London, 21 May 2012
Speech (check the video) at the Annual Google "Zeitgeist" Conference
It is truly an honor to be with you here, to share my thoughts with you on so many of today’s challenges. Greece has been squarely in the eye of the storm for the last three years. Only just yesterday the G8, again was pondering over the Greek crisis. And I found myself at the helm, guiding my country through uncharted waters, at high seas, and - with no GPS system.
To be honest I did have three map readers. The ECB, the European Commission and the IMF. But they read conventional maps, with analog technology, certainly no google earth to make accurate assessments.
Yes, never in recent history did a developed economy face default, while at the same time being constrained within a monetary union, with no effective National Central Bank, with a constrained European Central Bank, with no firewall, no support mechanism, no capability to devalue a common currency. That’s why I called this journey an Odyssey, keeping in good tradition with our Homeric heritage.
But before I describe experiences from the eye of the storm, let me take you and Greece out of the storm and tell you what Greece could be like.
Greece is a country with unimaginable and unrealized potential: a tourist industry that has potential in so many innovative products, from eco to cultural, to religious, to sport, wellness or health tourism.
Renewable energy from our wind, sun, geothermal sources are bountiful.
• Such as a new project, Project Helios - An unprecedented project to export “green” energy to Northern Europe (mainly Germany) and use revenues to decrease public debt.
• Our agriculture can become high-quality, based on the best of our traditions, and world renown brands such as the Mediterranean or Cretan diet. Our aquaculture is the biggest in Europe, while our merchant fleet is the biggest in the world.
At the same time, the ports of Piraeus and Thessaloniki, are becoming hubs between China, India and the Gulf States and the European market, while our program of privatization and public asset development bodes well for foreign direct investment and sustainable, competitive growth.
We have a younger generation, well-educated, many abroad, very innovative and motivated. They, and many Greeks of the Diaspora, are a potential engine of growth in our country.
• Greek companies such as Velti and Upstream have emerged as some of the biggest names in the ultra-competitive mobile market—and there are hundreds of incredible startups in Greece ready to join them.
• And our culture, ancient and modern, can be archived and uploaded, something we have started with Google, to contribute to a global commonwealth of knowledge and innovation, an amazing resource for creative and cultural enterprises. A resource for humanity.
So what went wrong?
The debt myth: Debt was just the tip of the iceberg, the symptom rather than the underlying cause. The real problem was one of governance, lack of monitoring, lack of transparency, bad allocation of funds rather than the lack of funds, waste, unequal distribution of money rather than profligate spending by all, clientelism rather than meritocracy, graft rather than the rule of law, unequal privileges rather than a sense of justice for all.
A badly managed country that lost its competiveness, resources, sense of justice and vitality.
That is what we needed to change. And I would name this a democratic governance challenge. We are changing.
Much so in governance by bringing transparency and online governance everywhere.
Despite media hype that Greece is not doing its part, a recent report by the OECD asssessed reforms amongst members over the past three years, and we are not number two but number one in reforming our country.
This change is often hidden by the pain of austerity seen by many as the cure.
But that takes me to a second myth:
Many believed, and still do, that this was and is a Greek problem.
Some were very prejudicial.
They believed Greeks were or are the problem.
This led to simplistic solutions. You put your house in order, you do your homework.
A slap on the hand, you lazy greeks: All will be well.
A wrong diagnosis.
From the very beginning, I said ‘yes, we Greeks have to take on full responsibility for our failures’. ‘However’, I also said ‘there is a deeper problem’. I saw this was a European problem. We have a problem of governance, governance structures in Europe. So I fought for Europe to respond.
And it did – yes, with solidarity towards Greece, and others, with new institutions, with the biggest bailout program in mankind’s history. With the biggest haircut of a debt in history. But the storm doesn’t seem to leave us alone. Markets, rather than being calm, continue to be skeptical, aggressive, speculative. Why? The sign I believe is quite apparent:
Greece is a precedent, a paradigm for both the inherent weakness of the European construction today and the wider problems of the developed world as it faces the emerging markets.
Even if we have difficulties, why should this matter enough to create a european and possibly a world crisis?
• Greece whose national economy is half the size of the economy of London (just 1.8% of Eurozone GDP, and 0.47% of global GDP, according to the IMF).
• Can we be held responsible for the stability of the global economy?
Well, it might be that the Olympian God, Zeus, is sending us a sign. He who abducted and seduced a Phoenician, a beautiful lebanese woman, called Europa. The women Europe is named after. So I guess it is legitimate that he is sending a sign from Greece, the cradle of Western Civilization that indeed not all is well with the developed western world?
So let me take you back to the eye of the storm.
The Greek crisis revealed some of the missing bricks in the architecture of our common currency.
An architecture of having a common currency without at the same time having a common treasury, an attempt to replace the latter with coordinated fiscal and, to a certain extent, structural policies which haven’t worked as efficiently as we would have liked.
Lack of harmonization in basic policies such as taxation, labour laws, pension systems, health and unemployment benefits.
This goes way beyond the myth that fiscal austerity will solve all.
And austerity will not solve a problem Europe and the developed world is also facing.
The major competitiveness problem with emerging markets.
Economic activity and capital is fleeing to Asia, Latin America, Africa, parts of the world with obvious advantages: lower wages, abundant cheap labor, lack of collective bargaining sometimes, lack or even meager social welfare systems, the capability to easily denigrate the environment.
All these factors combined with state support, in some of the cases, have given a strong comparative advantage to these regions and brought much wealth to societies there, albeit not always in just and equal ways, but have also undermined the social compact that we had in western societies.
So what is our dilemma for the developed countries?
