, we have discussed today many important projects in terms of energy.

To many other areas this involves all the administration in Greece, but almost all the departments in the Commission. And what we are going to do now is to implement these reforms, or, to be more precise, the Commission is going to support the implementation of these reforms, because this is a responsibility above all of Greece.

No solution can be found outside Greece. We are here outside supporting Greece. So it is an illusion to think that someone outside Greece is going to solve the problems of Greece. It is the structural reforms that Greece is making, and the authority of its democratic institutions, that can have a success. The ownership of the programme is critical.

And what we can and we are doing, the European Commission, the Eurogroup and others, is precisely to support those extremely challenging efforts.

MODERATOR Thank you very much.

L. PAPADEMOS As I explained some time ago in my speech in Parliament when the new economic programme was discussed and approved, the responsibility for the implementation of the new economic programme rests with the Greek government, the Greek Parliament and the Greek people.

So the Greek people are the owners of the programme, and I think it’s quite important, as President Barroso said, that the services provided by the task force for Greece and the other Commission services are now more integrated and cooperating together, in ensuring the more effective implementation of the programme.

MODERATOR Thank you very much. Greek television and BBC asked for the floor at the same time, so if the President allows just two short questions, the Greek question first. Go ahead.

Th. ATHANASSIOU (ERT3) The Commission had been supporting Greece for the reforms with surveys and essays for more than ten years, and we know the proposals are very specific for the last ten years. What makes you think that this time is going to be different?

J.-M. BARROSO First of all, because people learn. And now the sense of urgency is completely different.

As I said earlier, just now Greece has approved a very ambitious programme. Frankly speaking, that kind of programme would be unthinkable some years ago. And why did the Greek government and the Greek Parliament support this programme? Because they believe it’s the best solution for Greece, and that indeed there is no other alternative, to be frank. There is no other alternative.

And I think that when there is no other alternative people understand much better the urgency of the tasks ahead. And also in the euro area there is this sense of urgency. So I believe now what we have is a sense of urgency that frankly there was not before.

And also this programme has nothing to do with the traditional reports that we can do from outside. This is a programme with a strong ownership by the Greek authorities but also with a reinforced monitoring by the Eurogroup and of course by the Commission. So all this makes me believe that it is perfectly possible, and not only possible but probable, that this programme is going to work.

L. PAPADEMOS Let me add two remarks one concerning the past and one concerning the future.

It was implicit in your question that very little has been accomplished in the past. And I would like, in response, to mention two numbers, because I believe that reality is better than the image.

Over the past two years, the fiscal adjustment that has taken place in Greece is impressive. In a period of two years, the primary deficit of the public sector declined by eight percentage points of GDP. If this is not substantial fiscal adjustment, I don’t know which one it is.

Second, as competitiveness is a very important objective – it was an important objective of the first programme and it’s a very crucial one for the second programme – let me mention that over the past two years competitiveness, as measured by relative unit labour cost, against all our trading partners, 37 trading partners, improved by one-third. That is, in two years we restored competitiveness by one-third, relative to the competitiveness lost in the previous ten years. And the competitiveness gained in two years vis-à-vis the euro area and European Union partners is equal to one-half, 50%, of the competitiveness lost in the previous ten.

Now, looking forward, the reforms, particularly the reforms that will be introduced both in the labour market and in the product and services market, I am fairly convinced that they will fully restore competitiveness over the period of the programme, over the next three years. And I am fully convinced that the majority of the Greek people – and what I am saying is reflected in recent polls that were taken after the new programme was adopted by the government – are fully supportive of the programme.

Indeed, according to one poll, 67% of those surveyed said that they were looking forward to the successful implementation of the programme, because they realise that there is a need for change in the country, for reforming the functioning of the economic and of the public administration, and for achieving sound public finances, which can provided the foundation for sustained growth.

