LUCAS PAPADEMOS: Thank you, too.

MICHELLE CARUSO-CABRERA: How’s it going?

LUCAS PAPADEMOS: Well, we have many challenges ahead of us. As you know, the country is to achieve very ambitious targets both with regard to reducing its deficit and restoring its competitiveness. But I think progress has been made in the right direction. And we’re confident that this progress will continue during this year.

Now, the next few weeks are particularly challenging because we have to complete two interrelated processes. On one hand we have to complete the discussions concerning the voluntary restructuring of the Greek debt, the so-called P.S.I. process. And at the same time we have to formulate a new economic adjustment program for the period 2012-2015 in consultation with our European partners and International Monetary Fund. The two processes will have, this is the aim, to be completed over the next two to three weeks.

MICHELLE CARUSO-CABRERA: Extremely tough, but you’re confident that once you’re on the other side, both of those outcomes will be successful?

LUCAS PAPADEMOS: Well, I think that this is the objective. And I think the conditions are in place in order to do so. Definitely we’ll do our best. Now if we succeed in completing these two processes on time than Greece will be eligible for financing by its European partners and the I.M.F. That will provide a very good basis for completion of the economic adjustment program over the next three years. And we think we’ll be more than half the way towards taking the bold steps necessary to restore competitiveness and move in the direction of sustainable debt.

Of course the overall process of fiscal consolidation and reducing debt to sustainable levels will take much longer. There’s no doubt about this. However, the more difficult and demanding measures to be taken to this end, I expect that will be completed within about two years.

MICHELLE CARUSO-CABRERA: Two years from now?

LUCAS PAPADEMOS: Two years from now. Well, this year and 2013.

MICHELLE CARUSO-CABRERA: Two years from now, are you confident that Greece will still be using the Euro?

LUCAS PAPADEMOS: Yes. I’m very confident. I think it’s often discussed that leaving the Euro is an option for Greece. I think this is really not an option. This is the position of this government and of all the parties that are supporting it but what is more important, the overwhelming majority of the Greek people are in favor of Euro Area membership.

And I think the main argument for me is that membership in the Euro Area will actually facilitate the implementation of the economic adjustment program rather than hinder it. Some people think otherwise. But I think clearly this is not the case. Now as you know, Greece has two main problems. Its excessive debt and its low productivity. So correspondingly, the main objectives of this government is to eliminate the deficits, to reduce the debt to sustainable levels, and restore competitiveness.

I am personally convinced, and I think the Greek people share this in a fundamental way, that we can achieve fiscal consolidation more effectively and we can restore competitiveness in a more fundamental and permanent way within the Euro Area than outside. In addition the Euro implies, provides us rather, with an environment of monetary stability and an institutional framework conducive to fiscal discipline which will help promote long-term growth.

Let me also say that what I believe is relevant for this country is also supported by own experience. In the 20 years before Greece end up with the Euro, efforts to improve competitiveness through exchange rate and adjustments resulted only in temporary gains of competitiveness. And they were accompanied by very high inflation and low-growth performance. As a result of the fact that the economic policies pursued were not sufficiently disciplined and did not foster the fundamental restructuring the economy needed in order to foster growth.

So our own experience itself suggests that this is really not an option. And judging what is appropriate or not appropriate for a country, I think it is important in particular in judging what is the appropriate economic policy framework, one should take into account the overall political environment and the institutional framework within which economic policy operates.

MICHELLE CARUSO-CABRERA: The proponents or those who argue that you should leave the Euro so that way you could devalue say, if you stay in, you’ve got to do an internal devaluation, even further than what you’ve already done, which is very, very painful for the people. Can you achieve such an internal devaluation? And will the people go with you on it?

LUCAS PAPADEMOS: Well, what you have to do is to improve competitiveness, which partly depends on wage moderation and an internal devaluation reduction of prices and wages. But you can combine this with reforms that can boost productivity and market efficiency and enhanced competitiveness in different ways. Now clearly this process involves pain. It’s not only the process of internal devaluation. It’s also the process of fiscal consolidation, which is in parallel. Have as an inevitable short-term effect and a reduction, they lead to a reduction in real incomes. And they have resulted in an increase in unemployment.

But these effects are temporary. And by the end of the process, conditions will be in place that will help us foster a more sustainable growth path. Now, with regard to the progress made towards achieving internal devaluation, already in the two years behind us, that is in the year 2010-2011, since this program, since the first program started being implemented, measures of competitiveness based on unit labor cost show that we have gained competitiveness by about 5%.

And if the reforms being planned, and the other policies that are being also planned for this year and implemented, we estimate that by the end of this year, that is by the end of 2012 we should recover about one half and possibly three fifths of that competitiveness losses over the previous nine years. So the process has adverse effects in the short term, but it is working.

And as I said earlier on, I think the gains to be achieved by a combination of reforms and labor market adjustments are going to be more permanent and will provide a basis for reducing unemployment and improving expert performance and sustaining growth in a way that is more sound and more permanent.

MICHELLE CARUSO-CABRERA: Can you be more explicit on what the steps are? In order for – the true solution here is for Greece to grow. For Greece to grow, it has to regain competitiveness. You’ve mentioned some things already. What other things are part of the plan to restore competitiveness?

LUCAS PAPADEMOS: Well a range of reforms that aim to improve the efficiency of markets and remove obstacles to investment and improve the business environment so that economic activity is fostered both by external investment and domestic investment. Now in addition however, I will say a few more things about the reforms that have been implemented, then, the ones that are being planned.

I think achieving a higher fiscal stability is also a very important condition for restoring an environment which is conducive to growth because we have reached debt levels that were clearly unsustainable. As a result, global financial markets were no longer willing to finance the Greek economy. And indeed one of the problems, one of the factors, that is actually adversely affecting the economic activity in this country is the reduced liquidity associated with a difficulty of the country, not only the public sector, but also the private sector too to borrow.

So by establishing, by reducing, public sector deficits and reducing debt to sustainable levels, we will restore confidence in fiscal sustainability and the opening of financial markets. When it happens, that will provide an important driving force for restoring growth. In the meantime, however, because this will take, clearly, some time, we are pursuing reforms to improve the business environment.

Indeed, last week the cabinet approved a bill that aims through a variety of provisions to foster experts and make the establishment and the functioning of corporations easier. There are also reforms that aim at improving, you may think that this may not be essential but is quite essential, improving the efficiency of the legal system and the speed with which it provides justice. Because in the past, this has been a factor that has been discouraging investment.

MICHELLE CARUSO-CABRERA: Because you need enforcement of private contracts?

LUCAS PAPADEMOS: Of course. But also delays in the granting of justice very often reduce the speed with which investment could be undertaken discouraging discouraging investors. Now another area where some progress has been made, but more progress had to be made in the future, is liberalization of the markets for services. The so-called opening of the closed professions.

There were many restrictions in these markets that prevented competition, implying also that prices were kept at relatively high levels. Through legislation that was enacted last year, quite a few professions have been liberalized. What we aim now, and we aim to do this in the coming weeks, is to complete this process, first of all, by introducing measures that will fully liberalize some of the professions that have not yet been fully liberalized, as well as to introduce secondary legislation in order to ensure that the legal framework adopted before will be fully implemented.

MICHELLE CARUSO-CABRERA: What do you say to outsiders who look in and say, “It’s taken Greece too long to achieve these reforms. They’ve been at it for two years, and still you’re moving too slowly,” say some critics. How do you respond?

LUCAS PAPADEMOS: Well, there are various ways to respond. The first is, to say that the problem was big, not only with regard to the magnitude of I’d say structural weaknesses or rigidities that had to be tackled, but also with regard to the magnitude of the fiscal imbalances. So starting with the latter, because as I said before, there are two objectives, fiscal consolidation and the reform of the economy.

When the crisis was erupted, the deficit was at an exceedingly high level of G.D.P., close to 16%. Over the last three years, this deficit has been reduced by six percentage points. But what is more important is that the level, the headline level of the deficit in 2001, which is still very high, is substantially higher than the measure of the structural deficit that is the deficit adjusted for the effect of the cycle.

Now, because we’re in the middle of a recession, and correspondingly revenues, unemployment benefits are affected in a way that increases the deficit, this measure, the measure of the structural deficit is more indicative of the progress that has been made in addressing the fiscal imbalances. And recent estimates that I have seen suggest that this structural deficit is close or even lower than five and a half percent.

Now, coming to the reforms, I think it has to be realized that this country performed with significant restrictions and rigidities in the markets for a very long period. So addressing some of these rigidities requires both strong political will and commitment, as well as the support of the markets and the public to undertake the changes. Now I am convinced that the public, the large majority of the Greek people, realize that the policies pursued in the past and the market practices have to be changed in order to improve the prospects of the Greek economy.

So there is, I think, strong public support despite the increase in social tensions as a result of the recession that we’re in. And the formation of a government of national unity a few months ago, and by the way, this is the first time over the last 35 years that in Greece, we have a government which is supported by three parties, because the experience in this country was for all these years is to have a single party government, is a development that is a big step, I think, in the direction of achieving greater consensus on the appropriate, both macroeconomic policy to be pursued, but also on the reforms to be implemented.

And I believe this should contribute and will contribute towards speeding up the implementation of reforms. Going back to the question you initially raised, I think there had been some difficulties either political or related to the functioning of the public administration in the past that play a role in explaining the slow pace of reforms. But reforms have been made.

If I may add another example, back in 2009, one issue of concern, both with regard to public finances, but also with regard to the functioning of the economy in general was the sore state of the pension system. It was a pension system that because of structural factors, demographic factors, and others, was the most vulnerable in the European Union. Now, the reforms enacted in 2010, with regard to the main pension scheme were really fundamental and they have ensured, I think, the long-term sustainability of the main pension system.

And this has implications not only for the public finances. It also has implications about the way markets think with regard to the overall fiscal and environment within which the economy will operate in the future. Now this year, we hope to complete the pension reform by addressing the imbalances of the so-called supplementary pension funds. And to the final outcome of these two reforms together will be positive– not only, you know, for reducing the deficits, but also creating an environment which will be conducive for firms to perform better and invest more.

MICHELLE CARUSO-CABRERA: Are your European partners asking too much of Greece too soon? There have been statements by Mario Monti, for example, don’t ask for too much austerity, because it could lead to social splintering and the destruction of the European Union. Are they asking for too much from you?

LUCAS PAPADEMOS: Well, in the case of Greece, the magnitude of the fiscal problem was so large that it was necessary to take substantial and aggressive action, bold action, I would say, in order to address the imbalances and start the process that would imply with significant degree of confidence that fiscal imbalances will be reduced.

And as we discussed before, also the implementation of reforms at the same time were necessary. I think two points related to the questions. In the case of Greece, as well as in the case of other countries our partners and International Monetary Fund have provided substantial financial assistance, which was necessary for addressing our borrowing requirements during a very difficult period.

And I think it’s both understandable and necessary that this financial assistance is accompanied by conditionality on the policies to being pursued, in order to ensure that the risks that are being undertaken by those that are providing the financial assistance do not materialize. And progress is being made at a deliberate, at an adequate pace.

Now for Europe in general, the implementation in a number of countries at the same time of fiscal consolidation measures implies, of course, a combined adverse effect on economic activity. The answer to this, in my view is to try to combine the necessary actions in order to achieve, to return rather, to prudent fiscal policies, with other measures that can help to foster economic activity. Now what are the other measures? I don’t think there can be a single recipe for every country.

Coming to the case of Greece, one action, which also relevant for other countries, is precisely by focusing on changes in market structures and reforms that will contribute to improving export performance. Because by improving, by boosting exports, this is a way through which the short-term adverse effects on aggregate demand associated with the sharp fiscal consolidation can be initially partly offset and then later on more than partly offset.

Now in the case of Greece, so more generally, I think one will have to combine different sets of instruments in order on one hand to reduce debt, and at the same time, to support economic activity. In the case of Greece, the other instrument that is available, which admittedly has not been yet used very effectively, is to utilize in a more effective manner the available structural cohesion funds from the European Union. With regard to this, the available funds are substantial. And-

MICHELLE CARUSO-CABRERA: How much?

LUCAS PAPADEMOS: At this stage, more than $15 billion. And I think, at this stage Greece has been absorbing a relative low share of that amount. But this is an area, where I can point to an important achievement that was made last year that for the year 2011, the structural funds that were absorbed, close to $3.5 billion, for the year, were achieved the target that can be set in the memorandum of understanding in their economic adjustment program. Indeed, they achieved it 99%.

So this was, I think, a satisfactory and encouraging development. Having said that, however, there is much more progress that can be made towards improving the utilization of available funds from the Union. Now if this is done, we can stimulate economic growth in a more direct way and in the short to medium term. And I’m saying this, because although I’m convinced that reforms will play a central role in improving economic performance in the medium to longer term, it can not be expected that in the next six to 18 months, they will make a major difference.

But a better utilization of the structural funds can help to stimulate growth and contain the increase in unemployment and indeed help reversing it. One could argue that a slower pace of adjustment might be helpful in addressing the problems in a manner that also contains social pressures. I think this view is valid. And I think we have to keep in mind the balances that have to be reached.

But, again, returning to Greece, as I said before given the size of the problems, some of the deviations between outcomes and targets, as well as delays in implementing the reforms, which I admit, it is important not to reduce the pace of adjustment. It’s important because this will help us reach the final objective sooner. And also it’s important in order to convince markets. They’re not convinced yet that this process will be completed.

MICHELLE CARUSO-CABRERA: Do you have any estimate on when you think Greece can return to the markets?

