Athens News Agency: News in English, 08-09-06

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From: The Athens News Agency at <http://www.ana.gr/>

CONTENTS

[01] PM: int'l developments need 'steady course, solid steps'

[01] PM: int'l developments need 'steady course, solid steps'

In his address, the Greek PM said a series of international energy agreements (Greek-Turkish and Greek-Italian natural gas pipeline, the Burgas-Alexandroupoli oil pipeline and now the South Stream project) put the country into the global energy map, they bring revenues and guarantee new job positions in Northern Greece.

Karamanlis noted that a reform in education has opened the roard to upgrading public universities, putting an order in a chaotic situation with free education centers, opening an International University in Thessaloniki and beginning a national dialogue on a new entry system to universities.

Meanwhile, reforms introduced in the framework of economic policy have led the country out of an excessive deficit procedure, with the smoothest possible way, and drastically enhanced the resistance of the economy. "We all realize how dramatic things would have been today if we did not dare to take specific (not pleasant, but necessary) measures," he noted.

The Prime Minister said that reforms also ranked Greece in the third position on incoming investments and secured one of the highest growth rates in the Eurozone. They also offered social results, such as: a significant increase in employment, while unemployment falling below 7.0 pct in May. Per capita GDP rose to 98 pct of the EU's average, from 92 pct in 2003, real wages grew an annual average 3.0 pct, compared with 0.3 pct in the Eurozone, pensions also rose, while families with three children were offered more financial support.

A pension reform program also ensures the viability of the system, by drastically combatting accumulated disparities, he said.

"Nothing of all these was easy. In every case we needed to combat with vested interests and conservative views. We dare to give difficult battles. Battles that offer gains to all citizens," Karamanlis said.

The international crisis

"A year ago, by highlighting the economy as a national affair, I asked for early election. Citizens gave us a new, strong mandate. I was, and still am, fully focused on our commitments. We continue, consistently, the necessary reforms. But we face a difficult international conjucture, as the world has entered an uncertain, turbulent period. A credit crisis in the United States, increasing demand and international speculative "games" led to an explosion in international oil prices, food prices and commodity prices. As a result, economic growth rates are slowing down, economic activity falls and price increases become a major social issue.

Growth rates in the Eurozone fell by half compared with a 2.8 pct reading in 2006, while the EU's largest economies (Germany, France, Italy) recorded negative growth in the last quarter. At the same time, average inflation in the Eurozone jumped to 4.0 pct, from 1.8 pct in July 2007, to a new record high. This crisis, inevitably, affected our country as well. Net payments for fuel grew by almost two billion euros in the first quarter of 2008, compared with the same period last year, import prices grew by more than 12.5 pct, the inflation rate reaches an annual 4.5 pct and economic growth slowed to 3.5 pct in the first half, from 4.0 pct originally forecast. Also, rising interest rates significantly increased the cost of servicing the country's public debt, while state spending also grew and revenues fell.

This conjucture overturned the main goals of the state budget. "We are fully aware of the difficulties. We listen to citizens and acknowledge their feelings. We must support those mostly in need and to maintain our growth dynamism. We know where we want to go, and how to get there. International developments leave us no room for hesitation or postponment," Karamanlis said.

The Prime Minister noted he has made a harsh self-criticism for any government delays, but reassured he is determined to move forward with the necessary changes.

Economic policy

The Greek economy has, still, serious problems from chronic weaknesses, but also has significant capabilities. "I know the road ahead is difficult. I move forward, taking any cost is necessary. I am determined to continue by intensifying reforms. This is my decision," Karamanlis vowed.

The Greek PM said the main axes of economic policy will remain unchanged: sustainable fiscal consolidation, viable growth at the peak of Eurozone, social protection net for those in need. "Our first priority is continuing a fiscal consolidation program to eliminate deficits," he said. Karamanlis said a package of measures, recently announced by the government, was aimed at ensuring that state spending was contained and fiscal transparency was promoted further.

Another priority was to find solutions both for Olympic Airlines and Hellenic Railways Organisation, two state-owned organisations that burdened taxpayers with around 2.7 million euros per day.

Our aim with Olympic Airlines is to promote a new strong and competitive airline company, under the same name and logo, but withough the debts and problems currently facing with the European Commission. Our goal is clear: transfer of personnel to other state agencies and a voluntary retirement plan, ensuring air connection with all our islands and prohibiting any private monopoly in the airline business.

We also plan the corporate transformation of Hellenic Railways, envisaging modern financial methods to manage its debt, joint ventures with the private sector to fully exploit its real estate property, austere controls in management practices and a voluntary retirement plan.

The Greek PM also said the government was working hard to achieve a more fair tax system and to combatting tax evasion. "Tax evasion is a deeply anti-social behaviour. We all must work together to combat it," Karamanlis said.

