“Breaking the Bottlenecks: Steps Toward Sustainable Growth”
Wednesday, June 8, 2016 – 2:30 p.m.
Cotsen Hall, American School of Classical Studies
Everybody, Panos, Christos, thank you for the very kind introduction.
Distinguished panelists, distinguished guests, it’s a real pleasure to be here. Σας ευχαριστώ θερμά για την πρόσκληση και την ευκαιρία που μου δίγεται να βρίσκομαι σήμερα εδώ μαζί σας.
I wish it was more, I had three years of Ancient Greek, the modern Greek is a little shorter.
Stanford and the London Business School are two of the world’s leading universities for economics and public policy, so it’s a real honor for me to be invited to say a few words at the opening of this conference.
Both schools practice and teach the kind of growth-oriented strategy that will be required for Greece to “break the bottlenecks” it faces. In a country in serious social and economic crisis, sustainable growth isn’t just a buzzword or nice idea, but an imperative.
There are several reasons the United States government has been working hard to help Greece get out of its six-year depression. It isn’t just because of our long relationship, or because we like ancient Athens. Of course we respect and value the history, and what better place to affirm that than right here, at the American School of Classical Studies in Athens, but there’s a lot more:
The first reason that we’re working so hard at this issue is that we have a humanitarian interest. The last eight years have been disastrous for Greek society. Unemployment hovers around 25%, and youth unemployment is nearly twice that. Public schools and hospitals are overburdened. Domestic abuse has risen, and so have incidents of depression and suicide. Hundreds of thousands of people, especially young people, have had to uproot themselves and move overseas for work. The Greek economic depression has now lasted longer than our Great Depression of the Thirties, and by some measures it has probably been even more severe.
From President Obama on down, the American people and government have expressed sympathy for the suffering and difficulties that Greece has endured. We have tremendous respect for the sacrifices and the commitments that the Greek people, and successive governments, have made to restore fiscal stability, reform the economy, and restart growth.
In addition to that human factor though, the second reason that the United States wants to help Greece out of its depression is because Greece matters for the stability of the region. Years of high unemployment, a sense of futurelessness, and a declining standard of living are conducive to the growth of radical movements, both on the left and on the right. And it is impressive that this phenomenon has actually been a relatively limited effect here in Greece but a stable Greece has always been an essential element in the success of the alliance of Western, democratic nations since the end of World War Two. And that’s never been more true than now, as we all work to manage the ongoing migration crisis.
Greece’s location, since the civil war in Syria, has become even more important. Greece, and the United States, and all of our other friends and allies, work together closely on fighting ISIS and the other Islamist terrorist organizations, and on intercepting the illegal traffic of people, and weapons, and narcotics.
The third reason – in addition to the humanitarian and the regional stability factors – that the United States wants to see Greece finally shake its long depression is that the economy needs to get back to growth, not just for Greece, but for the integrity of the European Union. The EU has been instrumental in not only stopping the bloodshed of the first half of the 20th century, but also in healing the wounds of the Cold War period, and in ensuring a viable and prosperous economic future for its citizens. The European Union is an essential strategic partner of the United States.
So we really do need to see sustainable growth here – for Greece, for the European Union, and for regional stability, and there are several things the Greek government can do to stimulate that growth.
One, of course, is to honor commitments. If the government is paying for products already delivered and if it creates incentives for private sector investment, the word will get around that Greece is truly open for business. But actions – and results – are more important than words.
Another thing that the Greek government can do is to seek competitive advantage. Greece already has a thriving tourist industry, but its geography also makes it a logical regional energy hub. The Trans Adriatic Pipeline, or TAP, will bring Caspian gas across Greece, and interconnectors with Bulgaria will allow Greece to play a role, and charge a price, for getting liquefied natural gas to central and northern Europe. The energy sector has many well-paid, skilled jobs of the kind that are now in short supply.
A key factor at the heart of sustainable growth – for Greece, the United States, or for any country – is the need to build a strong and welcoming investment climate. An investment climate based on effective public administration, predictable taxation, and legal certainty for all investors. Stability. Predictability. Transparency. Efficiency. These are the things that businesses and investors look for.
Investors – big and small, international and local alike – need to know that there’s a talented, accountable civil service in place, predictable tax rates, consistent enforcement, and efficient collection procedures that are fair to all. Legal certainty goes hand-in-hand with that – timely administration of justice is as important as the fairness of the judgment itself.
Now I know we’re going to be talking in considerable detail shortly about banking but just a word on that. Greece really needs to eliminate risks to the banking system posed by historically high levels of non-performing loans (or NPLs) that hamper day-to-day lending. I’m told that NPLs now exceed one hundred billion euros – and that’s really just too high. Banks need the political and economic certainty to get back to doing what they are best at: lending. Consumers need loans for homes and cars. Businesses, large and small, need to be able to make payroll, invest in capital, and expand. And entrepreneurs need banks to support their innovation and creativity – to turn ideas into businesses that employ people, that create opportunity, and that build confidence. Greece, in short, needs its banks to finance the Greek economy and that’s why I applaud the passage of legislation to address the NPLs and I urge its speedy implementation.
But the success of a Greek recovery will also undoubtedly hinge on the government’s ability to meet its obligations, and that’s why, as the Eurogroup acknowledged on May 25, short-, medium-, and long-term debt relief is so important. After all, long-term debt sustainability and a return to growth for Greece within the Eurozone is the core goal of Greece’s program with its creditors. Let me repeat that… long-term debt sustainability and a return to growth for Greece within the Eurozone is the core goal of Greece’s program with its creditors. And as Greece’s delivers on its commitments in the bailout program, Europe needs to do the same. The combination of the two: comprehensive economic reform coupled with meaningful debt relief will be mutually reinforcing and put the country back on the right path.
So that’s how we see the states. That’s where we see some of the bottlenecks, and that’s where we see some of the opportunities to ease them. We want those opportunities to be seized. The United States wants Greece to succeed, and we will continue to stand with Greece and its people in that effort.
So, thank you very much.