George A. Papandreou - President of Socialist International - Former Prime Minister
George A. Papandreou - President of Socialist International - Former Prime Minister
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Interview on "Charlie Rose"

Washington, USA, 9 March 2010

Interview with Charlie Rose
Interview with Charlie Rose
Office of the Prime Minister

Interview by Greek Prime Minister George Papandreou on "Charlie Rose" with Charlie Rose

Greece is at the center of a debt crisis that has shaken world markets and threatened the long-term viability of the Euro. Papandreou`s socialist party came to party last October and declared the budget deficit had been vastly understated. Last week, his government issued another bond sale and round of austerity measures to meet the shortfall.

The European Union, of which Greece is a part, has promised to step in if necessary, but only as a last resort.

I spoke with Prime Minister Papandreou in Washington at his hotel this morning. Here is that conversation.


(BEGIN VIDEOTAPE)

Charlie Rose:   Mr. Prime Minister, thank you very much for spending this time with us. This has been a busy time for you in Washington. Yesterday the secretary of state and today speaker of the House and also the president. What are you here for?

George A. Papandreou:   Well, obviously, Greek and American relations are long standing, and we want to strengthen these ties, and I`m doing so. But obviously there are world issues which we share as problems.

And the recent economic crisis in 2008 but also even this year which afflicted Greece has been one of the main issues of discussion of how we need to create the type of governance on our planet to deal with a much more interlinked and interdependent world where we are all affected by each other.

Wall Street crashed a year ago, but it affected the whole world. Problems in different parts of the world will affect everyone.

So we need to see how we regulate — might be the word — or create the rules, the necessary relay switches and circuit breakers, what everyone might want to call it, in order that we can make sure that the vast power of the markets, the globalizing economy, can be used to the benefit of our citizens.

Charlie Rose:   Specifically you think speculators have made your job more difficult?

George A. Papandreou:   Well, that`s what`s being said, and I`m not saying it alone. It`s something which many in Europe and not only in Europe and even in the United States have talked about, the fact that you can actually take out insurance on your neighbor`s house, and then if it burns down then you get the money and you have no other obligations, or you have no other interest otherwise.

That is, you want to bet on the failure of someone, or in this case a whole economy, like Greece. That creates incentives so that rather than getting loans on the market which are normal loans, you have spreads that really make it much more difficult for countries to survive and economies to survive.

Charlie Rose:   So the interest rates you can borrow money for are much higher than they would be otherwise?

GEORGE PAPANDREOU: That`s right. Well, they were. We do hope that they`re slowly going down right now since we have taken these very severe austerity measures, and they have been approved by the European central bank, even by the IMF. They`ve had a very positive response to these measures.

So what we are doing is we are determined to make whatever is necessary to put our economy on a path which is a viable one and a competitive one.

But, of course, we do need to borrow as other countries need to borrow, and if in borrowing we have very high rates that will then undermine our efforts to make this change.

So what we have asked is that there is a solidarity both from the European Union and, of course, around the world, but particularly from the European Union, of which we are a member, the so-called Euro zone, or the Euro area, so that we do guarantee — we are guaranteed that we can borrow at normal rates as other countries in the Euro zone.

Charlie Rose:   OK, when you saw this challenge, when did you know this was going to be the challenge for you as prime minister?

George A. Papandreou:   Well, I came in, as you know, just a few months ago. I was elected with a large majority. And the mandate from the Greek people was a mandate of change.

So I did come in on a mandate of change. People did want changes in the administration, in the health care system, education system, actually, in a whole developmental model to move Greece from a country which was basically built around a lot of housing and construction and so on, and I would say more of the — more of a conventional economy into a green economy.

And Greece has here great potential because of the sun, the wind, the geothermal energy, but also because we can link this green economy with high-quality products and tourism, green tourism, green agricultural products, Mediterranean products, food and diet and so on, which is supposed to be one of the best in the world.

So this is where we’re moving. But what happened, of course, is because what was uncovered was we had a huge deficit.

Charlie Rose:   Almost 12 percent, 13 percent of your gross –

George A. Papandreou:   That`s right, 12.7 percent of GDP, which was double the one which we had expected, or which was announced officially before the elections.

And that, of course, made it more difficult for us and jittery in the markets. So we had to immediately set up an austerity program, a program which we call in the European Union — officially it`s called “stability and growth program,” to cut down four percent of the deficit in 2010, and then to get to three percent total deficit by 2012, which is a very harsh and a very ambitious program.