LUCAS PAPADEMOS: Well, it’s difficult to say because there are uncertainties. There are two – a number of factors that are relevant in answering the question. The first, implementing the program effectively. One can make an estimate about this, but what is relevant for the opening of the markets, among other things, is the expectation that progress will be sustained over the medium and long term.

So it’s not easy, as you know, it’s always difficult to make predictions about the future. It’s particularly difficult to answer this question. But what is crucial, by the way, not only for the opening of the markets, but also for improving the performance of the Greek economy, is the reduction of uncertainty about the prospects, as well as increased confidence in the capacity of the country to do the right thing, to implement the right policies and address its problems.

If confidence is restored not only this will affect, and I’m talking also about confidence among the Greek people, not only this will affect in a positive way aggregate demand and performance. But also this will facilitate the return of funds, of capital, that have left the country in an environment of uncertainty and concern about the prospects. For all these reasons I think it is important to persevere and to try to complete the adjustment process as quickly as possible.

Now there are some that think that relaxing and returning to some of the policies pursued in the past would ease the pain, would provide a solution to some of the problems that we face. I think this is really an illusion. Because where we stand now any such action would really increase the risks. And will not really, at the end, have a positive impact either on activity or on employment.

MICHELLE CARUSO-CABRERA: Some economists look at the numbers, they see a fifth year of recession. They look at debt sustainability. And they think that somebody somewhere is going to have to come up with even more money for Greece. Is that an accurate assessment?

LUCAS PAPADEMOS: No, my assessment at present on the basis of what we know and on the basis of the economic adjustment program, which is going to be finalized in the coming weeks, is that this will not be necessary. I think the funds that have been pledged at Euro Summit combined with the outcome of the private sector involvement process should be sufficient in order to support financially the Greek economy.

Now, in the case of shocks or other factors that may affect the process, there can be adjustments either in the policy area, in order to, or in other ways in order to reduce any possible funding gap. We’re talking about many years ahead. We’re not talking about this year. So on the basis, as I said, of what we plan to do and what we know now, I don’t expect that this will be necessary.

MICHELLE CARUSO-CABRERA: Are you confident the private sector involvement can get done in time? And do you have any opinion on what interest rate you should be paying on your new debt, in the exchange?

LUCAS PAPADEMOS: Well, first of all, let me say that over the past few weeks, substantial progress has been made towards reaching an agreement between creditors and Greece. The process itself is not straightforward, because, as you know, it involves a 50% haircut in the nominal value of Greek public debt held by private investors.

And to complete the process, we have to reach an agreement on the various elements of this scheme that will ensure a voluntary bond swap on the basis of the objectives that have been agreed at the Euro Summit of October. So one of these objectives is that the P.S.I. itself combined with the policies to be implemented will result in a gradual decline in the debt to G.D.P. ratio of Greece to 120% by the year 2020.

So the discussions which are ongoing have I think helped us to reach a point, which is close to an agreement, but some further reflection is necessary on how to put all the elements together. So as you know, there is a little pause in these discussions. But I’m confident that they will continue and we will reach an agreement that is mutually acceptable in time.

MICHELLE CARUSO-CABRERA: Anything scheduled, any dates, where discussions are going to begin again?

LUCAS PAPADEMOS: Well, as I said, I’m confident that they will resume reasonably soon. But I do not want to make a specific prediction on a date.

MICHELLE CARUSO-CABRERA: The European Central Bank holds Greek debt at below face value. If all goes according to plan, they will be repaid at full face value. In other words, the European Central Bank would make a profit on Greek debt. Is that acceptable?

LUCAS PAPADEMOS: Well, this is an issue that has to be discussed and decided by the European Central Bank. I’m not going to make any comments on issues relating to decisions to be taken by the European Central Bank. Either the specific one that you raised or more general ones concerning the performance of its tasks. The E.C.B. is an independent institution that performs its tasks in accordance to its mandate. And I’m confident that will take the right decisions, first of all, to fulfill, in order to achieve its objectives of price stability safeguarding financial stability.

MICHELLE CARUSO-CABRERA: So it sounds like you’re trying to head off my next question, which is many believe that to truly solve the Euro Zone crisis and the European Union’s financial crisis, ultimately, the E.C.B. will have to print money. Is that an assessment that you agree with or disagree with?

LUCAS PAPADEMOS: The E.C.B. has an unambiguous mandate on what it has to do. And it has and I’m sure it will continue to perform its tasks in accordance with its mandate, which as you very well know, the primary objective is to preserve price stability, but also to safeguard financial stability. And my judgment is that the bank has performed its tasks in a very effective manner, during a very challenging environment. And I’m sure it will continue to do so.

MICHELLE CARUSO-CABRERA: The way I read that or hear that is if they were to face deflation, there are a lot more things that they would be willing to do

LUCAS PAPADEMOS: No, I did not say that. I said that they will, first of all, as an issue of principle and I’m someone being the vice president of the European Central Bank for eight years is a principle that they fully adhere to.

MICHELLE CARUSO-CABRERA: That’s why I asked -

LUCAS PAPADEMOS: We should not – yeah, we should not – and I’m no longer with the European Central Bank. We should not in any way through comments or other ways impair the independence of the Central Bank to perform its action, its tasks. As I said before there is a mandate and that mandate is guiding the policies of the Central Bank. And printing money’s not an answer to addressing the issues that you raised. The bank will decide what is appropriate to do. And I’m sure it will do the right thing.

MICHELLE CARUSO-CABRERA: When March comes around and you have $14 billion Euros worth of repayments, you’re you are confident that all the steps that need to be done ahead of that, and you don’t face the potential for default in March?

LUCAS PAPADEMOS: No, our objective is to complete the two processes that I mentioned at the beginning of our discussion. And also to fulfill all the commitments that have been made in the past, in the context of the existing program. And we are confident that we’re going to achieve this.

I. A historic budget

The Budget for the fiscal year 2012 has been prepared, and shall be executed, at a critical juncture for Greece – critical because our actions today will decide the country’s economic future, not only for 2012 but the entire decade.

Indeed, this is a moment of immense national significance for our country. Both Greece and Europe are faced with the worst economic crisis in decades. Few generations in recent times have been called upon to deal with challenges of such critical importance for our nation. Circumstances demand that we transcend our limitations and surpass ourselves. We have to prove that we are one of those generations in Greek history that was able to succeed against overwhelming odds.

The 2012 Budget is a tough budget. It has to be executed within an economic environment that labours under a host of uncertainties. The Budget targets are ambitious. Greater still are the challenges in implementing the measures needed in many economic sectors. But we have to meet these targets, and we have to implement these measures. This is why we have to show determination and persistence in our endeavour. We have to work to the best of our ability and leverage our every strong point, in a spirit of cooperation. We cannot afford the luxury of bewailing our fate, nor can we continue the practice of exchanging mutual recriminations about the past – about who is, and who is not, to blame for our current plight. History will judge us harshly if, while waving our swords at the past, we abandon the struggle for the future.

The endeavour to implement fiscal consolidation and the restructuring of the economy, which will lay the foundation for sustainable and balanced growth, is nothing short of a national struggle whose success depends on the contribution of each and every one of us. This struggle transcends narrow party-political forces and dividing lines. The broad union of political forces achieved with the formation of this government of national unity needs to be backed by a truly concerted effort, on the part of us all, so as to ensure success.

By successfully executing the Budget Greece will meet its obligations to its lenders, restore the country’s international credibility, and create the basic conditions needed to overcome the crisis and rescue the economy. This will require steadfast efforts at a time of heightened uncertainty, and in a Europe – shaken by the crisis – that is seeking the next major step forward.

The Budget serves as the guide for the fiscal policy we must follow. It maps out targets and directions; it does not contain easy solutions that we agree today and forget tomorrow. The execution of the budget requires the motivation not only of the new unity government, but of all the social and political forces that support it. It requires us to maximize our shared interests and not allow our differences to divide us – these are of minor importance in the face of the challenge that lies ahead: to rescue this country. The citizens of this land will appreciate the genuine effort and contribution of all political forces. They will surely reward cooperation and responsible management.

The economic crisis that has gripped our country is no mere storm that will soon blow over. It will take time to pass because it is the product of imbalances that were exacerbated over many years through the accumulation of errors and omissions in policies that led to the creation of excessive debt. It is the result of a prolonged process of deferral of solutions, which, though serving short-term political ends, came at a terrible long-term cost for the economy and society.

Accordingly, the resolution of these problems will now take time and incur sacrifice. After four years of recession, this has become painfully obvious to everyone. Nevertheless, the positive impact of fiscal consolidation and structural adjustment will gradually become apparent: in economic growth, improvements in the real incomes of working people, and employment.

II. The key features and challenges of the 2012 Budget

The 2012 Budget serves the national goal of stabilizing and then rebooting the economy within an extremely sensitive and volatile European and global economic environment. The Budget is more than an exercise in regulating cash-flows and public finances. It serves the key objective and broader endeavour to restore the conditions for stability and growth in our economy. It encodes the necessity for both these things. We cannot have growth without stability. And we cannot secure stability if growth is not forthcoming. The Budget requires a long-term effort on the part of the current and future governments. This is reflected by the fact that, this year for the first time, the Budget targets for 2012 are consistent with the objectives of the Medium-Term Fiscal Strategy Plan for 2012-2015.

The 2012 Budget sets out a series of targets that are ambitious but achievable. The macroeconomic assumptions underlying it are modest and consistent with the projections of all the international organizations. The adjustment in the general government deficit derives, symmetrically, from revenues and expenditure. To illustrate, in 2012 revenues are forecast to increase by €4.5 billion while total spending will decrease by c.€5 billion.

The first key feature of the 2012 Budget is that, for the first time in recent years, the budget provides for a primary surplus, which is essential if we want to reverse the tide of rising debt. Although recession will persist in 2012, the Budget forecasts a primary surplus in the region of €2.2 billion, equivalent to [1.1%] of GDP. In other words, estimated government revenue will exceed primary expenditure (i.e. expenditure that does not include interest payments). The return to a primary budget surplus is an onerous, but not impossible, task. Achieving this goal, from 2011 to 2012, will require a €6.8 billion improvement in the general government primary balance, while over the course of the previous two years (2009 to 2011) the cumulative fiscal adjustment has been c. €20 billion. In the years to come, the primary surplus will need to increase further, so that the debt-to-GDP ratio can decrease to around 120% by 2020.

The projected increase in government revenues derives from both the increase in tax rates and changes in income tax. The shortcomings of the taxation system in Greece are a long-standing problem. Although the tax rates in Greece are no lower than in other European countries, our tax revenues as a percentage of GDP are well below the EU average. In 2010, tax revenues in Greece were c. 20% of GDP, compared with the OECD average of 25%. Indeed, according to EU data, the dramatic deterioration in tax revenues in Greece began long before the crisis. Cyclically adjusted revenues decreased from 35% of GDP in 2000 to 29% in 2009.

This situation reflects the major structural weaknesses of our taxation system: in the sphere of tax legislation, tax administration, the procedures for resolving tax disputes, and for punishing tax evaders. It has become clear that we need a multi-pronged approach in order to combat fraud effectively. Now is the time to put in place a comprehensive policy to deal with the phenomenon, which must then be applied to the letter in subsequent years. It is essential that we radically simplify taxation legislation by eliminating the manifold exceptions, exemptions, subsidies, and so on. Many of these arrangements were initially made in the name of social justice. And yet, the Greek taxation system presents a forest of injustices and gives rise to frustration on a daily basis.

Besides simplifying legislation, we must carry out a thorough restructuring of the tax collection apparatus, organize antiquated local tax offices and customs services on a new footing, and change tax inspection and auditing mechanisms. With the help of the Troika – particularly the IMF – new legislation has been drafted by the Ministry of Finance, which will be tabled before Parliament for approval. This is an important step forward in the effort to reduce tax evasion.

But the momentum must be maintained in the years ahead. The effort began with a series of measures that included the appointment of a public prosecutor for financial crime and a tax arbitrator, the launch of a dedicated tax revenue agency for large corporations, as well as various other measures. A good start has been made. Now we need to continue and follow up consistently on this groundwork, without backtracking.

Tax evasion is not only an economic problem. It is a profoundly social problem, and in Greece it has undermined public confidence in the wider public sector.

The fight against tax evasion will not only generate more – and dearly needed – income for the country. It will deepen the sense of fairness in the taxation system and restore public confidence in the state apparatus.

The other key challenge for the Budget as it unfolds is to ensure that strict controls are applied to spending. We all know of the wastefulness and mismanagement in the broader public sector. People also recognize that there is a need to strengthen spending on social cohesion, on enhancing education and health. Under current circumstances, the Budget cannot increase spending in these sectors. However, with the closure of various redundant agencies and organizations, the merger of others, and the rational management of available resources, it may be possible to increase the number and quality of services provided by the welfare system.

To streamline public administration we need to radically change the apparatus for monitoring and controlling public spending. The Finance Ministry has already put in place procedures for systematic controls. These must be intensified, run on an even more effective basis, and extended to cover all spending by both central government and local government and other public bodies.

I believe that when people are given tangible examples of effective government spending, and good public and social services, they will change their negative predisposition towards paying taxes. I understand the concerns of the average citizen, who has been asked to pay more taxes at a time when he sees his income declining, unemployment rising and the immediate economic outlook showing no improvement. But there are no easy solutions. We all have to play our part in helping the economy to avert the risk of becoming trapped in dead-end, and return to growth and prosperity.

A key component of 2012 Budget is the reduction in the debt-to-GDP ratio from 162% at the end of 2011 to 146% at the end of 2012, i.e. a debt reduction of c. €42 billion. This is the first reduction after a string of years where the constantly swelling public debt has succeeded in destabilizing the Greek economy. While the projected contraction in public debt in 2012 and the years thereafter will be due in part to the creation of primary surpluses, it largely reflects the PSI: the planned voluntary exchange of sovereign bonds by Greece’s private creditors.

