Nation embarks on a renewed reform drive

After being returned to power in Greece's general election on September 16, Prime Minister Kostas Karamanlis and his New Democracy government are determined to push ahead with their agenda to improve the economy, fight poverty, raise pensions, rationalize public spending, and reform the education system.

Despite the wildfires that occurred just few weeks before the election, devastating large parts of southern Greece and causing a stir on the political scene, Karamanlis and his governing conservative party were able to secure its re-election with 41.8 percent of the votes, amounting to 152 out of 300 seats in parliament. Karamanlis sees the victory as a recognition of the results already achieved by his government in its first term.

"The Greek voters have spoken loudly and clearly, giving New Democracy (ND) a clear mandate to continue the changes and reforms the country needs," commented Karamanlis.

Since coming to power in 2004, the ND government has been implementing a wide-ranging program aimed at maintaining strong economic growth, bolstering healthcare and education, reducing corruption and inefficiency in public administration, and improving the overall competitiveness of the economy.

And indeed, the Greek economy has been performing well under the conservatives, with a strong property market, robust consumer spending, and gross domestic product (GDP) growth accelerating from 3.7 percent in 2005 to 4.2 percent in 2006 - one of the fastest growth rates in Europe. Unemployment has been reduced to around 8.5 percent after many years of double-digit rates. The government deficit, which used to be among the highest in the European Union (EU), has been reduced to a level below the Euro area limit of 3 percent of GDP.

Behind these encouraging figures lies a strategy of stimulating growth through tax cuts while improving the efficiency of public administration and cracking down on tax evasion. Privatizations and public-private partnerships have contributed to reducing public sector participation and improving infrastructure and the quality of public services while activating private sector funds.

Emphasis has also been placed on enhancing the outward orientation of the Greek economy through expanding Greece's trade ties with the rest of the world, and facilitating foreign direct investment.

In 2006, Greece's exports went up by 18.2 percent and tourist arrivals hit the record mark of 13.7 million (up 7.5 percent from 2005). Foreign direct investment reached 4.2 billion euros ($5.68 billion), 2 percent of GDP, or eight times higher than the previous year.

In the Balkans and the wider area of South East Europe (SEE), Greece has taken a leading role in encouraging cooperation in many fields, such as transportation, entrepreneurship, trade, tourism, and energy. So far, Greek investments in SEE exceed 12 billion euros ($16.2 billion).

With the completion of the Greek-Turkish and the Greek-Italian gas pipelines, as well as a pipeline carrying Russian oil from Bulgaria to Alexandroupolis, Greece is set to become an energy hub for the region.

Looking ahead, the ND government is expected to carry on with much-needed economic and educational reforms, including further privatizations and an overhaul of Greece's fractured and debt-ridden pension system.

To achieve this, the slimmer majority of seats now held by the ND government versus the combined opposition in parliament is likely to incite Karamanlis to work even harder: "I now feel doubly responsible to be more effective and avoid mistakes," comments Karamanlis in response to the election results.

(China Daily 12/13/2007 page25)