Charlie Rose:   Does that put your government at risk to massive demonstrations in the street?

George A. Papandreou:   First of all, the Greek people realize we do need to make change and we do need to take some harsh measures. These, of course, are emergency measures. It`s sort of measures that make sure that we`re — our economy takes a good breath and then is on the right track to make the deeper changes which we need to make in the administration, making our economy more competitive, cutting down bureaucracy, and so on.

So the emergency measures, yes, they are hurting. But I think and I believe even from the polls but also from the fact that we do have a wide majority even in the parliament we do have the support to make this change. People realize that we need — Greece needs to change and that Greece would be a better place as we take these measures.

Charlie Rose:   But you have to make an argument to people who`ve worked for the government in the public sector, because of mistakes on the part of this government you have to undergo this austere new pressure on your salary, your benefits, what you had expected to have.

George A. Papandreou:   Well, let me make a correction — mistakes on the part of the previous government.

Charlie Rose:   Exactly.

George A. Papandreou:   I`ve only been in for three or four months — actually, five months now. So we took over with inheriting a very difficult situation.

So people say, OK, yes, the previous government did create a problem and did not manage the economy as it should. They realize, therefore, that we are the ones that have to make the changes, and I think that is where we have a confidence of people because we are the ones that are actually making these changes.

Now, I think you have a point in saying that we need to look at the social fabric, the question of social cohesion if you like, the disparity sometimes, or the fact that when we`re talking about emergency measures that often hits the main street, if you like, and — like increasing the VAT, the taxes, or cutting some of the salaries in the civil services, the people in civil services all the way from my salary to the civil servant in local government, so we do have a sense of justice.

But it does hurt the majority of the people and that`s why we`re talking also about making deeper change which will, for example, revamp our tax system so it`s more just, so that the rich do pay their dues and also takes off a lot of the burden or some of the burden for the wage earners.

And this is, of course, a very important point to — as we face this crisis, this economic crisis, that the crisis — and this is not just a Greek problem — the crisis is not thrown on those who actually have no or very little responsibility for this financial crisis.

Charlie Rose:   What steps are you taking in terms of getting new funds to immediately meet the deficit demands?

George A. Papandreou:   Well, first of all, we are borrowing and we have been on the market. We only just after the recent measure we took, we went to the markets and we borrowed another $5 billion.

Charlie Rose:   $5 billion Euros.

George A. Papandreou:   $5 billion Euros, which would be around approximately $7 billion. And we were oversubscribed, which means there was more money offered to us than we had asked for, which is a positive sign. And we were — we borrowed — those who lent us money were very, very — how do you say — credible groups and banks and pension funds around the world. So they obviously trust us.

Now, at the same time, the spreads, the so-called spreads or interest rates were high, higher than those in other parts of the European Union. And since we are in a common currency that makes thing more difficult in the long run to be viable and competitive.

So what we`re saying is we need to cut this spread, cut these interest rates, and you need sometimes in some form of intervention of some type of an organization.

In other parts of the world it might be the IMF that says “I have a reserve here which, if you need and if you see your spreads too high or if you can`t borrow — that`s not the case with Greece, we can borrow — but if your spreads are too high then we are here to give you money at a lower rate. You will have to go through an austerity program,” which we actually are doing, so we could actually follow that path.

Another way would be, of course, to have the European Union, which doesn`t have the — that type of a body. It doesn`t have a European monetary fund as the IMF exists, and that now is being discussed because of Greece, and I do hope that Europe does create that and I do hope that Greece becomes the opportunity out of this crisis.

But we may need an ad hoc mechanism — we may not, but we may need an ad hoc mechanism if we see that the spreads continue to be high when we go out to borrow again.

Charlie Rose:   You stopped and saw other governments before you came to the United States. What are they telling you about their willingness to go to bat for you?

George A. Papandreou:    would say that there is a wider sense of solidarity within the European Union. This has developed over the years of course. We are a very large union, 27 countries recently expanded from 15.

But there is a spirit there, and there`s a spirit that we need to further strengthen our coordination in order to be able to deal with issues such as financial crisis, because if we work together in unison we can be powerful in making sure that the markets work for us in a good way, or, for example, if we unite on the issue of climate change, which we have, we have a powerful voice in dealing with issue of CO2 emissions and greening our economies but also helping the world and the planet not overheat and create huge problems for future generations.

