Politics: PM: Crucial battle ahead at EU this month

Despite the hurdles still lying ahead, there were positive signs that reforms were beginning to work and the economy would soon recover, Prime Minister George Papandreou said in his address to ruling PASOK's National Council on Friday. He forecast that the rate of recession would significantly abate in the first half of 2011 and level off in the second half, with Greece returning to positive growth in 2012.

Papandreou underlined that one of the most crucial battles ahead would be fought this month at the European Union, where Greece had to strive for an EU solution to its excessive debt burden that would allow it to repay its debts. He underlined, however, that even if negotiations in Europe go exactly the way Greece wants there was still a long struggle ahead and that it was essential for Greece to change.

"If we continue to only buy, not produce and not export, we will not make it," he emphasised.

Referring to the debt burden and Greece's continued inability to borrow on the markets, where analysts still distrusted the country's ability to handle its debts, Papandreou said the answer lay in a coordinated European policy that would create better terms for a Greek debt settlement. He also emphasised that the government expected the opposition parties to lend their support to its efforts to achieve this goal.

The prime minister also stressed that the debate on this issue in Europe had to be wrapped up as quickly as possible so that the countries struggling with debt problems could work on improving their economies in a calm and secure climate, especially given the period of instability now sweeping the Arab world.

Among positive signs that the economy was recovering Papandreou cited a 30 percent increase in exports, a significant increase in orders from abroad and positive signs that tourist traffic will be higher this summer.

He stressed that the government was fighting to restore Greece's independence from any dependency or supervision and that it had successfully warded off efforts to force Greece to back down on economic but also national sovereignty issues as a result of the crisis. As an example, he pointed out that the government had averted efforts to deprive Greece of its vote on EU issues in exchange for the loans received from the EU as part of the financial support mechanism.

The prime minister also promised that an ambitious state privatisation programme would be based on the same principles, exploiting state assets financially but without selling off public land.

He also ruled out an Asian growth model based on low wages, saying this could not be a basis for achieving competitiveness. Instead the government would focus on reducing red tape, developing education, sustainable development. Indicatively, Papandreou asserted that greater transparency and rule of law would have generated savings ranging from 4-8 percent of GDP and thus spared Greece from resorting to either loans or a financial support mechanism.

On a growing movement toward civil disobedience in Greece, Papandreou said that he could also support disobedience but only to practices that brought Greece to its present pass, such as bribes to public officials and corruption in general.

He was particularly scathing about main opposition New Democracy's role in allowing the debt to grow, essentially accusing the previous government of doubling both the debt and deficit and "condemning future generations so that they and theirs might be better off".

The prime minister also admitted that there were problems with the internal coordination of his own government but attributed these to the way that the political system worked in Greece in past decades that members of the government were making huge efforts to change.

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