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Don't underestimate Greece's deficit-cutting plan, says economic minister Louka Katseli

February 10, 2010|By Henry Chu

Reporting from Athens — Greece's recently elected government is struggling to rein in a ballooning budget deficit that is putting the stability of the euro in doubt. Louka T. Katseli, minister for the economy, competitiveness and shipping, spoke to The Times about Athens' ambitious austerity plan to cut the deficit to the level demanded by the rules governing the 16-country "eurozone."

Is Greece the weak link in the eurozone?

This is both an unfair characterization and a very shortsighted characterization. . . . We are a part of the eurozone, and . . . you need to fulfill your obligations.

There is no doubt that Greece has had a credibility problem, a credibility problem that has deteriorated over the last three or four years due to, I would say, a wrong policy mix and also a weak governance system. However, that's why in democracies people vote for a new team to come in to address problems.

Can your government implement its austerity plan?

It's not an austerity plan. It's a stability and growth plan. It's a plan that actually has an elaborate, two-pronged strategy: one, to consolidate the budget and reduce it in a period of two years, and second, to promote both regulatory reform and [an] investment-led program to sustain growth. . . .

Don't forget that . . . in the past, nobody was believing us that we would do the Olympics as we did. It was the same argument till the last minute that the Greek Olympics would not be a successful Olympics, and we've shown that it was probably one of the most successful Olympics [ever].

What about public opposition to the plan and the large strikes that are expected?

First, I would say Greeks in general want change. Regardless of political affiliation, everybody realized that the situation we were in . . . could not go on. So there is still tremendous willingness from the general public to go forward.

Second, it's extremely important for the package to seem fair. It's not only what you do but the whole mix of policies so that people feel the burden is shared equitably.

And third, the package of measures needs to be such that it shows the light at the end of the tunnel, so there's a developmental aspect to it. . . .

I think we can pull it [off] if it's done in such a way.

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