So there is a sense of solidarity and when in crisis — one country is in crisis, there is this sense of help from other countries.

Now, each country has its specific constitutions and specific laws and possibilities, so there are –

Charlie Rose:   And specific political pressures.

George A. Papandreou:   And political pressures, yes.

Charlie Rose:   Because it`s different for Merkel than it is for Sarkozy. Some of her constituents are saying “We are being asked to bail out the Greek government because they were profligate in terms of how they handle their budgeting.”

George A. Papandreou:   Yes. And that`s why I was — one of the reasons I went to Germany and talked to Chancellor Merkel — she knows this, of course, but I did want to speak to the German public — is that we`re not asking for a bailout. We`re not asking to money from the Germans.

We’re saying what we want to be able to do is to get loan which we`ll pay back, but at a rate which is a viable rate and which is a normal rate and a competitive one compared to other countries.

Just give you an example. When we borrow $5 billion, we pay approximately $600 million, $700 million more in interest than Germany pays. So in a common single market and a single currency, that would mean that we would be less competitive and there would be greater burden on us.

So in the long run this would not help not only us but it would not help Germany, because we are a common economy. We buy German products. Germans come to Greece as tourists and to our islands, to our beaches, to our mountain villages, to our museums.

So there is a lot of interdependence, and therefore it is in Germany`s interest to see that Greece does develop and does have — does prosper.

So what we`re saying — and that was my message to the Germans — no, we`re not asking for you to carry the burden of what we have to do.

But secondly, we also are taking the measures. So we are saying, yes, we`re taking the medicine. It`s difficult medicine. What we want is your solidarity so that we can actually implement this in a realistic way and in a realistic timetable.

Charlie Rose:   It has also raised the question in a very strong way of what`s called sovereign debt, as you know.

George A. Papandreou:   Yes.

Charlie Rose:   And caused people looking at the global economic picture to say could other countries be far behind? They point especially to Spain, Portugal, and Italy. Is this a case that may be an indication of the future, the question of a government borrowing too much money and maybe at risk of economic collapse that would have a domino effect?

George A. Papandreou:   I think we — you have an interesting point here.

First of all, the fact that we may go through a difficult time because of the crisis, because of the international crisis, should mean that we could — we should not be over-penalized for this international crisis.

Now, countries will go through crises and they do have to put their economies in order, or, if you like, take stringent measures as we have to get through this crisis because of the — for example, in Spain there was the collapse of the construction industry. They had a lot of profit on that in recent years. And with that collapse, it created unemployment, created problems in their economy.

But they’re generally a healthy economy, Spain is a healthy economy. So it shouldn’t be penalized for the fact that one of its industries collapsed because of a financial crisis. So we have to see ways how we can securely make this transition into more — into a normal growth rate through this crisis.

And that’s where I think we need the necessary regulations so that it doesn`t metastasize, one crisis doesn`t create the fear of risk, the fear in this could create another Lehman Brothers domino effect.

Charlie Rose:   You have said in fact you will not let Greece be another Lehman Brothers.

George A. Papandreou:   Absolutely.

Charlie Rose:   Because when Lehman Brothers went down it had a huge affect on the rest of Wall Street.

George A. Papandreou:   Yes, and the rest of the world.

Charlie Rose:   What impact might it have in terms of the financial picture of the United States?

George A. Papandreou:   Well, obviously you could have — there are many things. And I don`t want to be a doomsayer and I don`t want to create any problems.

Charlie Rose:   But at least you have to understand the risk?

George A. Papandreou:   Yes. I think what we need to do is we have to see that there could create imbalances, for example, in the exchange rate between the Euro and the dollar.

Obviously the U.S. wants to — is on a track President Obama is on a track with putting the economy back into an export mode, into a more developing and great developing green economy here. So that would have an effect on the balance of payments, it would have an effect on the dollar, it would have an effect on exports.

Charlie Rose:   I hear you saying the focus of these conversations is really going to be about regulation more than any other subject.

George A. Papandreou:   What I do know as a lawmaker and head of government is we do need regulation. Sometimes I hear that this word has taken — people fear the word of “regulation.”

Charlie Rose:   Because they think it impedes growth.

George A. Papandreou:   It impedes growth.

