London, United Kingdom, 21 February 2010
Interview with Greek Prime Minister George A. Papandreou to the journalist Andrew Marr of the BBC One
Andrew Marr interviewed the Greek Prime Minister, George Papandreou
Andrew Marr: We've been warned about an age of austerity in Britain, but in Greece that's already begun. Faced with a yawning deficit and vast public debts, the Socialist government's freezing wages, putting up taxes, and telling the Greeks they're going to have to work longer. Now could this crisis threaten the Eurozone? Well Prime Minister George Papandreou insists he's not looking for a bailout from the EU. When I spoke to him yesterday, he said the crisis was "a test of European unity" and he appealed for more support. I began by asking him how Greece had got into such a mess.
George A. Papandreou: First of all, we had truly a mismanagement of the economy from the previous government, and we have to admit that. And the mismanagement had to do also with, unluckily, a lot of corruption, cronyism, clientilism in the way that money was used. Taxpayers just began to say well why should I pay my taxes, and we had an increase in tax evasion, which of course then hit our budget and deficit. And we of course, when we were elected a few months ago, found out and revealed that the deficit was actually double the figures that the previous government had announced officially, and that of course further created problems of credibility.
Andrew Marr: And even the things that you've done already are provoking furious reaction - I mean big demonstrations, strikes and so on - so have you pushed the Greeks as far as you can when it comes to public sector cuts?
George A. Papandreou: Even though there are austerity measures and they do hurt, they do hurt, we have the support right now which is - of the austerity measures - which is around 50 to 60% of the population, and the government also has that support. So I think what we're seeing here - and I haven't seen this except during the Olympic Games in 2004 - the real sense of unity of the Greek people, of wanting to make a change; and understanding that it's painful and there will be reactions, but the wide support is there.
Andrew Marr: And yet the EU wants you to go further, don't they? They've given you a deadline to come up with further reductions and so on. Are you going to be able to come back by that stage and say yes, here are more measures?
George A. Papandreou: Well yes, if needed. What we have said is let us, together with the EU authorities, the Commission and the European Central Bank, let's sit down. Let's look at how our progress is going, how we're doing on the growth and the stability and growth programme which we have tabled. We're on target and even beyond target on January statistics, so we're doing well; but if we do need extra measures, we will take extra measures in order to reduce our deficit this year by 4%. So we are ready to do so if necessary.
Andrew Marr: So why is it that other EU leaders - above all I suppose Angela Merkel - don't trust you on this?
George A. Papandreou: Well I think she very much trusts our government, but what has happened - and that is why I am saying we have had a credibility deficit much more than a financial deficit - what I am saying to my counterparts in the European Union is this is a different government. We were voted in on a mandate for change. We have the support for this change by the Greek people. It is painful, but you can see that the Greek people are bearing that pain with a great sense of courage and we can make these changes. So what we're saying is give us the time, give us the support - and I'm not talking about financial support - give us the political support …
Andrew Marr: Sure.
George A. Papandreou: … in order to show you that in fact what we are doing is being implemented, what we are saying is being implemented, and we are credible again.
Andrew Marr: Are you going to go out into the markets next week and try and raise some more money with a bond issue?
George A. Papandreou: Well as I know, we don't have at this point a need for borrowing. Our borrowing needs are covered till mid-March. What we are saying simply is we need the help so that we can borrow at the same rate as other countries, not at high rates which in fact undermine our possibility for making the changes and cutting down our deficit.
Andrew Marr: This is the real question, isn't it, because if you can't raise money with a bond issue at a similar sort of rate to other countries, then you will have to ask for some kind of bailout, won't you?
George A. Papandreou: Well it won't be a bailout. We don't have the specifics, because this is very new, as to what the financial tool will be, but it could be anything from a guarantee to finding other ways of borrowing money. But again it's not going to be handouts. It's going to be Greece borrowing money, which means we have to pay it back. But we want to pay it back at a rate which is a viable rate for our economy and which is basically a similar rate of interest which other countries are paying for. So we're saying, we're saying that this is a fair deal, and we're also saying that you know we are a country which cannot alone deal with the speculation. So this has become a European problem because if we do have a major problem, this could create a contagion for other countries too who are not to blame.
