Interview on “BLOOMBERG TV”

Copenhagen, Denmark, 17 December 2009

Interview with Greek Prime Minister George A. Papandreou to the journalist Francine Lacqua on the “BLOOMBERG TV”  in the margin of the Conference on Climate Change in Copenhagen

Francine Lacqua:    Well, I’m pleased to say now that we are joined live at the UN Climate Change Conference here in Copenhagen by the prime minister of a nation we have talked about a lot in the last couple of weeks. Well, that’s Greece’s leader, George Papandreou, the Prime Minister of Greece. Sir, thank you so much for joining me. Were you surprised, first of all, by what we heard from S&P yesterday, by this downgrade, after you yourself announced radical measures?

George A. Papandreou:   Well, I understand. I have just recently taken over government, elected with a very important and strong mandate by the Greek people. But the situation hasn’t changed overnight, obviously.

And there is a credibility gap, which we are paying for right now, as to many years of lax policies. I am more self-critical about my country than many others outside Greece. For example, I have talked very much about the major changes we need to make, in dealing with systemic corruption, clientelistic politics, money to political favours. This has created a whole atmosphere of tax evasion, and so on.

So these are major things we need to hit and change, and in the medium and long term these will be making Greece a viable country economically, and we want to turn around Greece towards a green economy, which we are talking about here in Copenhagen.

But I understand that right now people are asking questions. But what I am saying is give us a breathing space. We will show you. We are determined to turn Greece around.

Francine Lacqua:   Sir, S&P has also threatened to downgrade you once again. How concerned are you by this? And do you completely rule out a default at this point?

George A. Papandreou:   We have the support of the European Union, and we see that we have no problem of getting the necessary funding. We obviously are paying more for being able to get loans, but I think that as the next few months play out and people see and the markets see and others see that we are making major changes – we already have, in the first 60-70 days of our government, made really important changes, structural changes, which are changing the way we do government – they will see that we are putting our house in order.

Francine Lacqua:   Is default a possibility, though?

George A. Papandreou:   I don't think so. I don't think so. I think default is out of the question, simply because we have the strong backing of the European Union, and also because we are moving ahead in putting our economy into a much different position.

For example, we are now voting on our budget for 2010, already cutting our deficit down close to 4%. So that is big cut, at a time of recession, but we are doing it.
I have, as you know, put out a package in many areas which I think will be very important. They may not be the orthodox cocktail which some people want to see, but they are certainly more important for Greece and much more deep-cutting than one would expect.

Francine Lacqua:   Sir, a lot of people have criticised this package, just because you are focusing a lot on tax, instead of focusing on cutting spending. Are you considering addressing that? Would you come out with a second package in the next couple of weeks to address the concerns of the rating agencies?

George A. Papandreou:   We are absolutely looking at cutting spending also, absolutely. Tax is only one area, because if we get a slight portion of tax evasion we wouldn’t have the problem we have today.

And I think that’s very possible, and I would say we could do even more than a slight change in tax evasion.

But certainly we are cutting down in many areas on spending. Huge cuts in public spending that existed in all kinds of employment. We have had over-employed people. We have let people off, thousands of people, from the government. We have a cutting down in military expenditures, which are very important, cutting down in the consumer expenditures of our budget, and I think these are very, very important cuts.?> ?>