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10 Sets of Organizational and Administrative Actions to Restart the Greek Economy
Πρόεδρος του Ελληνοαμερικανικού Εμπορικού Επιμελητηρίου
In October 2009, five bilateral chambers of commerce in Greece (American-Hellenic, British-
Hellenic, French-Hellenic, German-Hellenic, and Italian-Hellenic) presented a comprehensive
proposal of detailed objectives and 123 specific actions as a tool to be utilized by the country's
This work followed broad consultation and analysis, based on the extensive experience, in Greece
and internationally, of the Foundation for Economic and Industrial Research (
) and the Boston
Consulting Group (BCG). The primary objective was the creation of a reform framework and a
restructuring program for the Greek economy.
The main conclusion at the time was that the Greek economy needed a new development model.
Development needs to become more outward-oriented—it must rely more on the export of
competitive products and services, and less on consumption, because Greece is a small economy
and the growth of domestic demand is limited by the small size of the internal market.
The proposals of the bilateral chambers of commerce were adopted and the majority of them were
incorporated into the Memoranda, the Mid-Term Program and the Omnibus Bills. The challenge,
however, remains in their implementation. Certainly, the rapid deterioration of macroeconomic
conditions over the past two years, particularly fiscal conditions, and the emergence of the debt
problem as an international crisis, have led the government to make the country's stay in the
Eurozone its highest priority—and rightly so.
As trade and industry operators, we must emphasize that our main objective is also a return, as
quickly as possible, to positive and sustainable rates of economic growth, compatible with the gross
domestic product (GDP) of the economy, for the benefit of society as a whole. At the same time,
there must be a macroeconomic adjustment of the economy toward smaller, 'twin' deficits: a current
account balance and the public sector. The key to combining growth and fiscal adjustment is the
improvement of competitiveness and of investment.
The reference framework for the enactment of these goals and of the means to achieve them must
be a Long-Term Plan of Operation based utilizing the potential of sectors with competitive
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advantages, on which the new development model can be based: Education-Culture, Agriculture,
Tourism, Shipping, Energy, Health, Mineral Resources, IT and Communications, as well as certain
branches of processing (e.g. foodstuffs, building materials).
Important intermediate goals are: the creation of a favorable environment to attract investment,
improvement of entrepreneurship, an increase of jobs, increased prosperity and the improvement of
social conditions. The basic parameters of our objectives and of the plan of operation, which must
be pointed out, are the following:
Efficiency of the state
Reduction of the state's size and simplification of all the procedures that govern the statecitizen
and state-business relationships
Reduction of business’ dependence on the state
Reinforcement of outward-orientation: Import substitution – increase of exports
Transfer of resources (labor-capital) from inward-oriented sectors to outward-oriented
Improvement in competitiveness through the reduction of relative labor costs per product
unit, increase of overall productivity, and reduction of relative prices through (a) the
removal of obstacles to investments and entrepreneurship, (b) opening all markets and
professions to competition, (c) improvement of productive capacity and the specialization of
the workforce through intensive training programs and work placements, by efficiently
utilizing the EU's funding programs. Such potential benefits are great.
Further fiscal adjustment within a reasonable time frame, until the deficit is reduced to
levels compatible with a considerable reduction of public debt, levels significantly lower
than 100% of the GDP.
Liquidity that will be channelled into the economy. The recapitalization of banks must be
accompanied by a system of incentives/disincentives that will favor those banks which
channel liquidity to solvent businesses.
Investment as a central factor for growth. The National Strategic Reference Framework
(NSRF) will support investments in infrastructure, provided that a small number of larger
projects are chosen in order to 'jump-start' the system. Concurrently, privatization is the key
to attracting foreign private investment. The exploitation of state-owned land and
infrastructure, with the adoption of faster privatization procedures, concessions, and public
private partnerships (PPPs), may prove to be the catalyst for foreign direct investment.
Unfortunately, however, the larger structural problems remain; that is, the state's extreme
centralization, the costly and fragmented bureaucracy, the lack of electronic governance and the
complete lack of correlation between expenditures, objectives and results.
Today, our goal is to point out the priority measures, as seen by the business world, so as to focus
on the prerequisites and those absolutely essential for restarting the Greek economy.
All the larger bilateral chambers (American-Hellenic, British-Hellenic, French-Hellenic,
German-Hellenic, Italian-Hellenic, Hellenic-Netherlands, and Hellenic-Swedish), as well as the
Hellenic Management Association, which support this initiative, represent important companies
with large dividends in the country's economy and society; those with considerable management
experience. Furthermore, as bilateral chambers, they wish to express their opinions on the
conditions that need to be met for the improvement of entrepreneurship and competitiveness in our
country, in order for it to attract substantial investments and immediate results, both in the creating
new jobs and in maintaining existing ones.