This private sector involvement will serve to improve the sustainability of public debt.

A further key component of the 2012 Budget is that, for the first time, it includes detailed data on the general government, i.e. not only central government but also local authorities, hospitals, utilities and other public bodies. Accordingly, the public will know what money is flowing in and out of the various institutions and agencies of the general government, and precisely what these many public organizations spend. This is a first significant step towards achieving transparency in state income and expenditure, and will also enhance more efficient implementation of government policy. Our aspiration is to expand this effort by providing monthly reporting on the progress of the general government.

We want the taxpayer to know exactly how the taxes he or she pays are spent, and whether they are spent well.

The promotion of structural reforms and the implementation of the privatization programme are also important features of the Budget. In 2012, reforms in the health sector, the social insurance system (following assessment of supplementary pensions), the new taxation map of the country, the so-called closed professions, and the judiciary will be completed. Privatization will be pushed forward at a faster pace, not only so as to enhance state revenues but also to improve the efficiency of the organizations privatized, thereby giving a boost to economic activity.

The economic crisis has taken its toll on the public, with the sharp rise in unemployment and the decline in incomes. These problems cannot and should not be ignored. Yet the process of consolidation is absolutely necessary. The accumulation of excessive budget deficits over a succession of years led to the over-indebtedness of the government, resulting in the refusal of lenders to finance Greece at reasonable rates. At the end of 2011, Greek public debt corresponds to over €30,000 per capita. It is vitally important that the adverse growth trend of the debt be reversed. By restoring fiscal stability and credibility we shall return to an environment that is conducive to growth and employment.

An apt question is whether, in an environment of heightened uncertainty and weak economic activity, the Greek economy will be able to emerge from the anticipated recession in 2012. Although the uncertainties are great, there are a number of positive signs supporting the view that economic recovery will get off the ground in 2013.

First, exports have increased significantly and companies that are export-oriented have not been affected to such a degree by the economic downturn in
Greece.

Second, the decline in salaries and pensions is not expected to continue in 2013, nor the increase in tax rates, and accordingly disposable income and consumer spending will tend to stabilize.

Third, when various major projects, which have come to a standstill, are restarted and the absorption of National Strategic Reference Framework (NSRF) sources gains faster momentum, we shall see an increase in employment and an improvement in the investment climate. This will be boosted by the financing of major projects by the European Investment Bank and the technical assistance offered by our partners (a special Task Force has been set up) in reorganizing the public sector. In addition, the emergence of a more favourable business and investment environment, backed by a reduction in bureaucratic barriers, will stimulate entrepreneurship and private investment.

|II. We have a responsibility to lay the foundations for sustainable growth

The current fiscal clean-up is taking place in an environment that is far worse than anything we experienced in the previous two decades. The 1990s and 2000s were a period of global economic stability and growth, which would have eased the process of economic adjustment. Today’s financial crisis and concomitant uncertainty, as well as the generalized endeavour to push through fiscal consolidation elsewhere in Europe, have hit the incomes of our trading partners, thereby frustrating our efforts to return to growth by boosting exports. In such a climate, Greece is compelled to redouble its efforts to attain the magnitude of fiscal adjustment achieved in the 1990s.

Against this harsh background, we have to draw on our reserves of efficiency, determination and ingenuity. This is the only way we can offer a viable future to the next generation, which, though better skilled and qualified than ever, is now seeking a brighter future abroad.

Do we have the ability and the stamina for such a national effort? I believe we do, so long as the country’s political forces work together and society remains united. Given the scale of our problems, we shall need to continue our endeavours well beyond 2012. It will require hard work and perseverance by more governments. But, if we want, we could make this a decade that ultimately delivers positive results. How?

- if, by concerted actions and measures, we build a new economic and institutional framework that will place Greece in the community of advanced countries;

- if we evolve a new sustainable model of economic growth, investment and employment founded on an outward-looking orientation, producing competitive services and products;

- if, swiftly and methodically, we push through all the changes needed to unlock the untapped dynamism of the Greeks, the virtues and talents of the creative forces of this country.

The drive to implement economic reform is sometimes presented, in some quarters, as being dictated by our European partners and international organizations. This view, however, hardly does us justice. Fiscal consolidation and the reconstruction of our economy – with the support of our partners – are developments that are first and foremost to our benefit. We should therefore assume full responsibility for how we set our priorities, how we develop initiatives, and how effectively we implement the policies needed to revive the economic outlook of this country. It is important to realize that, in the last analysis, we are not under the surveillance of the Troika; rather, we are under the surveillance of History.

IV. We have a responsibility to remain within Europe

Greece is and will remain a member of the united Europe and the euro area. The Greeks will not drop this membership casually – after all, it is the nation’s most important post-war achievement. It provides us with conditions of greater security in matters of defence and the economy.

Let me stress: our place in Europe is not up for negotiation. The Greek people will defend it at any cost.

But we should remember that membership of the euro implies rules and obligations that we must steadfastly observe if we wish to enjoy the benefits of a global currency, and if we wish to depend on European solidarity. The crisis has revealed flaws in the structure and function of Economic and Monetary Union, flaws that contributed to the formidable sovereign debt crisis that is currently stalking the euro area. If they stick together, united in their resolve, the European nations will overcome this crisis.

But a requirement for our participation in the common European project is that we meet our national commitments, that we implement fiscal consolidation, and improve the competitiveness of our economy. In spite of the crisis, Europe and our common currency remain one of the greatest achievements of modern history. The ancient source of European political history, Greece is an integral participant in the joint project of ever closer European integration. Greece belongs in Europe, and Europe is unthinkable without Greece.

V. To sum up: We can do it

The crisis is taking its toll on Greek society. It is hitting jobs, denting real incomes, undermining aspirations. The exit from the crisis will not be easy; there are no short cuts. Anyone who suggests otherwise is not speaking from a position of responsibility. Economic recovery demands effort and sacrifices, national unity and mobilization of all the creative forces in the country.
Yet, the crisis presents us with a historic opportunity: the chance to turn a new leaf:

- To rebuild the state and our economy, placing them this time on solid fiscal foundations.

- To reinstate the rule of law, with institutions and rules that are respected and observed by all.

- To rid ourselves of the oligopolistic market structure, lack of transparency in dealings, and easy money that generates complacency, feeds corruption, and exacerbates inequalities.

- To turn our back on a culture of generalized tax evasion, and recover a sense of duty to one’s country, a desire to eliminate social injustice.

This crisis has taught us the hard way that errors and omissions come at a price, that prosperity does not consist in a house of cards and borrowed money.

Rather, it requires organization and continuity; it requires that we play by the rules; it requires hard, disciplined and productive work. Above all, we have learned that the first to suffer the impact of the crisis are the weakest. And this is why we must ensure that this never happens again, by reforming the state, by eliminating the deficits, by shifting to a competitive and outward-looking model of economic growth.

The government of national unity embodies the unity and determination of the Greek people in the face of the worst crisis in decades. It embodies the threefold historic responsibility of our generation:

- To pull Greece out of the spiral of recession;
- To consolidate the country’s place in Europe and the euro;
- To create the conditions needed to foster economic recovery and sustainable growth.

The 2012 Budget is yet another concerted step in this direction. It sets ambitious targets and implies considerable sacrifice. But remember, the sacrifices will be vindicated by the outcome.

I urge you to support these efforts and play your part in shaping the future of our land by voting for the 2012 Budget. Through national unity, hard work, and faith in the country’s potential, Greece will enjoy the brighter future she deserves. We can – and will – succeed.

Greece is steadily aiming at the consolidation of good neighbourly relations with the former Yugoslav Republic of Macedonia and will continue to work to this end.

In this framework, Greece has supported the European course of Skopje in many cases.

However, a prerequisite for the full normalisation of our relations is to reach a mutually acceptable solution to the name issue. The continuing provocations do not contribute to the consolidation of good neighbourly relations and mutual confidence.

Greece remains steadfast regarding these positions also after the Judgment of the International Court of Justice.

Our country is ready to continue the negotiations in order to solve the name issue erga omnes, under the auspices of the United Nations.

Prime Minister, Lucas Papademos, sent the following letter to the heads of the European Council, European Commission, the Eurogroup, the European Central Bank and International Monetary Fund, Herman van Rompuy, Jose Manuel Barroso, Jean-Claude Juncker, Mario Draghi And Christine Lagarde (29 November):

On 11 November 2011, a new government was formed in Greece, supported by three political parties, PASOK, New Democracy and LAOS. The new government won a vote of confidence with a large majority in the Greek Parliament.

As agreed at the meeting of the leaders of the three supporting parties held under the chairmanship of the President of the Hellenic Republic, the main task of the new government is “to implement the decisions of the Euro Summit of 26 October, 2011 and the associated economic policies.”

The government is strongly committed to fulfilling this task. In particular, it will (i) fully implement the measures described in the current economic programme; (ii) conclude a sustainable and credible new EU-IMF multiannual programme, and (iii) finalise a sovereign bond exchange with the voluntary participation of the private sector (PSI), which will contribute to the financing and sustainability of Greek debt.

The government is determined to continue the process of fiscal consolidation and structural reform in order to secure sound public finances and improve the country’s international competitiveness. Since May 2010, substantial progress has been made to this end. Nevertheless, a lot more has to be done to reverse the adverse debt dynamics and establish conditions that foster financial stability, sustainable growth and job creation. In particular, confidence has to be restored and the forces of innovation, investment and growth have to be strengthened. In this way, social cohesion will also be enhanced.

Participation in the euro area ensures the preservation of price stability, promotes financial and economic stability and facilitates the implementation of the deep and broad reforms required for the revival of the economy. The Greek people recognize the need for a major economic and institutional transformation and they overwhelmingly support euro area membership, which they perceive as crucial for the success of this effort.

The government will take all measures necessary in order to implement the decisions of the Euro Summit of 26 October 2011 and achieve the objectives of the economic programme, which is crucial for improving the long-term welfare of the Greek people.

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1. The public discussion that took place in Parliament yesterday and today, at this highly critical juncture for the future of Greece, was certainly very useful for the people of this country. It was extremely useful for me personally and for the new unity government which, with your vote of confidence, will undertake the enormous task that lies before us.

2. I thank all those who support the government and who intend to provide it with their vote of confidence. In my view, each of these votes corresponds to a personal decision to undertake a burden of responsibility: to ensure that our country remains within the eurozone, and to ensure that the process of fiscal consolidation and reform of the Greek economy is continued.

3. I also thank those who, advancing specific arguments, have stated the reasons why they will not give a vote of confidence. I have listened carefully to their positions and I wish to assure them that, within the framework of the government’s policy to rescue the country, I take their concerns very seriously into consideration.

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Honourable Members of Parliament,

4. When presenting to Parliament the government’s policy statement I stressed that there are two keys to winning the battle to rescue our country from the state into which it has fallen: explaining the truth of our situation and restoring confidence. The truth emerges from an accurate reading of developments and an understanding of the actual situation in which we find ourselves. Allow me to give you my reading of developments in the eurozone, the causes and nature of our economic plight, and the policy required to deal with it.

5. Several Members of this Parliament have expressed their concerns about the escalation of the crisis that has gripped the eurozone. Indeed, everyone is deeply worried, as the crisis spills over from the European periphery to the core economies. Furthermore, rising pressure in the government bond markets is having an adverse impact on the European banking system and, via the banking system, on the real economy. Particularly worrying is the negative chain reaction between the bond markets, public finance, bank lending and business activity. These developments are not only threatening the European economy with recession; they are placing stability in jeopardy.

6. What led to the expansion and the deepening of the crisis? First, the measures deployed in various countries that were vulnerable on account of their fiscal problems and structural weaknesses proved to be inadequate. Second, the European mechanisms set up to support the banking system and shield the economy from the crisis had neither the fire power nor the flexibility required to prevent contagion.

7. The escalation in the crisis over the past few weeks has led to doubts about the ability of the eurozone and its member states to deal with it. So much so, that some are making grim forecasts regarding the stability and the cohesion of the eurozone.

8. I am optimistic that the eurozone will prevail in the current ordeal. I believe that in the end, despite the divergences in approach to how the crisis can be solved, and despite the political and institutional factors that constrain freedom of movement in adopting the measures needed to deal effectively with it, the people of the member states of the eurozone and their leaders will surely take the right decisions. And they will adopt measures and an institutional framework that will safeguard the standing of the euro and protect the stability and solvency of the European banking system.

Despite the hurdles that lie before us on the national level, I believe that all the countries – great and small, strong and weak – share a mutual interest in securing the cohesion and stability of the eurozone. Because this will ensure the continuation of the European integration process by which the peace, prosperity and solidarity of the European peoples is consolidated.

10. To deal effectively with the crisis, we need more radical measures, including the strengthening of financial resources and room to manoeuvre by the European Financial Stability Facility (EFSF), a more watertight framework of economic governance within the eurozone, and real steps towards convergence and integration of the various member states’ fiscal policies.
Honourable Members of Parliament,

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11. Time does not allow me to expand in greater detail on the subject. In any case, before formulating proposals on how to rescue the eurozone, it is both imperative and our duty to implement the right policies to rescue Greece, so that when the eurozone starts to emerge from the crisis Greece will still be numbered among its members. This must be our overriding objective.

