Demonetisation a 'draconian’ step, says Greek minister

Greece considered several measures to prevent black money, but never anything as "draconian" as the Indian government's demonetisation move, says visiting Greek Alternate (or Deputy) Minister of Foreign Affairs George Katrougalos in an exclusive interview to The Hindu.

Katrougalos, who was formerly Labour minister, also spoke on the Trump effect on global trade, and Greece's support to India for the Nuclear Suppliers Group. Expressing optimism about the future of the Left parties, he said a majority of people believe that neo-liberal policies favour just one percent of the population. The rise of the Right is clear proof that the status quo is not defendable, he said, adding that, when the vacuum is filled by the Right with the rhetoric favouring anti-elite positions, "we see a Trump win, or the rise of the nationalistic forces in Europe. But the Left also has the chance to fill this vacuum, which is what happened in Greece and Portugal." (Edited excerpts)

Given that India and Greece have not had very close ties in the recent past, where do you think the broadest bilateral opportunities for cooperation now lie?

We represent ancient civilisations that have always had contact, but it is true that we have a lot to do. On economic issues, we are starting from a relatively low level and this presents an opportunity to improve. India is an economic superpower and we are a country just getting out of a crisis. So there is an opportunity for India to invest in Greece as we have become very affordable in areas such as infrastructure, energy including renewable, information technology and tourism. New direct flights started recently will also help. I have met my counterpart Mr. M.J Akbar and invited him to return the visit, and hope for our foreign minister and Prime Minister to visit in the future.

Multilaterally, India is keen to push its membership for the Nuclear Suppliers Group, of which Greece is a member. Did this come up in talks, and where do you see India’s application going?

We are going to support India’s demand, because you have an unblemished record towards non-proliferation of nuclear technology. India’s responsible approach must be recognised, and Greece will be supportive, and we hope the overall climate will be favourable.

Where is the application stuck then? Many countries have offered support, so who is still blocking it?

There were discussions on this on November 11th. It will be discussed in future and I think India will succeed. It is a question of when and not if, but I cannot say that it will happen this year.

You are in India when the burning issue is over the government’s demonetisation exercise. Do you think it was the best way to prevent black money and corruption?

We have similar problems in Greece with regard to black money and the grey economy. Also in the European Union (EU), we have had discussions over what to do with the 500 Euro note. We have taken some measures in Greece, not as draconian as yours (the Indian government’s). For instance, we have said those depositing cash in banks must disclose their identity and other necessary details. However, as someone coming from another country, it is hard for me to have a critical stand without an understanding of the local issues (in India). As I told you, we have not adopted such draconian policies, and I am not fully aware of the situation that you have had to face here, so it would be irresponsible to make comments on the situation. We ourselves are trying to track this (black) money. Those in the grey market and carrying out illegal activities, use this money. In Greece, we have taken many actions to monitor it. We also have a problem in Greece of the “black labour market”, and we are working with international organisations on this as well.

Greece had relied heavily on external debt to improve its economy, but failed in the process. What are the lessons there for India as its external debt to GDP ratio has increased to 23 per cent now from 17 per cent a decade ago? Is India in danger of shocks due to its rising external debt?

The two situations cannot be compared. Well, we did learn a lesson on that (external debt) in our dealings with the EU. It is that we cannot change Greece alone. We have to make the necessary changes in Europe as well. We tried to implement a pro-socialist approach in Greece, and because of the domination of austerity policies in Europe, this has not worked. So now we are trying to influence the long term policies in the EU -- to promote cooperation of leaders who share our viewpoint that for the future of Europe we must work against austerity approach. Also socialist democratic movements and movements to the Left must work closer on our common agendas.

But across the world, it is the right-wing parties that are winning elections -- like in the US. What do you think will be the impact on global trade and investment?

Interestingly, even when we have the rise of the right-wing forces, their discourse is critical of the elite. In the US, on whether they think the government has done enough for the working class, the answer from Republican and Democrat voters saw 67 per cent on each side saying no. So I am optimistic about the future of the Left parties as the majority -- without reference to specific political beliefs like the Trump and anti-Trump voters -- believe that neo-liberal policies favour just one percent of the population. And that’s why the rhetoric of the right-wing favours these anti-elite positions. In Europe it is similar, which explains why trust in national parliaments and the EU are at historic lows between 27-33 per cent.

Are you saying right wing electoral wins across the world actually represent a leftward movement?

No. What I am saying is that they are responding to an objective situation, which is why I am optimistic. The rise of the Right is clear proof that the status quo is not defendable. It can be defeated either by the Left or by the Right. So when the vacuum is filled by the Right then we see a Trump win, or the rise of the nationalistic forces in Europe. But the Left also has the chance to fill this vacuum, which is what happened in Greece and Portugal. In Europe, the parallel to the post World War-I scenario is there, when politicians found Jews as a scapegoat. Now they make immigrants and refugees the scapegoat.