Can we compete on these terms?
Can we, in fact, create sustainable economies on these terms?
Can our democratic institutions survive on these terms?
I believe not.
But I also believe that even the emerging economies, sooner or later, cannot continue sustainable growth on these terms.
Our planet cannot provide, cannot sustain this model of growth.
But this is also a crisis of democracy.
Capital is fleeing from the developed world not only to emerging markets but to tax havens, to financial rather than the real economy, robbing nations of their tax revenues and creating deep inequalities in our societies. This has been one of our major problems in Greece.
Power and wealth is being amassed beyond national borders.
And with this concentration of wealth our democratic institutions are often captured, by special interests, which then further their privileges.
Democracy was an ancient innovation to, amongst other things, control the hubris of those who concentrated too much power in their hands.
Many economists and Nobel Laureates have pointed to this question and linked it to that of inequality. Whether it’s Krugman, Stiglitz, Galbraith, Jeffrey Sachs or Bob Reich, inequality is one of the main causes of the global crisis.
At a time when humanity has such amazing potential.
Our democracies cannot seem capable to deal with the fact that they can only make decisions within national borders, in a global economy.
Not only a country like Greece, not only Europe, but the world.
The technological capacity, you know! It is there!
I was speaking to Peter Diamandis yesterday. About the abundance of capacity we have.
We can make poverty history, we can deal with illiteracy, climate change, migration, pandemics, unemployment, financial crises, even the proliferation of weapons of mass destruction.
Yes we can! Yes we can! But we aren’t.
If we don’t democratize our potential, whether it is wealth, knowledge or technology, to create societies suited for the human dimension, this would be hubris, blasphemy to the gods as Aristotle would have us say.
And the backlash towards globalization will be more populism, racism even neofacism in our societies.
If we do not democratize and humanize globalization, people will see that our democratic institutions as weak. Not living up to expectations or their potential.
This will lead people to find refuge in saviors, fundamentalist or absolutist ideologies, passivity or violence rather that democratic, creative participation in our societies.
So as I have travelled on this Odyssey, I look beyond and see a major challenge to our democracies in this globalizing world.
This is where Europe steps in.
Why is Europe today so important.
It seems weak, teetering, complex, slow to react, a labyrinth.
Should we press delete?
My view is we need more Europe rather than less.
In this short intervention I won’t analyze the many proposals not only I but others have laid down for more Europe and a more democratic Europe. A Europe that has potential for transparent banking system. Democratic oversight of rating agencies. Clamp down on tax havens. Greater transparency in markets such as the CDS’s. For a Central Bank, more interventionist, more like the US Fed, that is also tasked with fighting unemployment.And - If we are talking about the financial crisis,
For a Green Growth and competiveness pact: Our model of sustainable and competitive growth should be based on quality, not inequality. For EUROBONDs a FTT, resources both to stabilize the debt challenge and to leverage funds for investment in green growth and jobs.
Investing in our human capacity, brains, education, research, innovation, and in the necessary infrastructure for the realization of our human potential, is paramount. This would also mean investment in energy grids, green technologies, broadband, green transportation grids, connecting north and south, east and west, but also Europe with the Mediterranean, Northern Africa and the Middle East.
The austerity hysteria is a dead end. We need to complement our national policies of fiscal consolidation with european growth projects. There seems to be some light from the recent G8 meeting and the political changes in countries such as France.
Finally Europe can draw up new social pact to deal with the high unemployment in the EU. The most popular program in Europe is called ERASMUS. It allows students to go another European country to study. Let us invest and extend this to the unemployed workers or professionals.
Let me conclude with a few thoughts on the importance of Europe.
You are innovators.
But yes we politicians are and need to be innovators in our institutions.
And from ancient times, whether it was the Olympic Games whose main purpose was to have an Olympic Truce, or the idea of democracy to create more free, just and equal societies, we have innovated.
Europe is an innovation.
It grew out of the horror of World War II. It grew out of the horrific experience of the Holocaust.
Europe is a peace project;
Europe is a democratic project, a social project, a growth project, a security project.
In the end, or in the beginning, Europe is a family of values: democracy, peaceful resolution of conflict, tolerance, human rights, rule of law, open but social markets, transparency, diversity with respect for all.
Today it is challenged to retain this memory, but extend it to our globalized world.
It’s a project where we, different cultures, different people, different languages, different religions, different traditions and histories, come together under one roof, pooling our strengths, pooling our sovereignties, pooling our decision-making in order to be stronger, more effective, more capable, in dealing with the global challenges, whether they be financial, climate change, poverty, conflict, migration. We are pooling our capacities.
Its importance is that it can be a model, a paradigm, for so many other regions.
An answer to how we together go beyond our nations and solve today’s pressing issues.
But this also goes for my region, in the Mediterranean and in the Middle East. The radical changes, with the advent of the Arab Spring, have created prospects, on the one hand for possible instability, but also for new opportunities.
And this is where Europe should not be absent. Solving our internal financial crisis, dealing effectively with the problems of so many countries, particularly in southern Europe, which are just facing on the other side of the Mediterranean the Arab Spring: this will be crucial for the direction the Arab Spring will take.
In Central and Eastern Europe and South Eastern Europe, we integrated societies into a family of common democratic values.
Can we do so in the Mediterranean, or will there be Nasserite or fundamentalist models prevailing? If we are looking for models in a globalizing economy, Europe should and could a democratic and effective one.
In this recent crisis, we haven’t done so well.
And I believe we either will move forward to more Europe or we will see - sooner or later - the disintegration of this important construction.
Despite our difficult Odyssey, in this Greek and European crisis, I remain optimistic, we will reach our Ithaca."