Improving growth environment

Our policy focuses on ensuring high growth rates to increase wealth, boosting social dividend and creating new jobs. We seek to attract large investments and to supporting business activity by ensuring environmental protection, he said, adding that the government has taken a series of major steps to protecting the environment, such as a National Land Register. The government was also taking measures to minimize procedures and costs of setting up new enterprises, in line with European standards. In energy policy, we are implementing a long-term plan to save energy, promoting alternative energy sources and expanding natural gas networks.

"A National Digital Strategy also contributes to saving millions of productive hours, for both public services, enterprises and citizens. Research and new technologies are supported with a new modern framework, higher funding and an ambitious project to boost broadband by developing a new optical fibre network, worth 2.5 billion euros," he said, adding that the government also focused on deregulating so-called closed professions.

Social protection

The government also seeks to build a viable social state, boosting employment and continuing a battle against price increases. It is very important the fact that a gap in the inflation rate with the Eurozone's average has been cut. But the domestic market still faced chronic problems, suffering from unfair practices and an inefficient competition in certain sectors. Karamanlis said the government was in a head-to-head clash with speculative practices.

"Our policy is reducing unemployment, supporting new enterprises, investments, new job positions," Karamanlis said, noting the significance of a viable social insurance system. He stressed that the government will soon activate a National Social Cohesion Fund aimed to support those mostly in need, such as unemployed people and low pension incomes.

Re-inventing the state

The Greek PM said the most serious problem was an ineffective public sector and its chronic weaknesses: overspending, bureaucracy and corruption and noted that the government has launched a plan to continuously strengthen all internal control mechanisms.

Karamanlis also said that local authorities would be strengthened through the implementation of a "Theseas" program, the transfer of 90 pct of revenues from vehicle circulation stamp to municipalities and rescheduling of withheld funds' return, totaling 1.7 billion euros.

Regional growth

Greece follows a course plan aimed at exploiting its geopolitical advantages, boosting outgoint trends and improving its attractiveness. The country has a better prospect ahead of it, the PM said, noting that the country was a pole of stability and growth in Southeastern Europe, a modern energy, transit, commercial and banking hub in the wider region with updated infrastructures. The public works ministry is currently implementing an investment program, worth 18.5 billion euros -of which 40 pct in Northern Greece. Strategic agreements with global port operators for the ports of Thessaloniki and Piraeus, will change the ports' character and bring large investments, cutting transport costs and boosting public revenues.

Karamanlis stressed that he supports the relocation of the Thessaloniki International Fair facilities outside the city and to transform the current facility into a metropolitan park for the city.

He also noted that a National Reference Strategic Framework, for the period 2007-2013, envisages that 82 pct of funds would be directed to regional programs with a series of major road projects, worth more than 9.5 billion euros, promoting joint ventures between public and state enterprises, worth 5.7 billion euros and approving investment projects worth more than 10 billion euros. The Premier said the government has earmarked around one billion euros for interventions in fire-hit regions of the country, supporting farmers and investing in quality tourism.

Foreign policy

Challences in turbulent and difficult times need solid steps of security and safety. The base of our course is the European Union and in this framework we seek special policies and financial support for our islands, policies to enhance social fraternity, a common immigration policy and a single European coast guard corp, Karamanlis said. "We support the European prospect of our neighbouring countries, by making it clear that full respect of the principles, values and prerequisities of the EU, also means their full accession. We have made it clear to our neighbouring Skopje that, in any case, primary importance was to establish good neighbouring relations. Our credibility has been tested and our position in known: A name with geographical determinant to be valid for all".

Karamanlis also noted that Greece was working towards a full normalisation of Greek-Turkish relations. "We welcome a restart of negotations in Cyprus and urge Ankara to encourage the Turk-Cypriot leadership to seek a functional, democratic and European solution for a united Cyprus without any occupation troops," the Greek PM said.

Closing his address, the Greek Prime Minister said the duration and the extend of the international financial crisis was unpredictable and stressed that the government was moving forward without any illusions. "In difficult times there is no luxury for short-term pleasant interventions, ending in catastrophe. There are no easy solutions. Our commitment is to take all necessary measures for the interest of the country and its citizens, without compromises, or fear," he said.

"I will not undermine the country's prospect for any short-term government popularity gains. Reforms are continuing to put an end to public sector's problems, to combatting weaknesses, producing more social dividend. They give a positive answer to citizens' expectations. This is our strategy. And this strategy will not be abandoned, but enhanced. It will not be postponed, but accelerated."

Caption: Prime Minister Costas Karamanlis touring facilities at HELEXPO-TIF, shortly after inaugurating the 73rd Thessaloniki International Fair (TIF) on Saturday.

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