So in two sentences, a lot has been accomplished in the past, more than often recognised. And second, I believe that, on the whole, despite differences of views of course by some, there is strong support by the Greek people for moving forward and implementing the new programme in addressing both the competitiveness and fiscal problems.

MODERATOR Thank you, Prime Minister. A last quick question to the BBC.

C. MORRISON (BBC) Prime Minister, it’s clear that Greece has lost the trust of significant political elements in countries like Germany, the Netherlands, Finland. How do you restore that sense of trust?

And Mr. President, are you confident that all euro members share your confidence that this programme can actually work? Because even though you both say the solution lies in Greece, this is a Greek programme, without that sense of trust and confidence, how do you have the time to implement the pro-growth measures that you both say you want to put into place?

L. PAPADEMOS: Well, you restore trust through actions, as well as by conveying in a more effective way what has already been achieved.

I gave you two very simple examples that I have found again and again in recent weeks that are not fully known.

But you restore fundamentally the trust and the confidence through the full and effective implementation of the programme in the coming years. and I think the Greek people are ready to do that, and I think better communication can also play an important role to achieve the objective of improving understanding, I would say, and confidence.

J.-M. BARROSO Let’s be honest: There have been problems of confidence. We know that. And that also was aggravated by the fact that sometimes in Greece important voices were questioning themselves the programme, and also outside Greece, and also sometimes outside Europe, important voices were questioning all these efforts.

But I believe the best answer to your question is very simple. Unanimously the member states of the euro area now decided a new programme, a programme that will amount to EUR130 billion. Do you believe people put EUR130 billion if it believes it not going to work? That’s the best answer.

If you ask the 17 members of the euro area committing to a new programme to support Greece and loans that can go up to EUR130 billion, apart from what was already given as a loan, I think this is the best, the best evidence that they believe it will work. If not, it would not be a responsible decision. I don’t believe that the Finance Minister has approved such a programme thinking that it will not work.

So in fact we have an obligation of success. Probably I am saying this more emphatically than others, but someone has to be very clear about this. I don’t think that we can put a lot of money in the table like that – and it’s a lot of money by any standards – and believing that money is going to be lost.

No, the euro area member states unanimously – and we are grateful for their effort – have decided to commit that money because they believe they are going to get paid. Of course. That I think is the best evidence that the programme is going to work.

And of course it will be of some help if some of those that are – I can use a Greek expression – the Cassandras, the professional Cassandras, always giving up to the intellectual gloom of pessimism, one day start thinking that it may work and that sometimes sceptics are wrong.

MODERATOR Thank you very much, President. Thank you, Prime Minister. Thank you all for coming. This concludes our VIP corner.

Your Excellency,

Thank you for your letter dated January 22, 2012, which was conveyed to me through your Deputy Prime Minister Mrs. Arifi during her recent visit to Athens.

I also wish to assure Your Excellency of the commitment of Greece to continue and enhance its longstanding policy for peace and stability in our region. To that effect and in the context of cooperation in the Western Balkans, Greece has always actively and consistently worked to promote good relations with and among all its neighbours. This principle remains a cornerstone for progress and constitutes a necessary element for the achievement of our common goal in this respect: the Euro-atlantic integration of all countries in our area. Our initiative “Agenda 2014″ clearly serves this purpose and will actively be pursued by the coming Greek Presidency of the EU.

With regard to our bilateral relations, to which Greece attaches great importance, as proved by the cooperation in various fields and eminently in the economic sector, I hope that they can be further improved to the benefit of both our peoples.

As for the name issue, our position is that it should be resolved through meaningful negotiations under the auspices of the UN; therefore, I encourage you to work towards this goal in a constructive manner. The forthcoming visit of Mr. Nimetz to our region is expected to contribute to the ongoing process for the resolution of the issue, provided that both sides show the necessary political will.

In light of the above, 1 would like to propose that we meet in the margin of the next European Council scheduled to take place in early March.

Please accept, Excellency, the assurance of my highest consideration.