Today, with the constant and undivided support and technical know-how of the Foundation for
Economic and Industrial Research (
) and the Boston Consulting Group (BCG), we
propose 10 specific sets of actions. We believe these steps will contribute to the effective
implementation of the measures that have already been decided or proposed and, above all, to the
achievement of those objectives. Because the fundamental economic question today is not what
must be done—since this has already largely been determined, decided or even passed as law—but
rather how it must be done effectively and within a rigid time frame.
1st Set of Actions:
Establishment of a Governance Center to Centrally
Coordinate the Government’s Reform Project
The large number of required actions and of parties involved in the government's reform project
demands the immediate establishment of a Governance Center which will:
Report directly to the Prime Minister
Be responsible for:
1. The planning and execution of reforms
2. Setting objectives for the action plans
3. Formulating budgets, per ministry, and correlating expenditures, objectives and
The Governance Center must include a core team of 15-20 members who, like a project
management office, will be responsible for general monitoring and supervision and must also have
satellite units in all the ministries. A fundamental prerequisite for the success of these units is, first,
that no political figures participate in them—particularly members of the Cabinet, as they already
participate in political decision-making bodies—and, second, that they have broad jurisdiction.
An apt example, which was implemented successfully in the United Kingdom, is the Central
Delivery Unit, under the Prime Minister, which intensively and closely monitors reforms in vital
sectors such as health, education, crime, transport, and immigration. The unit's objective is not just
to oversee the basic performance indices, but to also coordinate, on a daily basis, the government's
important reforms. Therefore, it reports directly to the Prime Minister's Office.
2nd Set of Actions:
Enforcement of Laws and Decisions
Immediate enforcement of laws that pass and of decisions taken.
The Governance Center will play a crucial role toward this objective, so that all necessary
actions are taken for enforcement.
It is also necessary to codify existing legislation in order to reduce the volume of regulatory
material. Extensive legislative regulations in recent years—which were, of course, added to
the existing legislative framework—render the assimilation and enforcement of laws
Also, no legislation should be introduced without a prior, thorough analysis of its
3rd Set of Actions: Functional and Effective Public Administration
Public administration can only be effectively improved by severing the umbilical cord that connects
it to various political parties, and through the adoption of private sector practices for the sound
management of ministries and their budgets:
The first essential step in this direction is the appointment of permanent secretaries and to
eliminate advisers to ministers, special secretariats, and special secretaries. There will be
one secretary per ministry, acting as manager. Secretaries will be approved by a cross-party
committee with specific intentions and objectives.
Legal persons of public law and legal persons of private law must be classified according
to the policy area which they cover and their added value in the management of said policy
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area. Those who can secure a significant part of their operational costs through own revenue
will carry on, while the remainder will be dissolved.
The jurisdiction of ministries, legal persons of public law, and the like, are determined,
modified and dissolved only by Presidential Decree and following an analysis of the effects
by the Governance Center.
4th Set of Actions: Compulsory E-government
E-government is an essential part of a functional and efficient public administration. Making an
increasing number of government services available online will be beneficial for citizens,
businesses and for the state itself. The state will benefit from reduced costs, improved efficiency
and greater transparency. Citizens will benefit from the increased speed and ease of transactions.
Small and medium businesses will develop fluency and confidence in Internet use, in which many
of them still lag. Beyond increased efficiency, E-government allows for digital tracking of data,
which can be used to combat tax evasion. Actions toward the faster development of electronic
governance (that could be funded through the NSRF's 2 billion Euro budget for Digital
Compulsory submission of applications and issuance of official documents (birth
certificates, vehicle registration certificates, passport applications, military service
certificates, tax declarations, and tax return forms) through the Internet
Utilization of widespread mobile network connections and smartphones in order to facilitate
citizen-state communication. Something similar has been implemented in India, where the
government has planned the development and deployment of a mobile application for all
Demand that all businesses that carry out public contracts execute all procurements
electronically, including bills and invoices. A concurrent change of the framework in which
public calls for tender are conducted, in order to achieve faster results and safeguards to
reduce inexpensive and redundant objections, in every public project (delays, overruns, and
the like)—even applicable to tender invitations.
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5th Set of Actions: A Unified Independent Authority to Combat Corruption
The drastic tackling of corruption requires the creation of a Unified Independent Authority to
Combat Corruption, which will assume complete responsibility and which will work with the
Parliamentary Committee for Institutions and Transparency:
The purpose of the New Unified Authority will be to investigate, expose and bring to justice
cases of corruption.