Responding to anti-immigrant sentiments in matters of global trade, India says immigration should not be mixed up with movement of skilled workers overseas for short-term projects. What is Greece’s stand on India’s demand to ensure easy temporary movement of such people for work across the globe?

Greece has the opposite problem, which is that because of this freedom of movement in the EU, we have seen a brain-drain of about 300,000 of our young professionals leaving. Our primary concern is to re-attract younger Greeks to return. On your question, we are for free trade and free movement in general terms.

GMR Group is bidding to develop an international airport in Greece. How do you rate their chances, and how are you pitching for more Indian investment?

By ensuring political stability, we have met the basic requirement of attracting investment. For economic stability, something that every investor wants, we now have a new stable tax system. We also have a new law to remove red tape for investment. We also have tax incentives, and have created special agencies to facilitate investments. Indian investors should choose Greece for all these reasons, and also because we can act as a bridge between Asia and Europe as well as Africa. After the crisis, we lost more than one fourth of our GDP. So at all levels, we are much cheaper than in the past. For country like India that is thinking globally, Greece is a really good place to do business.

India is planning to build over 100 smart cities. Is Greece looking at participating in building smart cities in India?

Greece has developed good IT companies. These cities need not be capital intensive. What is important is that they use human capital smartly. Also, clean energy is an area that has potential for bilateral cooperation.

Given the similarities in manpower capabilities and push for manufacturing, do you think there will be more potential for rivalry between our nations?

No. There are many commonalities, and exchanges of these capabilities are better than rivalry.

Do you think India-Greece ties have taken a back seat because of lack of progress in the proposed India-EU free trade agreement negotiations? Like the UK, do you feel bilateral ties with India is not progressing well due to the EU factor?

No. Being in the EU has helped us improve our relations with other countries. The EU’s remained an economic project, and problems started when political integration was not happening at the same pace as the economic integration. Also, after the recent austerity policies, the new generation began feeling that they might have a worse future than their parents. Therefore, to ensure political legitimacy, the EU must have a greater democratic process where there is more active involvement of its citizens.

Following Brexit, the world was worried about ‘Grexit’ (Greece exiting the EU). Are you saying it won’t happen?

What I am saying is that to the extent that the EU is following austerity policies, it is creating existential problems for its future. European Commission President Jean-Claude Juncker termed his team as the ‘last-chance Commission.’ But I consider it his ignorance of the dynamics of the EU. By itself, the process of unifying the EU for economic cooperation is noble. But it can be successful only if responds to the actual needs of its citizens. That is what is before the democratic representatives of the European people. We do not like the actual state of the EU, but we decided that the best policy was not to leave the EU, but to try to change it to suit the needs of its people.

For the first time since 2014, the Greece economy recently registered quarterly growth. Do you think Greece will be able to sustain this performance? What are the challenges there given that Greece is depending on financial aid from the IMF?

International organisations forecast a GDP growth of 2.7 in 2017. We need to sustain this growth and ensure that it is inclusive. Almost a third of our citizens are near the poverty threshold. This is the worst in the EU. We have seen improvement though. During our administration, there was a reduction in unemployment. But still a lot of our youth are unemployed even after the brain drain. The question of IMF aid is important. We had a huge debt. But despite the austerity measures and the consequent suffering, the public debt to GDP ratio has ballooned from 128 per cent in 2010 to 180 per cent currently. We have negotiated possible measures to alleviate this debt because it is unsustainable and clearly a burden for the future of Greece. So we hope that now that we have fully respected our obligations in the framework of the (bailout) programmes, it is time for our partners to help in positive measures. In this, we have the IMF’s support. We do not share the views of the IMF in other areas of reforms including labour reforms. We are fully for reforms, but we want workers rights to be respected as well.

In a post-Trump, post-Brexit and post-inward looking government era, clearly the West is changing. Do you think there will be that flexibility towards Greece’s problems and the kind of welfare state that you have advocated?

The answer is never in isolation. We are looking at a Trump era. But it is also a Bernie Sanders era. We had for the first time a change of agenda for the Democratic party in the US. The main failure of Hillary Clinton's candidature was that she focused more on identity issues and not on most of the global issues including poverty and inclusion – in both white and non-white regions. In the EU, we have now debate between pro-austerity and a socialism. Earlier, we did not have this problem of nationalism being promoted by the right-wingers. When we speak about sovereignty, now we are not speaking about popular sovereignty based on the will of the people as we know after the French revolution. We speak about the idea of blood and soil. Fascism and Nazism were born due to the frustration of the middle class, and because the answers were not to face the real problems of the crisis they found a scapegoat in Jews. Now also these are the challenges due to the increase in inequality. It is there in South Africa, which saw a miracle of political emancipation. In Brazil too there is inequality. So everywhere we are facing, as always, a confrontation between the forces of capital and forces of labour. This is clear in the EU as well.

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Printable version | Mar 9, 2021 4:50:02 AM |

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