But that’s sort of like saying, and I’ll take a very simplistic example — like saying we don’t need traffic lights because they slow down cars. Now, they do slow down cars, but they also make sure that we avoid accidents, and they do help us in regulating traffic.

Now, you could have overregulation, too, which could stifle innovation. But you need regulation so that you don`t have the concentration of so much power in the hands of a few people, so much lack of transparency, where decisions are made beyond the borders of our democratic processes or where the actual political system is captured by special interests.

And this happens in many countries, it happens in the United States, it happens in Greece, it happens in Europe because governments cannot stand up to these special interests.

Charlie Rose:   OK, let`s talk about speculation a minute, because there are two aspects of that. Number one, there`s some investigation in terms of the United States in terms of what speculators may be doing. On the other hand, there are questions being raised as to what bankers may have done in order to cover up debt that Greek government was incurring in order to meet certain requirements. Can you tell us what you think about that, the notion that American financial institutions came to your country and helped previous government governments cover up the extent of Greece, their debt?

George A. Papandreou:   Well, first of all we are — we have set up an investigation in our parliament concerning the whole issue of statistics and making sure we will have transparent statistics in Greece.

We actually set up a completely independent statistical agency in the government and the parliament so there will be a check and balance here. And the European statistical agency will also participate in this agency, which we have set up at the national level.

So, first of all, we want transparent statistics so everybody first of all in our country, our citizens, but also around the world know what’s happening with the Greek economy. We know we can get out of this crisis. We’re moving out of this crisis, and we want to show the world that we’re doing it in the right way.

Secondly we’re looking back and seeing what the problem was, where the responsibility was, so we’ll get to that also.

Charlie Rose:   But do you believe there may have been financial institutions who helped the Greek government cover up the level of their debt?

George A. Papandreou:   Well, I wouldn’t use the word “cover up.” I would use the word that these financial instruments which some people called innovation and they called them here in the United States innovation, were exported from the U.S. to around the world, and not only Greece, but around the world of how you use accounting rules in one way or another to — it was then legitimately –

Charlie Rose:   It would appear to date at a later time.

George A. Papandreou:   — prolong the debt requirements, and so on. So, in fact, these were legitimate tools at the time.

Now, these legitimate tools, of course, obviously yes created problems of too much leverage in banks or all these so called structured bonds, and so on. These types of tools are what we’re paying for right now, this opaque, non-transparent way of dealing with this –

Charlie Rose:   And that’s the kind of subject you want to talk to American authorities about, American government officials.

George A. Papandreou:   Well, I will basically — and I have said this publicly — I said that, yes, we welcome any types of investigations, first of all just to make sure — just to see what has happened in the past, but not only for Greece, but I think this is something which is useful for our financial systems throughout the world so that we make sure that when we’re building our economies, we’re building them on a sound basis which won’t be rattled simply by a bubble somewhere on this planet.

Charlie Rose:   I think you may have said that Greece should not be a crisis but a case study.

George A. Papandreou:   That’s right. That’s right. I would like to see Greece as a case study, which we are now handling, of course, and very difficult and it’s a huge responsibility on me personally, but I’m taking that responsibility, I’m taking the difficult measures, and we are ready to do so.

But it’s not a happy situation and we’d like to see that this doesn’t happen again.

So I hope that Greece can become an opportunity both for Europe to strengthen its coordination for that type of similar situations, also to look into the Euro and see there are certain instruments that the Euro needs. For example, something like a European monetary fund, more of a coordinated fiscal policy, but also see how we do this around the world.

Charlie Rose:   So this has led to discussions about a European monetary fund that would be there as an emergency measure in the future?

George A. Papandreou:   That’s right.

Charlie Rose:   It’s on the table for consideration?

George A. Papandreou:   Yes. I would say it’s on the table. It hasn’t been officially put on the table, but it has already been discussed in public.

And I see that there’s a willingness amongst many in the European Union to look for these new types of new tools. We talk about, for example, more coordinated economic governance in the European Union. I think that’s a good thing. It’s a good thing and it would be a good thing not only for Europe, I think it will be a good thing for the world.

Charlie Rose:   Just to make sure I understand this. Essentially the message you got from Chancellor Merkel and President Sarkozy and others is that if it’s necessary as a last resort for the European Union to step in, they’re prepared to do that.

George A. Papandreou:   Yes. That’s right. That’s –

Charlie Rose:   That’s the guarantee you got from them?

