The day US President Joe Biden introduced his ৩ 2.3 trillion infrastructure bill, Greece unveiled a vision of state-led economic regeneration that shared many of Biden’s priorities.
Greece 2.0 aims to invest 575 billion euros ($$ 6 billion) over six years to rebuild the network industry, reform state services, attract investment and boost exports.
Among other things, the universal plan includes renewable energy exploitation, renewed power grids, nationwide high-speed fiber optic and 5G wireless networks, digitization of governments, hospitals and schools, modernization of railways and re-burning of 16,500 hectares (40,7722 acres). Land
Greek Prime Minister Kyriakos Mitsotakis, as a workaholic and driver of economic growth, has devised a plan that will make Greece more sustainable, enterprising and equitable.
But the conversion is not cheap.
The government says banks and investors will receive less than half of the money spent on economic transformation. The rest – about 30.5 billion euros ($ 36bn) comes from the European Union’s 750 billion euros (6 886 billion) Recovery and Resilience Facility (RRF), which was launched last year to fight the Covid-19 recession. The EU wants states to spend at least 3 percent of their share of the fund on renewable energy projects and a fifth on digital services and research.
Another windfall from Brussels is expected by 2027, when Greece will receive 25 25 billion for EU structural funding and research and development. Greece’s goal was to match 26 26.7 billion (. 31.5 billion) in government funding, and Brussels would pay another 8 8 billion (9 9 billion) directly to local and regional governments.
Overall, total EU and Greek government investment in Greece over the next seven years could reach 113 billion euros (৩ 133 billion), equivalent to two-thirds of the country’s gross domestic product (GDP) last year.
“This is the largest fund ever seen in Greece. It is more important than the Greek martial plan. [the postwar] Period, “says political economist George Pagolats, who heads the Hellenic Foundation for European and Foreign Policy, a think tank
“The rationale is to choose projects that have a high multiplier effect and contribute to the growth of the economy,” he told Al Jazeera.
This is more important for Greece than the Marshall Plan.
For example, a reform will digitize and accelerate the growing justice system. The other will make state services readily available so that one hand of government does not duplicate the other. From planning offices to social security, state records will be digital.
Tax filings and collections would go online to ensure businesses paid their fair share. Retail business sales receipts will automatically be lengthened in their tax declaration, and artificial intelligence will be reduced to zero in case of tax evasion.
Alex Patellis, the prime minister’s economic adviser, described it as “the biggest step we can take towards social justice”.
“Reforms that were identified as necessary in most of the reports about all this Greek competition and how it could improve,” Pagoulets said. “With all these implementations, Greece will become a distinct country in terms of digital infrastructure, business environment, diversification and attractiveness to global entrepreneurship, education and training frameworks.”
A sad economy
While impressive in its field and ambition, Greece 2.0 has its doubts.
Some argued that last year’s 7.2 percent recession, or the eight-year recession that claimed a quarter of GDP in the post-2008 global financial crisis, did not go far enough to alleviate the pain.
“Seven percent of the recovery over the next five years is completely inadequate,” said a senior financial executive, who declined to be named. “What we need is the liberalization of small enterprises from the bureaucracy and the responsibility of small prisons, which is included in the closure of QoID, so that they can start jumping in and reduce taxes to encourage investment.”
According to the country’s finance minister, the Greeks currently cannot pay the 447 billion euros ($ 5 billion) they owe. They owe another 108 billion euros (128 128 billion) in unpaid taxes and 38 billion euros (45 45 billion) in social security arrears. In all, it is 111 percent of GDP
When he came to power two years ago, Mitsutakis promised to reduce the corporate tax rate from 29 percent to 20 percent within two years. He was able to bring it down to 24 percent before the COVID-19 recession hit the government’s revenue.
Since then, the government has spent 40 billion euros ($ 47bn) to bail out distressed taxpayers and defaulters, but the economy remains cash-poor. Although growth is forecast at 4.8 percent by the government this year, it is a point above the euro-zone average, it will still leave 6.2 percent lower than in 2019.
A new path
Corporate lawyer Yanos Gramatidis agrees that small enterprises, which provide 90% employment, will not benefit from Greece 2.0 for at least a few years. However, he believes that the recovery of the economy will be deeper after that, as Greece 2.0 is acting as a public side accelerator in public-private investment.
For example, it will now fund the state-owned railway network in conjunction with the private investment of 750 million euros ($ 885 million) from Italian rail operator Ferrovi dello Stato Italiani, advised by Gramatidis. “The entire national rail system will be electrified, and trains will be equipped with a Wi-Fi signal that will run along the railroad,” he said. “The government is even interested in bringing in hydrogen-powered trains.”
He says a new set of incentives for investment is under way, and a new law that will speed up public purchasing that has made the playing field “more conducive for developers.”
“This is the first time that a government has seen the Greek state as a private entity,” said Gramatidis.
This is the first time a government has looked at the Greek state as a private entity.
The financial executive says conventional growth based on recent experience will provide real relief this year. “The Greek economy grew by two to three per cent a year in 2011-201 without any ’emergency package’, due to tourism picks, which are flowing fast to the granular level – not just big hotels, but also small airbnb spaces, cafes and sitters – Employing cheap youth easily and quickly, ”he says.
After that though it will be the turn of the government’s master plan. If all goes well, it will clear EU approval by the end of July, and advance payments should come almost immediately.
A political impulse?
Speculation is rife that Mitsotakis will seek re-election in September through his first term. The argument is simple. The Mitsatakis came to power with the promise of prosperity. Instead, he is lighting a fire. In February last year, he faced a border challenge because Turkey encouraged refugees to get into the EU gate-accident. At the same time, the coronavirus struck. Turkey has challenged its claim to a continental shelf in the eastern Mediterranean, forcing Greece to focus on national security and diplomacy ever since.
Assuming he had won on the promise of Greece 2.0, Mitsotakis bought time to do well in the promise of growth, involving the team in the second defeat in a few years. He could help secure a third election victory in four years, when the impact of Greece 2.0 will be clear.
Mitsotakis kept no secret of his ambition to become a statesman in the aftermath. Greece 2.0 has its six-year plan. Circumstances suggest that he will use it for full political influence.