Andrew Marr: But if the speculating against Greece goes on and if you're not able to raise money in the bond markets in the usual way, I can't see what alternatives you've got to going back and asking for straightforward bailout help from the rest of the EU beyond possibly suspending Greece from the euro itself.
George A. Papandreou: Well Greece will not be suspended and that is not in the cards at all. What is …
Andrew Marr: Can I just press on that and ask why not because a lot of people would say actually it might be embarrassing, it might be tough, but it might deal with the situation, the problem more quickly than anything else?
George A. Papandreou: I think it would be an absolutely difficult (even in practical terms) exercise to try to think of a country removing itself from the eurozone and …
Andrew Marr: (over) Would it begin the break-up of the eurozone in effect?
George A. Papandreou: And of course it would theoretically also create that problem.
Andrew Marr: Now it's been pretty clear that for instance the French see this possibly as an opportunity to move from monetary union a little bit towards political union, and I wonder whether Greece is being a test case for this?
George A. Papandreou: We're in a laboratory right now and let us hope that this test case is a successful one for Europe by in fact putting to the test the unity of Europe in a positive way. Europe has a lot of strength. We need to pool that strength, and I am very much in favour of that - more of a deeper political union.
Andrew Marr: And despite you know the reservations and the hesitations of for instance the Germans, do you feel that in the end your European colleagues are absolutely with you and are going to see you through this?
George A. Papandreou: As I said, we haven't worked out (because this is the first time this has happened) the details and the financial tools. But the political will is there, and when there's a will I think there's a way.
Andrew Marr: Do you think the Greek people realised when they first went into the euro, monetary union, that in effect they were going to have to start to behave like Germans?
George A. Papandreou: Well I think we realised that there would be new restraints but new opportunities. I think we are now realising that much more, that we have to put our house into order, but that's also a good thing.
Andrew Marr: It has been reported that you'd appealed to the Chinese and indeed possibly also to the Russians for financial support, that you wanted to sell bonds to those countries.
George A. Papandreou: Well actually …
Andrew Marr: Can you clear that up?
George A. Papandreou: Yes. Well actually we haven't, but we are of course open to diversify our portfolio.
Andrew Marr: So you wouldn't rule out Chinese or Russian …
George A. Papandreou: I wouldn't rule out different sovereign funds being interested in our bonds. Also we would like to diversify and will do so if that's possible.
Andrew Marr: Your grandfather was Prime Minister of Greece, your father was Prime Minister of Greece. Your family suffered a lot during the period of the colonels and so on. Do you feel that in some sense you have been called to save Greece at what must be one of the most difficult moments of her modern history?
George A. Papandreou: It is one of the most difficult moments, you are right; and it is a calling, it is a deep … I have a deep sense of responsibility to my country and Greek people. But in many ways it is part of the tradition of a family that has fought for democracy, for freedom, for social justice. So it is a struggle and we have gone through crises. We know what it means, but that gives us … makes us even more determined and hopefully well prepared to take on this task and make it a success, an opportunity out of a crisis.
Andrew Marr: And finally for all those British people who are wondering where to take their holidays this year and they're thinking about Greece, thinking maybe it's a little bit dangerous this time, maybe it's a little bit uncertain what's going on there. What would you say to them?
George A. Papandreou: I would say the opposite. I would say we are a friend in need and I am sure that the Greek people would very much welcome the choice of the British people to come and enjoy Greece, first of all, but also that would be a sign of support.
Andrew Marr: Support Greece by buying some Retsina, enjoying some seafood …
George A. Papandreou: (over) That's right and I'm sure …
Andrew Marr: … and the beaches.
George A. Papandreou: … they will be very hospitable, Greece.
Andrew Marr: Prime Minister, thank you very much indeed for joining us.
George A. Papandreou: Thank you very much.