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Divide by 340

By John Psaropoulos, Athens News
Reprinted by Permission

JUST after midnight on January 1, a solemn ceremony reached its climax.

Deep inside the bowels of the Bank of Greece, a black-clad priesthood of bankers and finance gurus watched in silence as Prime Minister Costas Simitis stepped up to an automatic teller machine, inserted his card, punched in the appropriate numbers and emerged triumphant with brand new euro notes in hand.

The congregation cheered and cameras flashed. It was something like the emergence of the Easter flame from the Holy Sepulchre in Jerusalem. The premier had conversed with the powers embodied by the ATM, and declared to the attendant wise men the good news of a New Testament for the Greek economy.

The moment of the euro's birth was a triumph for the labours of Simitis and his finance wizard for seven years, Yannos Papantoniou.

While Greeks are excited about being part of the euro, a membership they above all have worked hard to win, they are also aware of their lowly place in it. With salaries paid in the same currency across 12 countries, there is no more disguising discrepancies.

Greek real purchasing power - Gross Domestic Product with price differences taken into account - stands at 70.9 percent of the EU average, the lowest across the Union. Other traditional laggards have moved on. Even Portugal stands at 73 percent, while Ireland has steamed ahead to 121 percent.

The measurement is rightly considered a pulse of the national standard of living, and in Greece it has risen only incrementally, by roughly 1 point a year, since the early 1990s.

With the Greek economy's present rate of growth, predicted conservatively at 3.8 percent for 2002 against the EU's roughly 1 percent, it should take a couple of decades to bring Greek purchasing power on a level with that in the rest of Europe. So, for the foreseeable future, Greece is set to be the Mississippi of the Union.

Still, Greeks can take pride in the fact that they may now move between a majority of EU countries without changing money, which creates at least an illusion of parity.

They can derive real benefit from the fact that their euro earnings will not be devalued by their government, as their drachma savings so shamelessly were. The decreased cost and greater simplicity of doing business across the continent should bind Greece more tightly to the increasingly integrated European economy, hopefully bringing more foreign direct investment.

But as benefits are brought forth, so is the pressure for more reform. Removed from the scene, the drachma will cease to be the focal point of popular frustration. Social and political causes will come into focus ever more sharply.

This increases the pressure on Simitis to lower taxes and unemployment, even as he modernises Greek society. Among other things, this means stripping the related labour and education markets of antiquated protective barriers.

Mobility between professions must be completely unobstructed, and non-Greek university degrees must be as readily accepted as Greek ones. Foreign universities should also be allowed to compete freely within Greece.

To delay any of these reforms is to deny the free movement of goods, people and services that the European Union, and the single currency, stand for.

Improving healthcare and public education, reforming the bankrupt pension system and coming up with an immigration policy that corresponds to the needs of the market place are also top priorities. Without these reforms, a change of currency will mean relatively little to Greeks in the long run.

(Posted 23 January 2003. Reproduced with permission.)

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