12. What is the nature and basic cause of the debt crisis and, more generally, the banking and economic crisis in our country? The main cause is the accumulation of excessive public debt relative to the size of the economy, due to the persistently high budget deficits over a number of years. The continual accumulation of large budget deficits was not compatible with the monetary policy of the ECB, whose key mission is to maintain price stability. The combination of expansive fiscal policy and rates of inflation that for a number of years were consistently higher than the average rate of inflation in the eurozone led to loss of competitiveness, with adverse impacts on the balance of payments, business activity and employment.

13.The accumulation of excessive debt – both in the public and private sectors -is one of the main causes of all the crises to have hit advanced and developing economies throughout the ages. In the case of Greece in particular, the expansion of the public sector and the growth of the economy were founded, for a number of years, on borrowed money, and both proved to be unsustainable. Borrowing was, by and large, not used as a tool for financing productive investments, but instead used to meet the consumption of the government and the private sector. In other words, we failed to create the foundations on the basis of which we could repay the ever-burgeoning debt.

14. The global credit crunch served to show just how vulnerable the Greek economy really was, on account of its fiscal imbalances and loss of competitiveness. When the true scale of the problem was revealed in the autumn of 2009, the markets responded mercilessly and the cost of borrowing soared. Thereafter, doubts about Greece’s ability to implement the policies required to rein in the debt led interest rates to prohibitively high levels that rendered the public debt unsustainable. As a result, Greece had to request a bailout package from its European partners and the International Monetary Fund.

15. When presenting the government’s policy statement to Parliament, I outlined the reasons why, despite the significant progress made in reducing the budget deficit, the time when the country can raise funds on the global markets has necessarily been deferred to a later date. As a result, liquidity in the banking system has contracted and funding of the economy has become anaemic. It is clear that, despite the reduction in the deficit, the high and ever growing public debt and loss of competitiveness are the main obstacles to economic growth, the creation of new jobs and improved employment figures.

16. The basic causes of Greece’s economic woes are, unfortunately, homegrown – they are the product of policies, practices and mindsets that have been endemic over many years.

17. At the same time, however, it needs to be said that the excessive public debt reflects the inadequate workings of the economic policy framework of the eurozone and the failure of the capital markets to give effective early warning of real credit risks and to encourage timely implementation of tighter fiscal policy. For instance, the Stability & Development Pact failed to deliver ideal results and, as it turned out, was unable to anticipate and prevent fiscal derailment.

Although for a number of years prior to the crisis Greece, at the highest political levels, had been the recipient of repeated warnings by the European Commission, the EU Council of Ministers and the ECB on the need to implement responsible fiscal policy and to reduce the budget deficit in line with the terms of the Stability Pact, these warnings were ignored. Indeed, the deficit continued to grow and was, to some extent, concealed from view. Accordingly, it is essential that we adopt a new framework of economic governance in the eurozone, which in future will effectively preclude the creation of excessive budget deficits.

18.The policy of fiscal consolidation and reform implemented today is essential, given the scale of the errors made over the past years. Only by applying this policy can we free ourselves of the constraints that high public debt implies, and lay the foundations for a different type of growth that, above all, will be sustainable. Unfortunately, Greece is called upon to correct, within an extremely short space of time, the accumulated ills of many years. And this demands an immense effort and involves enormous adjustment costs for a period of time.

The costs of adjustment and the sacrifices of the Greek people must be distributed fairly. However, without fiscal reform we shall never manage to create the primary surpluses needed to enable us to reverse the rising course of the public debt and to raise funds from the global markets so as to finance sustainable growth and create new jobs. Without money our options are very limited.

19. By leveraging the comparative advantages of our country in sectors such as energy, tourism and agriculture, by introducing structural reforms that enhance our competitiveness

- that generate further competitive advantages and strengthen exports
- and by leveraging effectively the community funds released via the National Strategic Reference Framework, economic recovery and job creation will be achieved within a shorter space of time, thereby offsetting the adverse impact of the austerity measures. We must act quickly and methodically, in line with a specific strategy, mindful of the unemployed -particularly unemployed young people – so as to make the period of adjustment as short as possible and to ameliorate the side-effects.

20. When presenting the government’s policy statement to Parliament, I mentioned that regardless of whether we are members of the eurozone or not, our country’s economic problems remain the same. I stand by this view. However, I am sure that these economic problems will be even worse and their resolution even more difficult if Greece is not part of the eurozone. First, an exit from the euro and the adoption of a new, devalued national currency will lead to massive inflation, which would hit first and foremost the incomes of ordinary working people, particularly salaried employees and pensioners. Second, it will make it even more difficult to service the public debt, which is denominated in euro and which will have to be serviced by the government at the exchange rate of the new, devalued national currency. Third, Greek public and private sector assets will be available at fire-sale prices for all those who have funds in euro or other strong currencies. However, as I explained in my presentation of government policy to Parliament, membership of the eurozone implies significant benefits and facilitates adjustment of the economy, provided of course the right economic policy is pursued. However unpalatable, these are the hard facts of the matter. By understanding precisely our situation and the international context of our predicament we can better assess the policies required and set the right course for the national endeavour to restore the economy to health. But we should all take note that there are no easy solutions to be drawn out of a top hat.

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Honourable Members of Parliament,

21. As I have already pointed out, the task that the unity government is required to carry out is immense given the brief term of life assigned to it. For this reason, it would be wrong to expect too much of it. Implementation of the decisions taken at the eurozone summit meeting of 26th October and implementation of the policies associated with those decisions will facilitate the transition of the country to conditions of fiscal balance and sustainable growth. Thereafter, when greater stability and certainty have been restored, elections will be held so that the next government can continue the task of restructuring and reforming the economy.

22. Of course, if the peoples of Europe and international organizations are to continue financing our country, they will need more than the promise by the present, short-lived, unity government that it will carry out the task you have assigned to it. They will understandably require the express undertaking of the leaders of the parties comprising this government that they agree with the full implementation of the decisions taken on 26th October, and undertake the obligations that led to, and derive from, those decisions, as I described in my government policy statement to Parliament. Greece is asked to make this commitment for the simple reason that the Europeans and our institutional partners are also committing themselves to long-term financial support for our country.

VI

23. When, following the proposal of the three political leaders, the President of the

Hellenic Republic honoured me with the invitation to lead a unity government, I
accepted fully aware of the responsibility I was undertaking. The stakes are
enormous: will Greece remain a member of the eurozone, or will we be obliged
to leave?

23.1 firmly believe that, united, we can prevail:

- With the support of the Europeans and other peoples who have faith in our endeavour and who are investing in our success within the eurozone.
- Through the implementation of the policies and reforms required to restore the country to economic growth.
- With the mobilization of the Greek people in the national effort.
In this way, the sacrifices of the Greek people will not be wasted. On the contrary, they will shape the foundations for a brighter future. 24. We must enter the fray with confidence in our abilities, with determination, in a spirit of common purpose. If we fuel conflict and friction, particularly at this crucial juncture, we shall do ourselves no service.

24. The process of rescuing the country and overcoming the crisis is a process in which we all have to take part, a common goal requiring solidarity, understanding and mobilization. The road will not be easy. This is why I am not addressing my remarks solely to those of you who intend to give the unity government your vote of confidence. I also address my words to those of you who do not intend to give the government a vote of confidence, and I beg of you to bear with us: By all means, exercise your right and duty to criticize the government, but please do not reject the common endeavour.

Honourable Members of Parliament,

25.1 ask for your vote of confidence in the unity government.

Thank you.

The decision – arising from the deliberations chaired by the President of the Republic – of the leaders of the three parties supporting and participating in the present government represents a major step towards establishing the consensus and common purpose required to save the country: after a long and tense period of friction and uncertainty, the agreement between the three parties – Pasok, New Democracy and Laos – to form a unity government with a clear mission and mandate is of crucial importance for the attainment of key national objectives. Indeed, it sets the basis for:

- restoring the international credibility of the country,
- strengthening national and social cohesion, and
- meeting the obligations that Greece has undertaken in order to exit the crisis and revive the economy.

I am fully conscious of the honour that has been bestowed on me, as well as the responsibility that I now shoulder. I thank the President of the Republic for asking me to form a government, and I thank also the chairmen of the three participating parties for the trust they have placed in me.
The new unity government – and I personally – undertake the task we have been charged with at this crucial moment for four key reasons:

- Because Greece’s participation in the eurozone is at stake;
- Because by staying in the eurozone we safeguard monetary stability, we lay the foundations for sustainable economic growth, and we enhance social justice;
- Because young people must be given the chance to live and prosper in their home country, within an environment of stability, favourable job prospects, and equal treatment for all;
- Because I believe that, united, we can and will succeed.

How, then, are we to do this?

- By securing the solidarity of the European peoples and international organizations who have faith in our efforts, as demonstrated by the financial rescue package and technical assistance they have provided us;
- By implementing the policies and reforms required to restore the country to fiscal health and regain competitiveness;
- By mobilizing the Greek people in the national effort.

The very substantial sacrifices made by the Greek people must not be squandered. Two keys to winning the battle are: first, the truth and, second, restoration of confidence. By truth, I mean the truth about our current situation and where we are heading. And by confidence, I mean the confidence in our ability to overcome our problems. To secure the confidence of the international community we have to regain confidence in our own abilities.

The fiscal crisis that took hold of Greece two years ago has escalated and spread. It has evolved into:

- a banking, an economic, and a social crisis;
- a crisis of confidence among the Greek public in the ability of economic policy to address the country’s problems and map out a brighter future;
- a crisis of confidence among our European partners in the will and ability of Greece to push through fiscal reforms and restore its economy to health.

And all this is occurring despite the notable progress in restoring fiscal balance and the significant improvement in competitiveness posted since early 2010. Specifically, the general government deficit fell from 15.7% of GDP in 2009 to 10.6% of GDP in 2010, and is expected to decline further to 9% of GDP by the end of this year. Further, the international competitiveness of the Greek economy has improved significantly, as shown by the evolution of unit labour costs and, more generally, the cost of production, as well as a reading of other indicators that capture the qualitative and other components of competitiveness.

Yet despite the reduction in the fiscal deficit, the public debt is increasing because the general government deficit has not been sufficiently reined in.

Sufficient primary surpluses to help reduce the debt and reverse its upward trajectory have not been generated. The process of fiscal consolidation, cost cutting and increasing taxes, and the limited liquidity of the economy have all served to deepen – beyond the levels initially forecast – the recession that first gripped the economy at the end of 2008, due in part to the global financial crisis.

As a result, we have seen been a sharp rise in unemployment and additional difficulties in meeting budget targets. In response to these developments additional austerity measures were implemented to reduce the budget deficit. Social cohesion has been put under pressure. The Greek public has become increasingly dismayed and frustrated by the fact that, despite their sacrifices, the prospect of an effective exit from the crisis looks ever more remote.

In addition, high public debt (and expectations that it will climb yet further), the shortfalls in the fiscal targets and the delays in pushing through structural reforms mean that the day when Greece can raise funds from the global money markets to cover government borrowing requirements has been deferred to an even later date. Accordingly, if reform and restructuring of the economy are to continue, it is essential first to secure further rescue packages for Greece from its European partners and the IMF and, second, to implement a new economic adjustment programme that addresses the country’s fiscal problems more effectively and at a faster pace, while aiming at restoring, and then improving, our competitiveness.

To conclude, despite significant progress, Greece today finds itself at a critical juncture. The choices we make about the course to be followed and the policies to be pursued will be crucial for the future prosperity of the Greek people. The two alternative directions that the country can take, i.e. to remain within the eurozone or to leave it, have been stated in no uncertain terms by our European partners, who have also stressed their readiness to continue supporting our country, provided of course that Greece itself wishes to continue the economic consolidation and restructuring process.

The decisions taken at the summit meeting of eurozone leaders on 26th October, and the commitments which, on the one hand, led to these decisions and, on the other, derive from these decisions, set out the actions required to ensure financing to Greece in the years ahead and the successful outcome of the economic recovery effort.

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The main task of this government, as agreed at the meeting of political leaders chaired by the President of the Republic on 10th November 2011, is the implementation of decisions taken by the eurozone summit on 26th October, and the implementation of the economic policy associated with these decisions. The government is called upon to guarantee that the respective commitments undertaken by the country are observed.

These commitments arise from the ongoing support programme; they also led to the more recent decision of 26th October, and derive from it, via the new rescue package and the involvement of the private sector (PSI) in the financing and long-term sustainability of the Greek sovereign debt. The Finance Ministry will manage the overall package of actions required for the implementation of our undertakings as per the adjustment programme.

More specifically, the decisions of 26th October concern:
1) additional financing for Greece totalling EUR 130 billion, covering our funding needs for the next three years, and
2) a new scheme for private sector involvement in the financing of the Greek state in the years ahead, leading to a significant decrease in the public debt, and a drastic reduction in the funding requirement for the public debt by 2020, while ensuring its long-term sustainability, bringing it to around 120% of GDP in 2020.

The sequence and timing of actions leading to the implementation of the decisions of 26th October are dependent on the agreements that associate our country with the eurozone member states and our institutional partners – the European Commission, the European Central Bank and the International Monetary Fund.

Once these decisions and the economic policy associated with them are implemented, Greece will be able to look to the future with greater optimism.
It is important to note that measures capable of leading to attainment of the fiscal targets set for the end of 2012 have already been taken and put into effect.
In the meantime, effective implementation of PSI means that:

- First, interest payments on the public debt will decline sharply in 2012, leading to further reductions in the fiscal deficit.
- Second, during the last two years of the new consolidation programme (2013 and 2014) under the Medium-Term Fiscal Strategy Programme, the need to take yet further measures will be reduced.

The task at hand for the present government is immense, given the brief term of life assigned to it. This is why we must get started immediately, and move at a rapid pace.