George A. Papandreou:   That’s the guarantee we have not only from them but from 27 members, actually, two weeks ago this has reaffirmed in a very strong way this that if — last — If there is a — if push comes to shove, let’s put it that way, there will be a solidarity from the European Union.

Charlie Rose:   And what about the International Monetary Fund?

George A. Papandreou:   Well, we haven’t — we never ruled the International Monetary Fund out, and we leave open as a possibility. We hope that we won’t need any of that kind of help, that the market will respond positively to the changes that we made.

And the IMF has said that if he were — if we were now under the IMF auspices they would say that, yes, what you have done is right, is correct. We wouldn’t ask for –

Charlie Rose:   But they would be there if necessary?

George A. Papandreou:   But they would be there if necessary in that case. But assume that one country goes to the IMF. What they then would say is you take the measures, we put the money on the table, sort of like putting a gun on the table so that the markets don’t speculate. Now that’s what would happen.

Now we have, as I said, we don’t they that would be necessary but we keep that option open if we see that things don’t go the way we hope they go.

Charlie Rose:   You faced some of the same questions at a more severe level right now that the president and other heads of state face, which is if you want to revitalize an economy and you have a deficit issue and you have a need to stimulate the economy, how do you make those two ideas converge?

George A. Papandreou:   Yes, that’s — that’s a very important question. And I think the two answers here.

One is making government smarter, making government more effective. And we have maybe even more so than in the United States a lot of leeway to do so.

There has been a lot of waste. There has been at times clientalism in politics and so on, which have increased, let’s say, for example, a huge debt of our hospitals without that being necessary. In the OACD reports they said we could reduce waste in hospitals by 30 percent while increasing the quality of the services we give. So we do have –

Charlie Rose:   So austerity may be good in that kind of thing?

George A. Papandreou:   In that sense, yes. It is remodeling, reorganizing our administration, making sure that the money we put in, our taxpayers money, actually does go to where we — where it should go, and it does — it is really valued and it does bring out the necessary results, whether they’re in services or growth or something else.

Charlie Rose:   But how do you stimulate the economy at the same time beyond that?

George A. Papandreou:   That’s the second point, and that’s the growth point. And that is where we need investment.

Luckily within the European Union, countries like Greece have an important help from the so-called structural funds, that’s a European term — don’t want to burden you with these terms — but they are funds which allow us to invest in infrastructure, for example in IT, information technology and the superhighways and so on, and green economy and so on.

Charlie Rose:   Green technology.

George A. Papandreou:   And we have about $16 billion allotted to us from the European Union, which is a huge amount, a very big amount. And we will use this in public-private cooperation to bring in private investment.

And I’ll use this as a plug if you like, that, yes, Greece is now I think becoming a very interesting place for investment because of the changes we are making, cutting down in bureaucracy, make things more transparent.

For example, the Aegean Islands, as I said, have a huge potential for wind, green technology. Just think of an island to be even a prototype because it’s an island and we have all different types of islands, smaller and bigger ones, where you can say let us see if we can have a complete carbon-neutral island, there’s no carbon emissions at all, and see what that means for society, for their electricity, for their power, for their community life, for education, for the types of jobs, for the tourism we create where people can live in a very different — see what it would mean to live in this kind of society.

So I think we have a — we will through this process become a very innovative and forward-looking country and seeing how we can bring in investment and stimulate private investment around the world.

Charlie Rose:   Larger geopolitical questions are being raised by the crisis in Greece. It is about the European Union. When you try to stitch together with one common currency, disparate economies, this shows that it didn’t work. Secondly, it says in some cases that the European idea is dead.

George A. Papandreou:   I would differ with these two opinions. First of all the fact that we’re going through a crisis, as I said before, can be an opportunity, and I believe it will become an opportunity for Europe to more coordinated and to be more integrated.

And the fact, for example, that we’re actually talking about a European monetary fund or we’re talking about Euro bonds, we’re talking about guarantees for countries, we’re talking about economic and governance in the European Union, I think shows the strength of Europe on this.

Secondly, the European project. Well, the European project, I think is a unique one in a globalizing society.

Charlie Rose:   The dream that began with Jean Monnet back after the war.

George A. Papandreou:   That’s right.

I will tell you where I think dream is going. The dream was after the Second World War not to have any more wars on the European continent. And therefore we interweaved our economies so that we wouldn’t want to go to war with each other. France and Germany, for example, that was beginning of a single market, then we became a union.

