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Tuesday, June 21, 2016

A New Greek Productive Model - Debunked!

Whenever I see a small light at the end of the dark tunnel which could signal some good news about the future of the Greek economy, I pick it up and bring it for discussion in this blog. There was a big light 5 years ago when McKinsey came out with its Greece Ten Years Ahead Report but that light had gone out in no time. There have only been few lights, however small, since then.

One of these was the recent "24 Progressive Reforms For a New Greek Productive Model" proposal by Yannis Maniatis, a former Minister of Environment, Energy and Climate Change (2009-14) coming from the PASOK ranks. I recently brought this report for discussion and below are a few sobering replies from people who are more familiar with Greece than I am.

Anonymous: Maniatis is part of the old Pasok mafia -- trying to keep his political career going. He was in an important government post after post since the late 1990s and has never done anything worth speaking about. You can see his non-achievements (other than collecting several salaries simultanously) here: http://www.hellenicparliament.gr/en/Vouleftes/Viografika-Stoicheia/?MPId=e92b1ddc-91a6-4155-ad23-fbf8983d0d8a. And you think that someone like this is going to save Greece? Hahahahahahahaha.

Lennard: I have read the 24+1 Progressive Reforms and whatever meager information is available about the governments new Development Bill; they have a lot in common. They are rather specific about what activities they will subsidize, and vague about how they will get the money for them. They are very strong on optimism and today's buzz words (geostrategic advantage, innovative measures, holistic development, national self confidence and the "powerful social solidarity network in a Greece of modern progressive patriotism"), and weak on realism and truth about where/who the country is. They are rich on promises of work, and poor on economic facts.

McKinsey's report form a better basis for discussions about the future of Greece. The form is good and factual, it is a solid piece of work. As must be the case for any prediction, McKinsey have some assumptions (conditions prevailing) for their predictions to become realities. The most important being their 20 horizontal macroeconomic growth reforms, Greece should commit to them or create their own, they must facilitate a good business environment. If Greece cannot agree to the assumptions there is no need for a business plan. Greece may prefer another "hitlist" than McKinsey, make it. Since Greece has wasted 5 years, and the world and Greece have changed, not all of McKinsey's top ten are relevant, but it is still the best I have seen. Since time is running out, Greece should pick the low hanging fruit which, in my opinion, are:

1. Regional cargo hub and logistic hub.
2. Tourism.
3. Agriculture, crops.
4. Food processing.
5. Manufacturing of pharmaceuticals.
6. Aquaculture.

They are all export (or import substitution) orientated.

PS: Maniatis has a bright future in Greek politics. There is nothing he cannot fix with a couple of apps for your smartphone. His flatter is so thick that only narcissists would believe it. His promises of money for nothing and gains without pains is the stuff PM's are made of.

Jim Slip: After taking a quick look at these "reforms", my opinion is that it's all bullshit. Like Anonymous said, Maniatis is an old-school politician (i.e. the kind that bankrupted Greece), so it's no surprise that his reforms are vague, PR-orientated, inefficient, and don't mention any funding at all.

A few examples:

- Pretty much all of his energy proposals are PR-crap. The one suggestion that makes sense (the power grid interconnection of the Greek islands) is the one that Greek politicians should have done decades ago and didn't (in order to cater to special interests).

- Waste management projects have been funded by the EU for decades, and Greece has still very little to show for it. Again, Greek politicians (and their corrupt friends in the private-sector) are responsible for this. All the projects that were funded were overpriced to begin with, their budgets still spiraled out of control, their delivery dates were postponed time and time again, and in the end their functionality was problematic and limited. In a lot of them, the EU asked it's money back.

- Electronic submissions for the issuance of building licenses (as well as the eradication of corruption in Urban Planning Authorities) is again something that Greek politicians should have done ages ago and didn't in order to cater to the corrupted Urban Planning Authorities that they themselves bred (and now supposedly they want to eradicate).

- Personally I would love to see optic-fiber networks. But who's going to fund the project? Maniatis should do well to remember that back in the time of the Greek Olympics (2004), Greece didn't even have ADSL connections (telecommunications were still a state monopoly at that point) because it would cater to the corrupt private-sector supplier (Intracom). It then hastily implemented them so that we wouldn't become the laughing stock of the planet.

One word springs to mind when reading Maniatis' proposals, and that word is hypocrisy.

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