Its procedures may not be obstructed but, quite the contrary, will be legislatively assisted by
every public body, particularly the police and public prosecution authorities.
The existence of such an authority will help create systematic and comprehensive electronic
databases which will result in speed, simplification and reduced costs of processing all
The existence, smooth operation and functioning of such an authority must be in parallel
with the expansion and integration of E-government which, by definition, renders physical
meeting between citizens and public servants obsolete.
The examples of Australia and Singapore constitute the best examples in this direction.
6th Set of Actions: Simplification of Procedures to Attract Investment
Despite the pressing need to increase the total size of the economy and to improve competitiveness,
less than 10 percent of the 250 obstacles to investment and entrepreneurship—as identified by the
Hellenic Federation of Enterprises—have been dealt with. The most important of these obstacles
relate to legislation on land use and environmental licenses, with the Council of State contributing
significantly to the delay and even hindrance of cases.
We must move away from the logic of small and large investments. One authority for all
investments, Invest in Greece, shall serve as a central licensing body. It will license large
and other investments alike, by regional administrative division, through the local offices
that it will establish in the seat of each administrative division. It will work with the support
of local chambers for the receipt, initial checks for completeness, and further forwarding of
each investment portfolio to local Invest in Greece offices and, finally, the monitoring of the
portfolios, in accordance with a cooperation agreement with service staff and with transfers
(perhaps also recruitment of specialists for each area of technological expertise).
Meanwhile, a formal declaration from the investor regarding the validity of the required
documents that must be submitted along with the portfolio, as well as the investor’s pledge
to provide any additional necessary material, will allow the investment to proceed. In this
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manner, responsibility is transferred to the entrepreneur. In the event that an infringement of
any substantial prerequisite for the realization of such an investment is discovered, which
cannot be rectified within a brief, binding deadline, and the business was provided with a
reasonable notification, the business will cease operations while those responsible will be
subject to steep and pre-determined tiered fines, depending on the severity of the
Since disputes will arise, particularly where environmental impact and land use is
concerned, it is proposed that a new department for prompt discussion and decision-making
be established within the Council of State—comprised of judges coming from its existing
departments—responsible for judicial rulings on investments classified by law as being of
“strategic interest in the context of outstanding and urgent public interest for the country's
economic development” and which meet certain set requirements defined by law. At the
same time, a procedure must be devised to severely limit the number of stalling, unfounded
and without consequences, cancellation applications, which are submitted against the
administrative acts. The legal services of the aforementioned bilateral chambers will be at
the new government's disposal with specific proposals for legislation to this end, which are
Best practice: In 2005, Malaysia was facing a dire recession and wanted to attract new
capital to its market. The government demonstrated that it had both the will and the vision,
by establishing a powerful Investment Promotion Agency with the authority to grant permits
and respond to any queries by potential investors. This agency gave its approval in order to
initiate investments in the country without delays. It functioned independently of the
government and, in addition to its local offices in Malaysia (a role which can be fulfilled, in
our case, by local chambers), had twelve offices in Asia, four in the U.S.A. and six in
Europe in order to actively attract investment. However, its most important characteristic
was the specialized staff in each area of interest, which resulted in the agency being able to
provide information and services of a very high quality. The establishment of this new
investment promotion agency had remarkable results: within three years (2005-2008),
foreign direct investment in Malaysia rose by 70 percent ($75 billion).
7th Set of Actions:
Immediate Implementation of Denationalization
(Privatization) and Utilization of Public Property
The program for utilization of the state's assets is based at around 50 percent on the use of land, 35
percent on the use of infrastructure and 15 percent on the sale of shares hitherto belonging to the
state. The revenue collection target comes to 19 billion Euro by 2015, and until 2020 the target is
45 billion Euro. The government's denationalization (privatization) program is not primarily
revenue-driven but rather aims to accelerate the growth of the Greek economy, mostly through the
utilization of land and infrastructure.1 It is expected, for example, that the use ofElliniko (the
location of the former Athens Airport) will add 0.3 percent of GDP to the country's growth rate for
each year of the duration of construction. However, procedures are slow, as the bureaucracy creates
systematic obstacles (a typical privatization procedure takes between 12-20 months), while the
delay in transferring real estate or public assets to the Hellenic Republic Asset Development Fund
(HRADF) threatens the privatization program and creates fears that privatizations will not succeed.