Our first priority is the immediate fulfilment of the conditions that will* enable timely disbursement of the sixth tranche of the original loan. The release of this tranche needs to be made no later than 15th December, in view of the government’s financial needs in the second half of the month. The legislative and administrative conditions for disbursement have been fulfilled by the country, thanks to the implementation, by the previous government, of all the required actions.

It remains for us to enact the undertakings that led to the decision of 26th October, and which derive from that decision.

The second priority for the new government is the completion of discussions with the troika on the new programme, on the basis of the fifth review of the original programme that was completed a few weeks ago. Following adoption of this new programme, the new loan agreement will be drawn up and then submitted to Parliament for ratification before the end of this year. The agreement must also be ratified by the parliaments of all those other member states whose various constitutions require such ratification.

Another urgent task for this government, of course, is the preparation of the budget for 2012 within the deadline set by the Constitution. Already, the budget is in its final stage of preparation by the economic team under Deputy Prime Minister and Minister of Finance, Mr. Evangelos Venizelos. The new draft budget will include an initial assessment of the beneficial impact of PSI.

The budget for 2012 shall be included in the revised Medium-Term Financial Strategy Programme, which comprises the cornerstone of both the existing and the new support programme.

Preparations for the planned bond swap under PSI are already under way so as to map out the financial and fiscal framework that needs to be in place by the time the new programme is approved and scheduled, and the holders of Greek sovereign debt are approached. Accordingly, we shall publish forthwith the global public announcement of the PSI, as per the Eurogroup decision of 7th November 2011.

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At the same time, we also need to ensure – in collaboration with the European Financial Stability Fund (EFSF) and the ECB – the liquidity of the Greek banking system during the implementation phase of the new PSI.
An immediate priority for this government is the approval of the bill ratifying legislation regulating issues related to Greek government guarantees to banks.

Alongside its core mission, under the Constitution the government is charged with formulating and running the general policy of the country in all spheres.

For example, the government will pursue the structural changes required to improve competitiveness and enhance the productive potential of the Greek economy.

The implementation of critical structural changes that are governed by national legislation needs to be rapid and effective. These changes include:

- the new uniform payroll frame;
- labour reserve measures;
- labour market reforms;
- the privatization programme;
- completion of measures to open up closed-shop professions;
- reforms in the workings of the judicial system;
- evaluation and restructuring of bodies, staff and services in public administration and the broader public sector;
- improving the business environment and enhancing healthy competition.

With regard to structural reforms in the labour market, the key priorities include: enhancing active employment policies; ensuring the sustainability of pension funds; supporting economically disadvantaged groups. No less than 24 new job creation schemes are scheduled for activation by the end of the year.

The new Single Agency for the Provision of Primary Healthcare is in the process of being launched. The crucial project of setting up the national electronic prescription system is moving ahead at a rapid pace.

The government is currently pursuing further reductions in the prices of medicines, reductions in pharmacy profits, and consolidation of the implementation of liberalized opening hours for pharmacies. An additional aim is to reduce the cost of procurement costs of hospitals, medicines and other materials compared with 2010.

The implementation of a national strategy to boost exports is particularly important and efforts are being made to accelerate it. A new bill has been drafted to streamline export procedures. Funds available for supporting the working capital needs of export businesses are being enhanced, at favourable interest rates. In addition, a further 20 plans to attract large foreign investments totalling EUR 5.5 billion are currently being evaluated under fast track procedures.

The restructuring and strengthening of the National Strategic Reference Framework (NSRF) so as to bring it into line with current needs and thereby channel funds more effectively to the country’s development priorities is another measure being promoted by the government. In the months ahead, substantial sums from the NSRF’s EUR 14 billion fund will be released to help finance the completion of major infrastructure projects and enhance the liquidity of businesses.

The privatization programme is progressing in line with the fifth review of the support programme. The challenge now is to attract investors.

It is particularly important that the country’s energy resources are put to good use. International tenders have been announced for conducting oil and gas exploration in the Ionian Sea and southern Crete. At the same time, the government is promoting plans to export the country’s solar energy resources to Northern Europe in line with the decision taken at the summit meeting of 26th October.

An action plan is currently being drawn up in collaboration with the new European Task Force for the reform of public administration and reductions in paperwork, both of which are essential if the country is to foster greater investment activity.

We shall focus on drastically reducing waste and closing down unnecessary bodies and agencies.

More efficient government administration and public services, greater transparency, equal treatment for all, and the strengthening of institutions are all of paramount importance. To this end, a bill is being drafted for the transformation of the Greek administrative model to that of a strategically focused and streamlined state. Also, a bill has been drafted for the reform of the disciplinary regime applicable to public service workers, and is now due to be submitted for discussion in Parliament.

Reforms will also be made across the entire spectrum of the administrative, civil and criminal justice systems. At the same time, alternative forms of dispute resolution will be strengthened so that the public will at last be able to find justice within a reasonable space of time.

Improving the educational system is essential if the country is to tap effectively its human and productive resources. Streamlining of the hundreds of regional administrative structures in primary and secondary education is already under way. Implementation of the Higher Education Act is a popular imperative, as reflected in the very broad support it received from the vast majority of MPs. The government will also take steps to restructure the country’s research profile.

Last, it is important that we implement forthwith the Lifelong Education programme.

In the area of tax policy and the management of public finance, the primary objective is the immediate and effective introduction of the new structures that have been decided, and the implementation of the findings of the reports prepared by technical experts of the IMF so as to tackle effectively tax evasion.

Honourable Members of Parliament,

It is my hope that the time during which this government is responsible for the management of public affairs will be more than a mere parenthesis. Rather, it is my hope that it serve as the bridge that facilitates the transition of our country to a state of fiscal balance and sustainable growth.

Our European partners and the international organizations that are supporting us have made it clear that the continued funding of Greece will depend on full implementation of the decisions of the eurozone summit of 26th October and the economic policies that go hand in hand with those decisions. To this end, they have asked for the commitment of the government and the leaders of the parties that form it.

This requirement should not be interpreted as the demand of faceless powers and organizations. We need to appreciate its true dimensions. The commitment they are seeking is a requirement and expectation of the peoples and taxpayers of the states which, either directly or indirectly, support us, and who are undertaking the risks and contingent liabilities that will arise if we fail to deliver on fiscal consolidation and restructuring of the economy. The pursuit of policies that aim at achieving these ends is first and foremost in our own national interest; however, it is also an obligation towards those other peoples who are showing us solidarity.

Honourable Members of Parliament,

It is true that the crisis and concomitant austerity measures have deepened the recession and hit employment over and above the levels originally estimated. These undesirable developments, however, can be countered and gradually eliminated in three ways:

- By promoting the reforms I outlined above, so as to improve competitiveness, enhance the country’s productive potential, and support an outward-looking economy.
- By using more effectively Community funds through the NSRF.
- By fast-tracking investments in energy, and particularly renewable energy.

These actions will help to absorb unemployment. Furthermore, we must provide a strong safety net for those who are socially more vulnerable. We need to support them with policies and stronger social solidarity by every available means. I believe that in the storm of this crisis none of us should feel alone.

The Greek people know that the course we have to tread is uphill, and that our efforts will require persistence. The exit from the crisis, under the best possible terms, and a return to growth and full employment, will not be forthcoming without sacrifice and without the associated cost of adjustment. These costs and sacrifices, however, must 6 be distributed fairly. Broadening the tax base and eliminating tax evasion are not only fiscal consolidation measures; they are also measures of social justice.

I should stress that uur endeavour to achieve fiscal consolidation and economic restructuring is made easier – not harder – by Greece’s membership of the euro area, which serves as a guarantee for monetary stability and fosters the right conditions for sustainable economic growth. In addition, the single currency assists in the European integration process and reinforces cohesion and solidarity among European nations. Remaining in the euro is our only option. The Greek public are fully aware of the benefits arising from membership of the euro area – as evidenced by all the opinion polls.

Honourable Members of Parliament,

If we stick to our commitments and are systematic in our efforts throughout the term of this transitional government and the subsequent government that is elected by the Greek people, the positive results we are striving for will start to materialize.

There is no denying that the road ahead is far from easy. But the time will come when our current hardships will take a turn for the better. The time will come when economic recession will return to growth, when the state will function better, when our collective efforts and social solidarity will be rewarded. The agreement of 26th October provides us with the best opportunity to reverse the current adverse climate, at least insofar as our own actions can impact it.

This crisis can be turned into an opportunity. All that is needed is for us to try our best. I call upon all those who work in the public sector – everyone in the nation’s tax offices, schools, public services – to do their very best to prevent their sacrifices from going to waste; for their efforts are crucial to the success of our common endeavour. The contribution of each one of us may seem meagre; however, combined with the efforts of everyone else it amounts to immense social and economic progress.

In a spirit of common purpose and social unity it is possible to deal with the crisis at greater speed and at lower cost to all. We can prove that we are capable of changing the country and shaping a brighter future, especially for young people. It’s up to us. We have the potential. Together, conscious of the difficulties that lie ahead, but with a clear objective, in a spirit of determination and systematic endeavour, I believe that we can succeed.

Allow me, then, to conclude:

I undertake the office of head of government at this most difficult hour in the recent history of our country. I am fully conscious of the great responsibility this entails. However, I cannot carry out this mission alone.

Emergencies of the kind that Greece now faces can only be confronted effectively when all the nation’s forces and potential are united and work together. I believe that by giving this government a vote of confidence you will be joining in this effort.

I am sure that no one here wants to see our country defeated and leave the euro.

I take it that all those who support the government undertake responsibility for ensuring that Greece’s membership of the eurozone is not up for negotiation.

The country can be saved. It depends on us.

Let me be quite clear to you and the Greek people. As long as the Hellenic Parliament entrusts me with the office of Prime Minister I shall perform my duties solely in the interests of our country.

Honourable Members of Parliament,

I ask for your vote of confidence in the unity government.

Thank you.

            I have delayed somewhat because I wanted to listen to what the opposition would say.  I will refer to what they said, though I think that probably our decisions have proved to be justified.  The opposition has taken a major decision to support the package.

First of all, dear Colleagues, every time we meet we note how dramatic things are, and that is true for today’s meeting too.

Let us look at what is at stake here.

I heard that yesterday our partners expressed surprise.  I do not understand why they were surprised- I simply do not understand why there was any surprise at all.  I was surprised that there was any surprise.

At one point in time, I and many others had said that what was at stake was our participation in the euro.  This was not an issue raised by us but is up for discussion due to circumstances.  Those who do not understand this call us ‘blackmailers’ and say that we are raising dilemmas that do not exist.

Yesterday’s events are simply a confirmation of what we were saying and nothing more.  What is really at stake here?  At the moment, it is the decision taken on the 26th October, and all the decisions taken recently, due to the enormous deficit problem and our sovereign debt in 2009.

The only way for us to stay in the euro, through negotiations of course, both internally and externally, is to faithfully implement the specific decisions.  We took decisions the day before yesterday that are beneficial for the country.  I will refer to these also.

In my reference to a referendum recently which unleashed a public debate internationally, there was another beneficial factor: we saw some indication, a foretaste of what it means to have saved the country and what it would have meant if we had not saved the country.  This was a foretaste simply.  We should fully understand the situation; every Greek citizen should understand that we are speaking in all sincerity.  We may not have been as bombastic perhaps as some like us to be, but we were sincere.

We also saw the international reactions to our decisions, within Greece and on the world markets.

How are we to deal with the issue of faithfully implementing the decisions of the 26th October?  I think that we are all concerned about the difficulties but the incidents of the 28th October in Greece was the culmination that made us look ridiculous in the Eurozone and internationally, giving the impression of a total lack of seriousness and understanding, instigated by groups acting to the detriment of our national interests– even though they were holding the national flag.

Our partners have expressed their bewilderment at the reactions of these people in our country after difficult but beneficial negotiations for Greece.

I am not referring to small groups which may ultimately exist in any country and who might have extreme views and act more or less irresponsibly, but I am referring to political parties.  With all the political parties reacting and denouncing the Government in no uncertain terms! I have stressed so many times that we need the broadest possible support.

We have felt the constant pressure of public opinion in trying to do things that have never been done in this country and to implement policies which are beneficial, even though there may be a difference of opinion on the details – still they are beneficial in their general thrust.

As to the referendum- first of all I consider that a referendum is the decisive and categorical answer to all those scenarios both inside and outside of Greece which talk of abnormality or of exiting the euro.  I must make it clear to all that I have every faith in the wisdom and maturity of the Greek people, much more so than in the present political system.

I am not condemning the political system in general.  What we know is an established political system.  Counter to this are the citizens, without any romantic allusions.  I believe firmly in Democracy and this will never change as a principle that I hold, and I believe is firmly rooted in our political movement, with deep political and cultural roots in our country.

Despite the prevailing problems of certain systems, as soon as we mentioned the referendum, it was the first time for many years that citizens felt that we were taking them into account and enabling their voice to be heard and that we trust their judgement.  We believe in people’s ability to judge correctly with the correct information to hand of course.

As for our partners, they recognise our right to a referendum. Of course, as I said in the Cabinet meeting they would like everything to be calm, simple and without referenda.

As to the subject of the referendum, this was not for them to set.  This is non-negotiable for us. They explained that they would then interpret the result.

Of course we will never, as Vangelis Venizelos said earlier have made our participation in the euro a subject of the referendum.  Our participation in the euro goes without saying.  If we do not however meet up to our obligations, then the issue of the euro is of necessity up for debate. Our referendum issue would have been the 26th October agreement.  This is a beneficial package with many issues and of course commitments attached.

