BBC World America | Interview with Matt Frei

8 March, 2010

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JOURNALIST:  I know that when you came to office in November, you inherited an awful mess. But critics of your country are saying that basically Greece lived beyond its means for far too long, cooked the books, and in the process is jeopardizing one of the world’s great currencies, the euro. What do you say to that?

MR. G. PAPANDREOU: We know what mistakes we have made and we are ready to take the responsibility for them. And we already have, by first of all being very transparent about the problem; secondly, looking into the core issues that we have to change, the structure of our administration, the fact that we have a bloated public sector, a lot of clientelistic practices, even corruption. And we are going to fight that.

Because I did come in on a mandate of change. And I would say the Greek people today really realize that we need to change things.

JOURNALIST: One of the things that struck me was that Greece was benefiting and finally paying the price for the same kind of financial wizardry, the same sort of financial instruments, credit default swaps, which almost caused the demise of companies like AIG. Did that surprise you?

MR. G. PAPANDREOU: Well, I think what happened years ago when this was actually considered to be best practices, not only Greece but many countries were using this as a way to deal with some of their deficit problems.

I think that just shows some of problems that our financial system has worldwide, beginning with the banks themselves, which were very responsible for much of the crisis we had in 2008.

JOURNALIST: You are seeing President Obama tomorrow. Are you going to tell him that Greece’s problems could become America’s problems, if they are not sorted out, that this is the world’s financial problem, essentially?

MR. G. PAPANDREOU: Yes, well, I think we are living in a very interdependent economy, and we have to realize that, a very complex globalised economy and one where we are not really sure that we have the necessary rules and stops and relay switches to make sure that a crisis in one spot doesn’t metastasize to some other place. We do need to regulate this quite new and unregulated globalised economy, to make sure that it does serve us, our needs, and not simply the needs of certain profiteers or speculators.

JOURNALIST: There are a lot of economists who think that the Greek crisis will spread beyond its borders. Are you in a position to reassure the world that that will not happen?

MR. G. PAPANDREOU: Well, I am in a position to reassure the world that we are doing our part. We are doing what is necessary, and we are doing even more than what is necessary to guarantee that we are cutting our deficit, making our economy viable, moving into the type of investment which will make our economy competitive, such as the green economy, green tourism, green agriculture, and in areas of high-tech and so on.

So we are modernizing our economy, making it more transparent, less bureaucratic, much more effective.

JOURNALIST: But that could take time, couldn’t it?

MR. G. PAPANDREOU: First of all, we have some immediate measures, which have shown our determination and which have given the insurance, if you like, or the guarantee that we are on the right track.

We are cutting our GDP deficit by 4% in one year. And everybody, from the IMF to the ECB, the European Central Bank, the Commission in the European Union, have congratulated us and said that we’re on the right track.

So we have been doing what we have been asked to do, and we will be doing it in a very, very determined and courageous way. I’m not talking about my government; I’m talking about the Greek people.

Now, of course, since the markets are not necessarily always responding in the healthiest of ways to these situations, since we have done our work we would like to make sure that there is a community, and that is the European Community in this case, but the world community, which can stand by countries that do do the right things, but could be a target of speculation and attack.

If we didn’t have that kind of standby solidarity, then yes, this crisis could metastasize to the world economy, as the Lehman Brothers failure did to the banking system.

I don’t think that will happen, because I see now that Europe is confident and determined to take any action, if there is any type of attempt to destabilize the financial system, the monetary system in the European Union.

JOURNALIST: So Greece is not about to become another Lehman Brothers.

MR. A. PAPANDREOU: No, certainly not.

JOURNALIST: We’ve got to leave it there. Prime Minister, thanks very much.

MR. A. PAPANDREOU: Thank you very much.