We broke down the wall, the Berlin wall. Central and eastern Europe are part of this European Union. So, in fact, Europe became a peace project, a project for democracy, a project for social cohesion and progress.

We still have part of that to do in the Balkans, in the western Balkans, Turkey is also a candidate. Cyprus is also still, even though it’s a member of the European Union, still has occupation troops. We need to solve that problem. So there are — that’s still European peace project at work.

But I think what is more important for a globalizing society is we have shown that, as you said, disparate economies, countries with different languages, with different cultures, even different religions, countries with different pasts from the west of the east, former communist countries, former dictatorships, we had a dictatorship in Greece, Spain and Portugal, can come together under a common roof and with an underpinning of common values and can work together and pool their sovereignty to deal with some of the problems of this time.

Now that — if that is not a model for globalization, for governance in a globalizing world and a globalize world, I don’t know what is.

For example, we need today to pool our sovereignty, if you like, to give a little bit of our sovereignty up, even the United States needs to do this, if we want to deal with climate change. We won’t be able to govern this planet unless we all work together.

Well, our experience is a very difficult one, but it’s also very effective one is the European Union. You can do it. We can work together. We can pool our sovereignties to deal with these global issues, whether it’s climate change, whether it’s — and we have a very clear and common position on climate change in the European Union — whether it’s the financial crisis, whether it’s dealing with poverty and pandemics, whether it’s dealing with non-proliferation, some of the very biggest issues –

Charlie Rose:   Issues that go beyond national borders.

George A. Papandreou:   Absolutely.

Charlie Rose:   But what happened at Copenhagen, do you think?

George A. Papandreou:   Well, I think it does show the failure — even though it was one step, it does show the failure or the difficulties of global governance, of the fact that we are asked — this is the first generation of human beings that are being asked to actually manage a whole planet.

We’re not asked — we’re not being asked to manage our countries, but we are elected in our countries. We are heads of governments, of national governments. The fact that we have to manage very detailed issues at the global level is a very new experience in our history and in politics. And we have to do this fast.

In fact, for example, we are going to have to decide how much CO2 each factory or each industry or each country or each sector of industries has to or can emit. I mean, that is — and do this at the global level, that’s a huge feat.

Charlie Rose:   As you know, emerging nations say “We should not be held to the same standard that industrialized nations of the west have been, because they have got the advantage in terms of their own growth from a lower emission standards, and now when we’re growing at rates that we feel necessary that we shouldn’t be held to the same standards.”

George A. Papandreou:   Yes, well I think there are two points here. One is that this is right. Historically we have destroyed our environment or used our environment in a capricious way without being careful of what we were doing. We weren’t very conscious of it initially many years ago.

Now that we are more conscious of this, of course, this becomes a very heated issue. We do have an historical responsibility. At the same time – - and therefore we do need to help the emerging economies.

At the same time, I think when we talk about emerging economies, we’re talking about different economies, too. China is a different economy and the — some of the sub-Saharan African countries are very poor, and here are different economies. So I wouldn’t put them the same bag.

China doesn’t need financial aid. China has the possibility of transforming its economy on its own. Other countries in Africa, for example, need that financial aid, they need that help.

But I would say there are certain issues here. We have deficit — the contradiction here or the problem here is that we are being asked to — the developed countries are being asked to pay for the developing countries, but at this point it’s the developed countries that have the huge deficit while the developing countries are the ones that have the surpluses. So we need to pool our resources.

And I think there are a number of issues here. First is one, well, what if we had something like the World Bank or some other bank where we could actually pool resources and use these resources to mobilize capital around the world to help the developing countries, but also to help the emerging — the strong emerging economies to transform their technologies?

Secondly, why not look at other ways of funding? We’re talking about things like a carbon tax, which could be redistributive. For example, a carbon tax if we had it across the board around the world could be funding then those countries that need help, but it would also be incentive for those countries that have carbon emissions to cut down on those emissions.

Transaction tax, the so called Tobin tax — we have capital going from one country to another moving at the speed of light, and there have been issues even about that as a problem. But that could be something like tens of billions which could be used then for aid and development of the new technologies.

So we do have some of the instruments at the global level if we want to deal with this problem and deal with this contradiction, if you like, between the developing and developed worlds.