We said yesterday that this package will be the basic issue for the referendum, which of course is our guarantee for participation in the euro.  Rejection of this package will for our partners signify the beginning of our exit from the euro.  In the meeting somebody mentioned the fact that ‘if you leave the euro, it does not mean that you leave for ever – you will leave for ten years and then we will discuss matters again’.

The final result of rejecting the 26th October package, either by referendum, either by elections, or through parliament, or due to not being able to implement it, – would mean leaving the euro.

The non-implementation of the package would mean, quite simply, ‘out of the euro’, we must comprehend this and make it known to all.  I believe that we have understood this.  It is not the referendum, as some would say, that is at fault for this situation, it was the impossibility of implementing the package.

As to the negotiation, because there have been discussions as to a renegotiation, I believe that our answer to our partners was clear yesterday.  It was crystal-clear.  We negotiated. What do they mean by ‘renegotiation’? We are constantly negotiating.

How great a renegotiation should we have?  Has there ever been such an enormous package negotiated over the past decades for our country?  I remember us celebrating because we were to receive 20 billion for the CSF!

First of all, if all goes well the debt will be reduced by 100 billion.  This is a huge package, unprecedented the world over.  A second package, of 240 billion euros in total, over and above the write-off of debt is due.  There are EU funds, on the basis of new conditions, capitalisation of banks, and mobilisation of our partners for investments in Greece – and these are all tools we must put to good use.

The discussions over the past few days here in Greece have been a revelation.  For the first time in two years it has been impossible not to step up to the demands of the day.  Those who accused us of ‘giving in’ are now begging us to vote and to show that we are responsible patriots!

Who is afraid of citizens now? Even those who formally were seeking a referendum do not dare to mention it.  We do not however fear the people.

I do of course understand the moral difficulties that our members have as to the result of such a referendum.  Even this minor doubt means that the result of the referendum will be watered down.

What, however, are the alternatives.

A national salvation government: so far we have been a government of national salvation, going it alone.  For two years we have fought by ourselves but can we last I wonder.

Will our parliamentary group last? There have been insults and heckling, so I ask can we stand it?  We can because we will carry this cross even though they cast stones as well as criticising us.

I fully feel and understand the difficulties you are all facing as members of parliament and if you think that you can proceed without solutions or referenda or broad consensus then let’s go it alone.

I have the feeling however that these two solutions exist.  There is always the option of elections of course, but this would mean a greater danger of default and exit from the euro.

At least a referendum has many chances of sending a very positive message.  I would not like to have it on my conscience and to regret that we did not go to a referendum and then find ourselves outside of the euro, because the Greek people did not have its say, and because we could not implement the beneficial decisions due to the reactions of some groups.

This is not of interest to our partners; however, they are not interested in who is to blame.  Greece is to blame; it is not Samaras, nor Papandreou, not this group, nor the other.

They would like us to meet up to our commitments and they guarantee the implementation of the agreements which are beneficial to the country.  Irrespective of disagreements or agreements on ideological issues, we cannot doubt that they desire the success of our country.

So we have dilemma –true consensus or referendum.  As I said yesterday coming out of the meeting if there were consensus we would not a referendum.  In the meeting this was stressed repeatedly.  I said that ‘if the opposition comes to the table to agree on the agreement we do not need a referendum’.  I also said that elections would be a third, though harmful solution.

You too have heard the statement by Samaras.  I think that first of all we should welcome the fact that the New Democracy party will vote for the loan agreement.  This is a major achievement I believe.  I am not going to comment on previous moves by the opposition, what has been lost or what where the country now finds itself, – we can do this amongst ourselves

The basic fact is that the ND party will vote for the new loan agreement and I would add that in view of the negotiations ahead of us we should re-discuss its participation in this effort too.

Certain conditions have now been set down – a transitional government, elections, etc. This is an issue we should discuss together, not something we should a priori adopt or reject, because it is still a general statement with a number of contradictions.

What would a ‘transitional government’ entail? What does ‘we go to elections but this parliament will vote for the package’ mean?  When will these elections be held, if elections are held, and for what purpose? We will discuss all this later.  Here we have said that we will vote in order for the country not to be dragged either to a referendum or to elections.

I at least am content, even if we do not go to a referendum, which was never an end in itself, if by all this discussion many have seen the logic at least.

The real problem however still remains, we have not avoided the swirl.  Even if some form of collaboration is achieved we must understand that the real problem remains.   The discussion, on the other hand, will be done with sincerity and on the basis of the national interest.

What is at stake is the move on with the broadest possible consensus in implementing a programme that is beneficial for Greece.  This issue is a political one, not one of procedure, it is profoundly political.

On this basis I propose that we appoint Dimitris Reppas and Nikos Athanasakis to discuss with respective cadres in the New Democracy party.  I too will discuss with Samaras to see what the next steps will be, on the basis of a broader consensus.  All will have their say of course and we will shape our proposals.

I think that today is a truly historic moment where the political parties have been able to agree on issues of major importance without conflict.

What this means for us we will see, but I think that we are here to serve our country above anything else.

Dear Colleagues, President,

We know that our country has been waging a titanic battle over the past two years.  Citizens are making a super-human effort.  With great endeavour, difficulties, political and personal cost we have all done our patriotic duty.

For two years now, once it became known what we inherited as a government, our country and society have entered a long tunnel of tribulations.  Our intention is to come out of this better and stronger. We have been constantly on the go trying to keep Greece on its feet and we are proud of this.  We are proud for what we have achieved and what we are achieving every day, despite the fact that public finances were due to collapse, despite having a clientelist state in dissolution and an international context which is fluid, where markets are uncontrolled with fear and speculation holding sway.

At the same time we have Europe with its own doubt, difficulties and set views.  We have public dialogue swamped by the facile exploitation of pain instead of fertile dialogue.  Most of the political world is unable or unwilling to accept the fact that it must change, nor to recognise the seriousness of the situation.

This is the situation and it is within this context that we are waging a battle as a country the past two years.  Despite the difficulties, despite the crushing criticism, despite the folly of the situation, despite the unfair reaction of powerful, organised vested interest groups who dominant the economy and the state.

We have been able as a Pasok government and parliamentary group, by ignoring the sirens, the populist jargon, (with the loss of those unable to endure the situation), to avert default first and foremost.  We have saved the Greeks from having to live through this nightmare of a national default.  What we have achieved is continued financing for wages and salaries by the establishment of a support mechanism which did not exist. We have proceeded to a huge, unprecedented reform programme so that our country can change once and for all, for us to be able to face the future and forthcoming changes with new provisions.

We have struggled hard to come to an agreement of paramount importance for the future of our country to ensure considerable relief from the burden of the past and which opens up a great window of opportunity for the future.

Dear Colleagues,

In this special situation we find ourselves after the 2009 elections it has been our primary obligation to avoid default.  Spearheaded by me we have all undertaken the responsibility to find the finances to avoid the collapse of the country.

This was our first goal.  It was not what we expected prior to the elections and nobody could have foreseen it.  We did however undertake to the full, the responsibility of this huge burden and we succeeded.

First of all with the agreement of May 2010 – this ensured us the first and largest package worldwide – 110 billion euros.

Our second goal was to improve gradually the terms of the agreement, based on the credibility the country gains by the painful efforts undertaken by all society.  We have been the guinea-pig, it is true. This was the first time that this situation has arisen in a developed country such as Greece and in a Single Monetary Union, such as the Eurozone.  In this experimental stage of course we have paid dearly, learnt much, but negotiated much.

At the March Summit we were able to achieve a very important reduction to our debt, though it remained enormous and difficult to repay without strangling Greece for years.

This is why as concerns our debt we wanted to reduce the burden on our citizens.  We achieved this in July and then with the 26th October agreement, a few days ago, which complemented and then positively exceeded by far the decisions of July.

I repeat very briefly something I have said many times, but which is often lost in the tumult of other discussions, that the 26th October agreement achieved in the European Council is a milestone for this country and opens up new prospects.

Many tried at the beginning to belittle it, each for their own reasons.  But the true importance for the country is proven today.  As each day goes by it becomes apparent how decisive and historically important this is for Greece.

Our concern in this negotiation which was difficult is for the position of our country in the euro not to be called into question.

Secondly, we tried to remove the dangers and to protect the assets of citizens so that they do not lose one euro of their savings.

Thirdly, we wanted to facilitate decisively our effort to overcome the crisis more quickly and less painfully so that we could proceed to development.  All three goals have been achieved.

This agreement not only confirms our position within the hard core of the euro, but also strengthens our ability and gives us fresh supplies to rebuild our future on better and stronger bases and for us to stand on our own feet with our own strength.

When the agreement is implemented it will signify the end of a period of great anxiety and insecurity that our citizens have been through. – Anxiety in trying to keep afloat, anxiety as to people’s savings and the prospects for the young generation. Now a new era has opened up which is difficult but more certain, more creative and more promising.

I remind you that the implementation of this agreement means that we will have a new package available to us of 130 billion euros, the largest ever in the world.  It will cover the needs of our economy and state, underpinned by better financing conditions possible, better than the first programme and than other countries in a better position than we are.

In the European Council we achieved an agreement of decisive importance for the future in an effort to write-off a large part of our excessive debt.  We were able to achieve a 50% write-off of debt, the object of course of negotiations ahead of us.  This debt is in the hands of private individuals, holders of Greek bonds, chiefly of the banks.

100 billion can be subtracted from our debt burden in the forthcoming months, which is almost half of the wealth we can generate in one year.  This cost is taken over by the banks, both Greek and foreign.  This would achieve something that is at the heart of our movement – a more equitable and just distribution of the burden.

This is also an act of social justice, especially as our citizens were constantly asking quite justifiably why he should shoulder the burden alone and moreover a burden for which he was not responsible.

For the first time in our country the debt will be reduced directly, in absolute terms, instead of increasing as in the past every year.   This is not a theoretical or abstract achievement.  It is immediate and therefore concerns the life of our citizens for many years to come.

Simply by reducing the total debt we will have lower interest rates, a longer period of repayment, a longer grace period,- and far less interest will be paid.  According to the estimates of our institutional partners, next year we will reduce interest repayments by 5 billion euros. This is approximately the cost of all the measures in the multiple law

that we voted on, so you fully understand the importance here.  This has been a tremendous saving which came out of the reserves of each family through taxation, so this will come as a huge relief.

I am not saying that all is rosy but it is certainly a greet contribution for the Greek people.  When we started this super-human effort we undertook a basic commitment to our citizens that their sacrifices would not be in vain.  These have been difficult sacrifices but have not been in vain, they have taken root as a new basis for the future of the country.

We have honoured this commitment therefore.  This write-off of debt alone is much greater than the sacrifices we are called upon to make or have made already.

Consequently this is a clear vindication of citizens’ efforts, and of all of us, for what we have been through and are still going through, – all the difficulties with votes of confidence, standing our ground, threats and much more.

It is recognition of our policies and our common efforts; it a proof also of the robustness of our society.  I do not know of other societies, such as Greece, which within a democratic framework can endure such a burden in so short a space of time.

It is a recognition and proof for ourselves which gives us courage and shows that we have the will and the unbroken unity to achieve miracles and that we have a productive phase ahead of us.

As I said the agreement does not apply to the indefinite future, to 2020.  Already we are aspiring to saving time.  This was also part of the negotiations – for us to weather the stormy sea now which is the greatest difficulty. When things will be better for our country, it will also be much easier, but today it is difficult for citizens and for the country.  This was recognised, negotiated and we succeeded.

In practical terms this changed the budget data.  We will soon be submitting the 2012 budget, but the data for calculation to be negotiated for 2013 and 2014 are changing which will give us a huge breathing space.  The Deputy Prime Minister, Vangelis Venizelos will be saying a few words on these prospects.

This means that with a manageable debt and without excessive interests payments strangling us, new prospects open up for growth.  The issue is not only one of whether the money is sufficient for growth, but where the money is going and where it will be invested.  This has always been our condition and objective, everything must be on the basis of the public and common benefit for growth which will take us to another qualitative and green growth.

The agreements of the 26th was concluded and thereafter the 27th October, with tragic scenes in our country. These are scenes which do us dishonour as a country, but also harm us.  Somebody may carry the Greek flag, but whether he honours it or not is a different matter.

You all heard the statements by our partners yesterday.  I heard that many were surprised at these statements.  In addition to the tone and content, telling us ‘how to hold the referendum’, on which we were very clear, I do not understand their surprise.

First of all I clarify that the decision to hold the referendum or not was and is our own decision, the decision of the sovereign government.  We took this decision.  They of course knew that it had possibly been discussed publicly as well, but it was our own decision.

We may have an economy under tutelage, but democratic procedures and institutions are a matter for the Greek people only.  I have made this absolutely clear repeatedly, both in the past when the issue of removing the right of each country to vote was on the programme, but also in discussions we had on the referendum.

But to come to the heart of the matter why are we surprised with what they said? I am not at all surprised.  What I and many cadres had said is that what is at stake is our participation in the euro.  Yesterday was just a confirmation of what we had said.  To be more specific tantamount are the decision of the 26th October.  All the decisions however that we have taken recently within this painful and difficult programme which will change Greece after the major perturbations to our country due to deficits and debt, all these decisions are our obligation to stay within the euro quite simply.

The only way to stay in the euro, with negotiations of course and with consultation with society is the true implementation of our decisions, of common decisions taken by us and our partners.

We took decision on the 26th and 27th October which are most beneficial for our country despite the difficulties.  We decided to propose a referendum and a world public debate broke out, but there is another beneficial element for us:  we received an idea of what it means to save the country and what it means not to have saved the country. But this was just a foretaste.

We must understand this. This is the reality.  Whether we like it or not, whether it is just or not, this is the reality. We must manage this reality.  We are managing this reality in the best possible way in the interests of the Greek people and our nation.