Experts in the field of privatization stress the importance of quick successes, of a creating a
positive environment in the economy and thus sending investors and society the right
message. HRADF's activity and effectiveness must be assessed annually, based on the
accomplishment of specific, minimum goals to which it has legally committed, and it should also
implement a system of percentage-based incentives for success for its staff, based around meeting
and surpassing asset-sale objectives within a set time frame and to a minimum sale value for each
asset. In the event that, after 2014, the intended privatization program has not been completed, it is
proposed that assets belonging to the Greek state are transferred to institutions such as the European
Investment Bank and the European Financial Stability Facility, with immediate payment made by
them to the Greek state (following an appraisal of the assets by two independent appraisers) and
with immediate settlement of part of the public debt with the proceeds. It is also proposed that:
An overhaul of the system, particularly in matters of land use, can be accomplished with the
creation of new institutions like “Epifania.” According to “Epifania,” the Greek state will
not sell its actual land, but will provide property rights in rem to counterparty investors, thus
giving them the right to borrow against it and, therefore, the possibility to draw additional
funds for investment.
Licensing agreements for the use of infrastructure—such as airports, harbors, motorways
and tourism facilities (marinas)—constitute a tried and tested practice in Greece,
particularly considering that the program for exploitation of the state's assets is 35 percent
based on the exploitation of infrastructure. State hospitals with surplus capacity might
It is estimated that for every 1€ received, 3€ more will be invested.
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constitute a special case, with their facilities and equipment having the potential to be used
in the development of medical tourism.
These procedures could be accelerated and, most important, could maximize the state's
revenue, thus allowing the rapid exploitation of its significant and, for decades “idle,” real
estate, if the HRADF or another suitable public agency was granted, by constitutional
provision and within a specific time frame, the ability to determine land use in regards to
public real estate.
8th Set of Actions: Stabilization and Simplification of the Tax System
Establishment of an internationally attractive/competitive taxation framework for business
and investment for a minimum period of 10 years, through a law with increased formal
validity, any changes to which will require a qualified majority in Parliament.
Immediate repayment and consolidation of all the payments due to businesses by the state.
Establishment of amortization in cases of delayed payments, which are estimated at around
6.5 billion Euro.
Reduction of insurance contributions for businesses and other agents that are punctual and
Best practice: For many years, Turkey's taxation framework was complicated and unstable. At the
beginning of the previous decade, the government, in its attempt to implement a more fair, more
stable and more efficient tax system, appointed a council of tax experts to conduct a study on the
taxation of legal persons. After designing a new legal framework, the tax regime was modified to
be in line with international law and international trends. The results were immediate, since they
managed to broaden the tax base, increase taxable income, and reinforce the tax collection
9th Set of Actions: Reinforcement of the Public Investment Program
In the field of public investment, priority must be given to the full realization of the Public
Investment Program, which must cease to regarded as the easy solution for reducing the fiscal
deficit, given the current increased percentage of co-financing of the European Union's Structural
Funds (95 percent) and the high income multiplier of these investments. In this context:
The government must choose a small number of important public projects and public works
with a considerable contribution to economic development and growth, which can absorb
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significant funds in a short period of time (major roads; modernization of harbors, marinas
and airports; certain energy projects) in order to rapidly increase the absorbency of the
NSRF's remaining investment capital (approximately 12 billion Euro).
The European Investment Bank must provide guarantees in order to cover the funding gap
created in larger public works by Greek and foreign commercial banks due to current
uncertainty. At the same time, new instruments for capital reinforcement must be sought,
perhaps similar to the involvement of the European Bank for Reconstruction and
Development in the EU's countries of the former Eastern Bloc.
10th Set of Actions: Reinforcement of the Potential and of the Monitoring
Role of the Bank of Greece
Like all central banks worldwide, the Bank of Greece must invest in more human resources
for improved supervision and monitoring, and the active promotion of solutions to the
problems faced by the Greek banking system, in coordination with the Hellenic Financial
The amount of capital reinforcement and of aid for banks' liquidity demand the best possible
supervision for optimal use of the aid, the stability of the banking system and the devising of
incentive mechanisms through recapitalization for the channeling of liquidity to solvent
Given that European banks face equivalent issues, the need to institute a Unified European
Monitoring Authority becomes pressing and must be included in the program of the new
Beyond, however, the goals and individual actions listed here, it is necessary to devise a
National Strategic Plan for the Greek economy that will lay out the vision for its direction
over the next 20 years, at least. The above proposed objectives and actions will serve precisely
this plan. The plan will determine the strategic areas for development of the economy, their
interconnections; their connections to the state and the private sector in the context of a
coordinated course of action. It will be a plan that shall even determine the interconnections
between the center and the periphery, and exploit its potential. Laying down a National
Strategic Plan such as this requires political will and cross-party agreement. It also requires
consultation between the state and all entrepreneurial and business bodies as well as think
tanks in the country. It is a national effort which will afford the country its new international
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