Charlie Rose:   In terms of — a couple questions before we close. One, in terms of — you speak with that question of climate change with a certain passion.

George A. Papandreou:   Yes.

Charlie Rose:   More so than you speak about the deficit crisis, if I may say so. But is climate change going to be a casualty of — And other aspects of governance of this economic crisis where the focus has to be raised?

George A. Papandreou:   That’s a good question. Well, first of all, I speak of it with more passion because I know we will get beyond the deficit problem if Greece and we will deal with that. But the climate change issue is one which is looming and it will be much more catastrophic if we don’t deal with it.

Many of our islands will be underwater, for example, in Greece. We already are feeling that the effects of so-called decertification, we’re losing our forests, our problems with water.

And this is not a Greek problem. Of course this is a worldwide problem. You see these changes. This is a very beautiful country, it’s a tourist country. And we want to — and this beauty is the base of our culture, so we want to leave — first of all we want to be able to live in a country which is a viable country, and we want to leave our country to the future generations of all this beauty and culture.

But this is not a Greek problem, this is a world problem and the Mediterranean will be hit and Europe will be hit and other parts of the world will be hit. So that’s why I speak with, if you like, more passion about this because I think it’s something that’s looming and something we need to deal with.

What you’re saying is what people on the street will say, well, we don’t have jobs. Why talk about the climate? Let’s look for — look at our jobs.

Charlie Rose:   Well, they’re saying that’s do that first.

George A. Papandreou:   Let’s do that first. What I would say is let`s combine it. Let’s combine it. And if we combine these two we may even have more jobs. Not we may, we will certainly have more jobs.

There will be more quality jobs, they’ll be better jobs and they will be more viable jobs, that is more durable jobs and not simply competing to the bottom if you’re racing to the bottom to see who has lower wages, as we’re doing right now between different economies.

If we create the framework worldwide — and that’s why I think Mexico is — the meeting in Mexico this year is very important — the necessary frameworks where we can help create the incentives for investment in a green economy, we will have many more jobs. We’ll mobilize money, we will mobilize investment in new technologies.

And these technologies will transform our economies. And in that transformation we will create viable economies and jobs and a better future for our children.

Charlie Rose:   One question about the United States. You have been a long time friend. Your father lived here, you lived here. He taught school here.

George A. Papandreou:   I was born in Minnesota.

Charlie Rose:   You were born in Minnesota where he was teaching. How do you see us today? We have a new president a year into his administration. He inherited lots of problems. His domestic priorities are in trouble.

George A. Papandreou:   Well, I think the new administration and particularly Barack Obama has created a great deal of hope and has changed the image of the United States around the world after an administration which was quite isolated but also linked with wars such as the Iraqi war, and one which was very unpopular around the world and created a lot of polarization.

I believe that people are looking for U.S. leadership at a time when we do see power shifting to different parts of the world. And I would say that the dilemma we have is do we create a more rigorous system at the global level of some rules and regulations.

And I know this in the United States is often seen as a taboo subject or a negative thing, such as the United Nations. I’m not talking necessarily about the United Nations only. I’m talking about the fact that we need to govern this planet and we need to work together to govern this planet.

But on what rules? With what values? Who’s going to make decisions? How are we going to make sure that everyone is represented? Well, the answer to these questions is where the United States, and I would say working with Europe, could be forces of stability, forces of making sure the values of say democracy, human rights, the rule of law, are implemented at the global level.

And we bring in countries like China. We bring in areas like Africa, Latin America, India into this new global system in a way which we make sure it is a viable one. That is the positive scenario.

The negative scenario would be that we start moving into an era of competition of power, between different centers of power, different regions of power, where there’s less understanding and more fear, much more scapegoating during the — concerning the problems that we have, whether it’s climate change or competition for energy, poverty, and so on, and where we create fundamentalisms and culture clashes.

And then we get into a world with which — where we’ll see much more conflict and much more disparity and much more suffering in the future generations

And I think we’re at a very crucial moment, and this is where I think the U.S. can play a very important role.

Charlie Rose:   Mr. Prime Minister, thank you very much for joining us on this program.

George A. Papandreou:   Thank you very much.

Charlie Rose:   It’s good to see you again.

George A. Papandreou:   Thank you.

Charlie Rose:   Prime Minister Papandreou of Greece here visiting the president of the United States, the speaker of the House, the Secretary of State, the finance secretary, and others. Thank you for joining us.

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