This must be understood by all Greeks because much has been said about how we found ourselves in this position, who is to blame, which magical solutions might be found.  We are being absolutely sincere in what we say.  Perhaps some would like us to express this sincerity in another way.

We also saw the international repercussions that our decisions might have, the reactions towards Greece from the world financial system.  This should be the subject of serious discussion in the G20 meeting today and tomorrow because after 2008 decisions taken  and recommendations made must be implemented.

Ultimately it must be the people that decide and not the markets.  You cannot have the states needing to collect taxes and at the same time to have a world banking system which allows tax evasion and tax havens.

We cannot have a banking system which pays far less in taxes than paid by workers – here I am referring to the financial transactions tax.  The Rating Agencies cannot have greater power than parliaments.  I could go on further.

It is imperative for the G20 to understand its responsibility it also has in terms of international financial governance, the environment, migration and poverty.

How is the 26th October agreement to be implemented faithfully?  We have all been concerned recently and hence the discussion on initiatives and on how to proceed.

I think that the 28th October incidents were the culmination of the phenomena observed, which unfortunately made us look ridiculous in the Eurozone and internationally giving the impression that there is a total lack of seriousness and understanding because these individuals acted against the interests of the country.

It was also inconceivable for our partners, and of course they said so yesterday, that after such a difficult and tough negotiation over so many months up to the 27th October, that the reaction of Greece should express full opposition.

I am not referring to the small groups or individual citizens who might feel the need top express their anger.  I am referring to parties and their leadership. They all in one way or another denounced the beneficial agreement.  The leaders commented yesterday -’we have never seen a country having its debt cut by 50% and protesting’!

All the parties protested against the government and accused us of anti-patriotism.

All these events are worrying because we need shape a broad consensus among the Greek people within the parties and social partners as well.

We are doing things that are of historical importance.  What has been done in our country is unprecedented but truly beneficial and even with certain disagreements for certain issues, we are moving in the direction of huge reforms and change to the benefit of citizens and the viability of our country.

This is why we proposed the referendum as the solution which could shape social alliances and a clear decision by the Greek people in favour of the decisions of the 26th October.

On the referendum I want to say that it is a decisive and clear answer, if the answer is yes, of course, to all the scenarios under way in this country and abroad, either towards abnormality or our exit from the euro,

I would like to have an answer on this too.  I have every confidence in the wisdom and maturity of the Greek citizens, more so than in the political establishment.  I am not referring here to the political system, which has its weaknesses and which we want to change, but to the political establishment.  I am not saying this in the romantic sense.  I firmly believe in Democracy.  This is my belief and my principle.  I also believe that this principle has its deep roots in our movement, in the political and cultural traditions of this party.

When we announced our initiative, despite the outburst of different systems as soon as we mentioned the referendum, our citizens for the first time in many years heard that not only do we heed them but also that we are allowing them to make their voice heard, we trust in the people.

We believe in people’s judgement of this major political issue, – with the right information of course.

As to our partners they recognise of course the right to go to a referendum, elections, or anything else.  As I said in the Cabinet meeting our partners also want everything to go smoothly and not to have to face elections or a referendum which might make things difficult.

I would like to point out here that we would never have a referendum on whether we are to remain in the euro or not.  This is not an issue for us to ask the Greek citizens on, we consider that it goes without saying as we have pointed out in the past.

I said yesterday in Cannes that we can not ask such a question.  I want however to be quite frank with you all and say that if we do not meet up to our obligations the issue of the euro will arise. We would have had a referendum on the agreement, in other words, on a broad consensus as I said in the cabinet the day before yesterday. This package, as I said in Cannes yesterday would be the basic issue of the referendum. This decision would then have been the guarantee for our participation in the euro.

The rejection of this package would mean for our partners the beginning of our exit out of the euro.  That is absolutely certain.  In our discussion we were told that if Greece decides to leave the euro, we can re-discuss their re-entry only after ten years have elapsed.

The final result, however, of the rejection of the 26th October package is still centre-stage.  It is not the referendum.  Let us not make the mistake that many would wish – the referendum is not what is at stake.  What is at stake is whether we are ready as a country, not as a government, to implement the decisions which we tried to achieve of the 26th and the 27th October.  It is my belief that we can.

The rejection of these decision, whether by referendum or due to losing our parliamentary majority on this issue, or by its rejection due to the impossibility of implementing it caused by groups staging sit-ins, or because we do not pay, or due to anything else, would mean exit from the euro.  This is something we must understand.            The question therefore is not one of ‘referendum or not’, but how are we to ensure the best possible way to implement the decision of the 26th and 27th October.

It is not the referendum that is at fault for any abnormality.  It was the impossibility of our society, our political bodies and institutions to implement the package that this referendum was to ‘cure’.

This is how we arrived at the events of Monday, with a politicians refusing categorically to undertake their responsibilities – and the discussion over the past few days in Greece has been very revealing, probably outside of Greece too.

For the first time however in two years nobody could hide however important a personage.  Those who accuse us of being conciliatory are now begging us to vote to show that we are responsible patriots.

Who is afraid of the people now?  Even those who used to ask for a referendum do not dare to speak of a referendum.

We in our party never feared the people.  I understand the moral burden of all our members who have expressed their fears.  What are the alternatives though?

There were three.  The first I consider catastrophic which would have been to take the country to elections now.  The parliament would have closed and we would have a polarisation of the political scene, now that society is under pressure and it is doubtful as to whether we would have reached elections without the country going bankrupt, and having lost a lot of valuable time as well.

The other alternative was the referendum which has no relation to the change, via elections of the government, but would have been the continuation of our work in order to win a resounding ‘yes’ and to prove to Europe that we are the ones who desire change.

The third solution of course would be for there to be an understanding and convergence as to what is politically at stake and more specifically the decisions of the 26th and 27th October and our loan agreement.

I personally had tried to establish this collaboration before the elections with something else in mind a t the time of course, but even after the elections, on a number of occasions, but had no success in the effort made.

I understand all the difficulties of our members, and feel them also.  We are carrying a cross and are being stoned as well.  It was therefore imperative that we shape a broader consensus in some way.

As I said the referendum could have sent a positive message.  If we had the dilemma of ‘a consensus or a referendum’, as I said yesterday as I came out of the meeting, and as I told our partners, we would not have even needed a referendum.

If the opposition comes to the negotiating table I said, we are ready to move ahead with ratifying the agreement as soon as it is ready and we do not need other solutions.

We all heard the statement from Samaras.  I really do want to believe in his good intentions expressed as to collaboration on the issue of the vote on the loan agreement.  I wish for this reason to welcome his stance today on the loan agreement.

I will not enter into facile criticism at the moment.  I think that now is the time for us to welcome a different national stance which can bring results, and I hope, the beginning of a new political culture, of a new political stance all round, not only of the two main parties, for the political future of this country.

It is a position which I believe the Greek people also welcomes, which it seeks and which shows the credibility of our political and democratic institutions.  The basic fact is that the New Democracy party said it would vote in favour of the new loan agreement.

In view of the negotiations ahead of us for the new programme I would say that we must call in the New Democracy party and ask them once again to come to the discussions of the new programme as co-negotiators.

I do hope that from now on there will not be any useless ‘no’ votes.  Once again many conditions have been set and I think that one cannot a priori either reject or accept them.  There must be a substantial discussion with the New Democracy party in order to see how we will proceed.  Each decision must however be based on essential data.

First of all it should be based on specific policies.  We are not talking of collaboration but for collaboration.  We are not talking of collaboration simply to divide out posts or positions.  We have very specific goals to implement, a beneficial historic venture and decision of the 26th October and on that basis to move to all possible convergences.  Of course the loan agreement must be ratified.  So therefore it is primarily a political move to have this collaboration.

What is also at stake is for there to be a pillar of stability, of our parliamentary group, which means us, you.  We are keeping this country on its feet and we are still the pillar of stability in this country.

For this reason  the vote tomorrow  is of such importance, because it will stand as a guarantee  as to how we should then proceed according to the decisions taken and how we will discuss with the opposition and those forces that will really to work with us and under what conditions

I am however, glad that the opening up of the discussion on the referendum has created in many a positive, a beneficial shock and has brought positive results to the political circles of this country.

The real problem however, dear friends, still remains.  What we are trying to achieve is the implementation of the programme which is not a procedural issue, but a supremely political one.

We will work with unity and decisiveness in implementing whatever has to be done. The agreement must be implemented, we must have broad commitments in a very clear fashion, but we must also have a united front that this effort requires.

I am certain that the Greek people will value this effort of ours which opens up the road to overcome the crisis in a very difficult period.  There must be stability of the parliamentary group, of this government, irrespective of any discussions with any other political parties.  This is the prerequisite for the day after.  Dear Friends, I do hope that today will prove to be a very important day when voices for unity and for consensus will multiply and that this proves to be a very important day for our homeland.  The more Greeks say that ‘Greece matters more than any of us’, the better our future will be.

Dozens of times I have spoken about this unity which means that we all work together and we support each other, that we have discussion, collaboration, consultation, that we put the collective interest above the personal interest.  We have shown over the last two years that when we try we succeed under the most difficult of circumstances.

In the same way that we succeeded with the first package, just as we achieved the decisions of the 26th October, so too we will succeed in the next steps.  It is not only the effort undertaken by us all together.  For two years it has been the effort undertaken by all of us, of all the Greeks.

We are waging this war with the Greek people, not alone.  We are the soldiers of the battle.  I have said that the salvation and the change of the country is not an issue for one man alone.

We will not succeed alone, I will not succeed alone, and we will succeed all together.

It will be the result of as broad as possible consensus and participation of the Greek people in the effort.

The citizens have borne the burden with sacrifices and now have the result which is the reduction of the debt and a new prospect.  We have achieved much to date, due to our serious approach, our decisiveness and our responsible stance.

You as deputies of Pasok have voted and supported each bill of law, no matter how harsh, and you have done this to save and change our country.  You have supported your citizens in your constituencies and of course we all face difficulties and the change of our country.

Your stance is heroic. Today your stance is a responsible one and a sign of political culture and superiority.

I would like you to continue like this.  I want you to last the course, and you will in implementing this programme.  This is not for me, nor for Pasok, not for our Government but for the people, for our homeland and for our children.  For our common future which has been filled with optimism, I believe, after the beneficial agreement of last week.

We have the potential, we have demonstrated this.  We have the potential and the people.  Our people never defaulted.  Mentalities have gone bankrupt and die every day, – those mentalities that brought us to this point.

On the 27th October in my message I said that we have drawn a definitive red line across the past.  I care not for what we did, but for what we are doing.

We have much work ahead of us for prosperity, but we will succeed.

Thank you.

>> Watch the video.

>> Photographic material.

As you all know, on the 26th and 27th of October we took crucial historical decisions for Europe and for the eurozone. These decisions of course also were crucial and are crucial for Greece. I believe in the many benefits they have for Greece: benefits for growth, benefits for lowering the burden of debt on the Greek people, benefits for a strong package of support for the next few years, where we can actually put our house in order and make Greece a viable economy.

These decisions of course come with responsibilities. And there are important responsibilities. This will change the future, not only today but of the future generations. Positive.

But of course there are many that disputed these positive aspects, and I felt that it was important that the Greek people make a decision on these important developments and the decision we made in the Council of October 26th. It’s their democratic right, and the Greek people I believe are mature and wise to make the decision that is to the benefit of the Greek people and the country.

We are part of the eurozone. Being part of the eurozone, we are very proud, and being part of the eurozone is both having many rights but also many obligations. And I believe it’s crucial that we show the world that we can live up to our obligations. We can live up to these obligations, and this is crucial for our future participation in the eurozone.

So I informed my counterparts that, after consulting with the Cabinet in Greece yesterday, that we could move the referendum as soon as possible, organise it as soon as possible, and we believe that we can have a referendum possibly on the 4th of December.

I will be returning to Greece and consulting of course with my counterparts in the other parties, the leaders of the other parties of the opposition, to inform them of the discussions we have had and of course of the importance of these decisions that we are taking.

I believe that the Greek people, as I said, are wise and capable of making the right discussions, for the benefit of our country. And a positive decision, a positive decision by the Greek people, is not only a positive decision for Greece; it is a positive decision for Europe.

JOURNALIST: What did Sarkozy and Merkel tell you?

MR. G. PAPANDREOU: I informed them that we need to have a wide consensus, because the programme we are facing is difficult, is difficult in implementation, but I believe the Greek people want us to be a strong partner in the euro, in the eurozone, a strong partner in Europe, and that this is at stake. This is at stake.

It’s not the moment to give you the exact wording, but the essence is that this is not a question only of a programme. This is a question of whether we want to remain in the eurozone. That’s very clear. That should be clear to everyone.

I believe that this will be a positive outcome. I believe the Greek people want us to remain in the eurozone, and I believe that this referendum will show so.

JOURNALIST: And if they say no, do you have plan? If they say no?

MR. G. PAPANDREOU: I want to say that we will have a yes.

JOURNALIST: Can you tell us if you are confident the Parliament is going to approve the referendum?

MR. G. PAPANDREOU: First of all, we have, as you know, a confidence vote by Friday, and so then this is our first battle.

JOURNALIST: Are you confident about that? Are you going to win the confidence vote?

MR. G. PAPANDREOU: Well, I do hope so, but obviously this is a democratic process.

JOURNALIST: Without EUR8 billion, will you go bankrupt?

MR. G. PAPANDREOU: Ah, you are now talking about the sixth tranche. Well, of course that is if everything goes well, which we hope everything will go well in the referendum. It’s quite a few days before the sixth tranche is needed to pay up salaries and pensions and so on.

