Stournaras Slams Papandreou, Karamanlis For Crisis

Greek Finance Minister Yiannis Stournaras, upbeat that Greece will begin to recover from its crushing economic crisis as soon as October, and said it could have been averted if former Prime Ministers George Papandreou and Costas Karamanlis had taken decisive action instead of vacillating.
In an interview with the newspaper Kathimerini, he blamed Papandreou, the former PASOK Socialist leader, and former New Democracy Conservative leader Costas Karamanlis for being asleep at the wheel while Greece careened into economic danger.
Karamanlis ruled from 2004-09, when he lost to Papandreou, who came to power on the back of pledge that “the money is there,” only to ask the International Monetary Fund for a bailout six months later. That came with harsh austerity measures attached that have worsened the country’s recession, now in a sixth year, and created a record 26.8 percent unemployment rate.
“That period after 2006 can only be described as a derailment,” Stournaras said, noting that state spending as a percentage of gross domestic product skyrocketed to 53.8 percent in 2009 when Karamanlis was still in office.
Stournaras bamed Papandreou for ignoring Karamanlis’s belated appeal for cutbacks to state spending and for seeking to honor his pre-election promises despite the dire economic situation. “If he had taken measures immediately, we would certainly have had better terms,” Stournaras said, referring to the conditions attached to the first bailout. “We might have entered the memorandum with the terms of Portugal or Ireland.”
But he insisted the worst is now behind Greece even though the coalition government being overseen by New Democracy leader and Prime Minister Antonis Samaras is hammering workers, pensioners and the poor with another $17.45 billion in spending cuts and tax hikes while virtually ignoring tax evaders.
Noting that Greece has significant potential to increase its production, Stournaras said he believed the recent stabilization of the economy with an infusion of $69 billion in more loans as part of a second bailout of $173 billion would allow the first signs of recovery to appear as early as October. The assessment is disputed by other analysts who say the country’s economy will take years to rebound.
“The gap between what we could be producing and what we are producing is higher than 25 percent,” he said, adding that he expected “a significant recovery in 2014.” Greece is on track to produce a primary surplus this year, he added, noting that the government aims to give concessions to low-income groups. “We have agreed that 70 percent of the excess will go to social benefits or to tax cuts,” he said
Questioned about the insistence of opposition SYRIZA leader Alexis Tsipras that the government’s austerity policy has failed, Stournaras challenged him to reveal the reaction of German Finance Minister Wolfgang Schaeuble and of the IMF to SYRIZA’s alternative proposal. “There can be no stabilization program without reducing incomes for a period of time,” Stournaras said. “There were never any magical solutions.”