So I believe that, as the programme is as we have the roadmap, that the dates we have are in accordance with the positive disbursement of the sixth tranche.

JOURNALIST: Are you 100% sure about the referendum?

MR. G. PAPANDREOU: I have said over and over again in Greece that we need a wider consensus. I have tried for a wider consensus with all the parties. I have talked many times with the leaders. And if there is a wider consensus, obviously we would not need a referendum. But this wider consensus did not exist.

But I do believe there is a wide consensus amongst the Greek people. And that’s why I want the Greek people to speak. And the Greek people will speak soon. Thank you.

>> Photographic material.

Dear Friends, dear Colleagues, after much discussion within the Movement and more broadly within the framework of a social dialogue, I took an initiative to take us forward.  This initiative is the calling of a referendum.

For the first time after many years the people will give an opinion as to the course of this country.  This initiative was not taken in a vacuum. The option of a referendum is both public knowledge, but was also discussed a number of times.

It is a basic pre-electoral principle, a basic position that both I and the party hold and when the Lisbon Treaty was submitted to Parliament for ratification it was on the agenda of the Cabinet and Parliament as a possible option.

It is a supreme democratic process provided for in our Constitution, and many democratic countries in the world and Europe have used it to enable their peoples to express themselves and to decide democratically.

Therefore I would like first and foremost to stress that any wild reactions are unacceptable that wish to undermine the right of the Greek people, on the basis of various danger mongering arguments that we run a risk if the Greek people express their.  This logic stems from a very anti-democratic concept as to the maturity of people and their ability to take a decision on a serious major national issue.

We are a democratic Government and a party that demonstrates clearly how democratic it is by asking the opinion and decision of the Greek people.

The second issue is also a substantial one.  We find ourselves at a very difficult juncture as a country and as a society.  We have been struggling for two years ceaselessly in order not to fall into the abyss; we have struggled to convince our partners and lenders for a viable and smooth solution to be found.

We have come to the conclusion after a difficult path, through a morass of suspicious criticism, self-serving populism and hypocrisy from a large section of the political spectrum, to this extremely important historic decision of the last Summit.

Even after the Summit decision however, a large proportion of the political spectrum, along with vested interests, whom we know for years have wanted to dominate any power in our country, has undertaken every endeavour to dismantle this result.  Moreover it has done everything it can to imbibe hatred into a part of the population in order to thwart the implementation of this programme.

It has wanted to create the feeling of chaos, as we have seen for example in the recent parades, where an effort was made to undermine and insult the institution of the President of the Republic.

I also remind you that until now, not one single political Leader has taken a position as to the essence of the agreement, not one political party has told the truth to the people, – that this agreement constitutes an enormous ‘window’ of opportunity for the country.

Instead of this, even though they want this agreement to be implemented, they hide behind their minority, causing dissolution everywhere and spreading nebulous and vacuous criticism.

We have succeeded in bringing to the country a favourable agreement for its future.  We all recognise the difficulties of implementation and you know how we have toiled for this over the past few months.  The problems of implementation have become obvious, even with the evaluations, which will continue into the 7th instalment, the 8th, the 9th – there will always be an evaluation.

I want to be clear on this:  a decision was taken in a recent Cabinet meeting, and in Government Committees, and in individual discussions that these changes ahead of us now will be made with the Greek people, – that it should also participate and create.

We have taken a decision for the rule of law to prevail over lawlessness and this applies especially to large-scale interests and privileged parties.  We also know that the next stage requires the broad support of the Greek people, of the conscientious civil servant, the trade unionist with a new creative role, the productive entrepreneur who does not seek to evade taxes.

This is something that concerns not only the State but also the citizen, mentalities, practises, the shaping of a society with cohesion and a common conviction as to the future, a new patriotic concept of a national conscience, a new commitment for the State, for its institutions, and as to the role we have, as to our position within the European Union.

This cannot be achieved simply by laws or by decrees, or by policing.  This can only be achieved only by a broad understanding and participation of citizens – I am convinced of this.

This could have been achieved through a broad political consensus, even by a government of national unity or a government alliance, with a broad outlook, but with basic social and political goals.

This was attempted to no avail so far, not due to our disposition.  I repeat this.  Therefore our choice was a much clearer one.  We either call national elections, or instigate another procedure to make the citizen a participant.

National elections would mean, dear colleagues, avoiding our responsibilities.  It would allow a nebulous state to develop, with vague promises, and there would be an ambiguous mandate to the new government thus formed.

Apart from the damage and attrition of a new electoral campaign period, where everything would be called to a halt, we might also slide into the danger of bankruptcy.  A Referendum is completely different from national elections, which require campaigning out in the constituencies with ministers absent from their posts, and where most likely the result would be a government unable to govern and implement what is necessary.

On the other hand, a referendum would be a clear mandate and a clear message within and outside of Greece, as to our future in Europe and our participation in the Euro, and making a clear decision on this.

Nobody then either in or outside Greece could then question Greece’s place within the Eurozone.

What has changed to cause this ‘rabid’ reaction from all the political parties and most of the mass media against this proposal, which should be discussed at least calmly and with sobriety?  This should of course be in good faith, since any proposal or initiative has its pros and cons.  But what has changed since the announcement of the Referendum for so much commotion to be unleashed?

It is obvious what has changed.  First of all the new loan was agree, and some bankers are worried, some mass media are in huge debt and a search is underway in Switzerland.  Those who placed their bets on a default of Greece have understood that they have lost their money, just like those who bet on a return to the drachma.

This and other things has changed.

Suddenly a referendum has become something awful and fearsome for them.  The Opposition which believed that we would not make it in the Summit and hoped that we would fall from power now sees that by a Referendum it might find itself in a corner, because it is not making any positive contribution.  They fear the people.  They speak supposedly on behalf of the people, but fear the will of the people, because they do not accept the fact that citizens can decide for themselves.

Up to now they said the new agreement would be a catastrophe.  Now they pretend to fear that with a referendum this agreement will not be implemented, which for them was a catastrophe!  This is the supreme contradiction that everybody sees.  They have not decided what they want even!

Perhaps our partners fear the Referendum?  They were well aware of this option and they will respect and support the efforts of the country.  But they are of course uneasy, and of course they would wish for things in Greece and Europe to be calm and simple.   And of course they would not want any perturbation of the markets with the prospect of a referendum, but more so with possible elections.

But we must ultimately send out a message especially to the G20 that what we need is for policies to be decided upon which will ensure that Democracy prevails over any desires of the markets, and this is what I will tell them tomorrow.

For some time now we have spoken of the need for serious changes to the international financial system – for transparency, to tax havens, the CDS,  derivatives, Rating Agencies, transaction tax, – some of these decisions, supposedly, were taken two years ago and others more recently, but nothing has been done.

There is huge tax evasion, not only in Switzerland, but elsewhere, and the international community does not have the courage to control the phenomenon in precisely that decisive manner with which it controls the budget of all Eurozone countries. It should audit in the same decisive way the bank, the bankers, the bank deposits of individuals in various tax havens.

This money has been stolen from nations, not only the Greek nation.  In Greece too, unfortunately, there has been capital flight which of course creates great difficulties in any economic recovery or dealing with the nation’s debt.

What we are trying to do is to change society, to make the citizen a democratic participant.  This is the historic challenge now, apart from saving the country from default, which we have almost fulfilled.

We also have our democratic principles, and as I said, we will not implement any programme by force, but only with the consensus of the Greek people.  This is our democratic tradition and we demand this be respected abroad.  It is my belief that it will be respected.

Already there have been expressions of support from Governments, but also from leaders of other socialist parties in this direction.

There will be a perturbation on the markets, but only temporarily.  The approval of the new agreement on the basis of a referendum will be in Greece’s favour.  Everybody will be mobilised to make the PSI a success, which means the participation of the private sector, because otherwise they too will lose out as they know full well.

The only ones who do not want the agreement to succeed and for Greece to default are those who are already bankrupt, who are trying to organise a new instability, who want chaos, as can be seen from their behaviour, such as for example, in their behaviour during the national parades.

The dilemma is not ‘this or that government’, but rather ‘yes or no to the agreement’, ‘yes or no to Europe’, ‘yes or no to the Euro’.  Perhaps I should mention again the Government of National Salvation’ that I tried to achieve first?  This is what the New Democracy and left-wing parties rejected.  Now that they see that their plans have been foiled, they reveal their true selves, because they fear the people, but we do not.

What is it that the Greek people want?  Are they asking simply for different people to take the seat of power? Or do they want more substantially for there to be radical change in policies, in order to deal with reactive vested interests which brought the country to this state, for which the Greeks are paying unjustly?

Our answer today must be that we are not yielding.  Our answer today must be that we stand united front and seek a plebiscite unhampered.

The only thing that we and the Greek people want is the salvation of the nation.  I am convinced that our citizens will express this by a positive decision as to the future of the country.

From tomorrow the debate begins in parliament on the vote of confidence.  I have asked for this because I described a very specific framework of action.  These are actions which are imperative for the country and the implementation of an agreement, a framework for major changes and reforms which we have undertaken to implement so that this historic opportunity is not left unexploited.

For this to happen however we need calm, sobriety, the support of society itself, and not misleading information.  These three days will be an opportunity for every Minister to inform our citizens and Parliament as to our priorities, the programming and the schedule we have ahead of us.

As I said there are people who do not want this effort to proceed, who see citizens as clients, as hostages to middlemen and petty politics.

We must now reveal who it is that does not want citizens to speak out, who want truth and logic to be substituted for facile propaganda and fear.  When we voted on difficult legislation in the past, when we were deciding our accession to the Support Mechanism, when we were voting on the Medium-Term programme, certain social minorities chose violence, provoking chaos and all this supposedly in the name of the people, whereas today they do not want citizens to make their voice heard.  They react of course because they do not speak for the people, but on behalf of specific interests.

I would like to remind you that we have taken decisions, but ahead of us there are more decisions which need to be taken.  My reference to reactions is not perchance, because even if some of them are genuine, there are however reactions instigated by organised forces.

We now demonstrate that we are serious when we speak of bank accountability and hold them responsible.  For the first time we are moving towards transparency of the banking system which will invest in the real economy.

For the first time we are taking serious steps with arrests for fuel smuggling.

For the first time we are talking about bankrupt mass media, which continue to operate without anybody understanding where the money is coming from.

We are cleaning out the world of football for the first time.

We are publishing a list of tax evaders and chasing them up.

For the first time we are locating bank accounts abroad of tax evaders.

For the first time a Government is trying to clear out the stench of vested interests which, for years, have held sway.  This is where there is most reaction.

We will not give up. We will fight.  Since some are talking of government instability, I would like to remind you, as I did yesterday, how we must implement our task of dealing with immediate and vital duties in the interest of our country and citizens, and the intensive work we must undertake over the next few weeks.

I wish to stress our priorities for this historic success to ‘take root’, in other words to avert anything that could jeopardise it.

First of all, in negotiations with our partners, we will immediately clarify the contents of the new programme which will accompany the 100 billion euro loan.  This will start immediately.

Much has been said of the banks and as to whether they will come to the negotiating table or not, due to the announcement of the referendum.  I wish to stress here that they have already announced that they will be at the negotiating table.  I believe we will achieve the best possible negotiation through the plebiscite also.

Secondly, as to the decision of the European Council, we have until the beginning of 2012 to hammer out the details fully to quantify debt reduction and interest payable as well as the burden on our citizens.

This is a vital duty that must be fulfilled.  Then there are the prior actions we must take for the 6th instalment which you know full well – Mr. Venizelos has briefed you, and Mr. Sahinidis can clarify.

Our goal is to receive the 6th instalment within November, within the next few weeks therefore, so that there is substantial market liquidity created, which means we cannot slacken our pace over the next few days.  We must move on decisively.

We also have decision on important issues as follows: the National Tax System by the end of the year, the 2012 budget, ratification of the legislative act to increase bank guarantees, as well as other direct legislative initiatives.

These are imperative.  We also have major political priorities as I analysed yesterday. Since there is a long list of them I will ask the Secretariat to distribute the text so that you are all aware of them.  These are the basic priorities as you know, and which we have discussed.  By way of indication, I mention the ‘means test’ for all, the major bill of law on entrepreneurship, the issue of speeding up legal proceedings, the plan for the centre of Athens, etc.

Dear Colleagues, this is what we have ahead of us, together and individually.  What I said yesterday is a step towards enabling us to proceed smoothly with this course.

It has unleashed panic, now intensified with the proposal of a referendum.  So much fear lest citizens be allowed to express their will fairly and freely!  Citizens should reflect upon why certain individuals do not want them to express their opinion.

We have said we will seek the opinion of citizens as to this supreme national choice.  All these reactions are based on a common premise, their interests are affected and they want to deprive us of a major success.  We will carry on with the priorities set.  We will not be thwarted. Only political abnormality can remove us from this course.

This is why we stand united, rallied together and we will proceed.  This is what we must demonstrate today.   We have taken on a huge burden without being responsible for it.  We have embittered our voters in order to save the country.  Now that the burden is to be lifted from the citizens, now that a path has been opened up to rid us off all dependence, efforts are being made to stop us.

I also wish to say that there are forces already moving on the borderline of institutional derailment.  You read the announcements of the New Democracy party, of Mrs. Bakoyianni, of the LAOS party, openly inciting their members of parliament not to give us a vote of confidence.

This is why we must all deal at this historic juncture with a sense of responsibility.  We must deal with these efforts to provoke institutional chaos that some people are trying to achieve.

It is only with unity and with clarity of expression from us and from the Cabinet that we must move ahead.