How come you chose to work for Greece and George Papandreou? What was it that made you accept his invitation?

I felt that the good solution of the Greek problems is crucial not only for Greece but for the EU as well. I also felt that the program that was adopted at the beginning of May, if consistently implemented, provides a real chance to get out of the crisis. I believe in the quality of this program and I wanted to help.

How close is your cooperation with the Greek government? With whom do you mostly communicate and work with?

I am an advisor. I am not working with the structure, I am not doing analysis myself. I am an advisor to two persons: the prime minister and the minister of finance. I talk and work essentially with them. I am close because we have many occasions to be in contact and we have a high degree of agreement on the work that needs to be done.

Some people have criticized the Prime Minister for recruiting many international consultants. Do you feel uncomfortable because of this criticism?

This is very much a European crisis, it’s not an exclusively Greek crisis. Just as the EU has been the key-promoter of the moves to get out of the crisis, so, it’s quite natural that some people from the EU also play a role to help.

Will Greece make it through and how long will it take?

The very difficult situation in which Greece found itself is the effect of many-many years, perhaps even decades of policies, institutions, behaviour through which this difficult situation built up. So, to think that it is possible to move out of it in a matter of few months is a clear illusion. It will take some years. But let me make a distinction. One thing is how much it takes to turn, to change direction and another thing is how long will it take to change the reality. The change in direction has to come at the beginning, and rather quickly. But then, it is necessary to walk on the new directions for a fairly long period in order to reach the goal.

Are we moving in the right direction?

The movement is clearly in the right direction. The process is one in which first a diagnosis of the problems of the Greek economy was necessary, then in which the cure for these ills was to be designed (and this is embodied in the plan that was stipulated with the EU and the IMF), and then, there is the implementation. The first step in the implementation is to adopt the legal acts that permit to change situations (and these were done to a very large extent, the plan was approved, many of the legal instruments were passed in parliament). But, the reality does not change with a change in law. The reality needs to be changed by implementing the new law and the implementation takes time, it’s not a legislative function but an executive, managerial and organizational function and this of course, is where now the test really lies.

Will the revision of the 2009 deficit change the picture and lead to additional measures?

I think the first review last August was a positive but it mainly assessed very preliminary results and the adoption of the legislation. There will be another review in a few weeks. What is essential is to fully meet the requirement of the next review, of the one that will follow, of the third review, the fourth and so on. This is the real test. I think it’s entirely possible to implement the review in full but it doesn’t come automatically.

Which are the biggest problems of the Greek economy?

The biggest problems of the Greek economy are the same which give the name to the EU pact: stability and growth. Stability is to a very large extent a public finance issue and both taxation and expenditure should be brought under stronger control. Growth depends on the entire economy not only on the public sector.

Some argue that the Greek public sector is too big? Is this a problem?

What is sure is that public expenditures have to be brought under control.

What about tax evasion? How can one deal with a problem such as tax-evasion?

The review of August expressed some reserves regarding tax evasion. Clearly, to reabsorb tax-evasion is a long process. I know well the example of Italy. Italy has very large tax evasion. To bring the level of tax-evasion down not to zero but to a low level, again takes several years. It’s a complicated issue.

Some argue that there is lack of measures directed towards growth?

This is the most difficult part. I would not say that no measures have been taken but I would say that a lot of efforts are still necessary.

On debt-restructuring. Is such a development possible and under which conditions?

I don’t think that restructuring is an issue. The confidence of the creditors will come back if the program is implemented and in that case, there will be no need of debt-restructuring.

How do you view the reactions of the markets so far? Are they excessive?

Markets tend always to exaggerate, both optimism and pessimism. They have been much optimistic for too long, they have been pessimistic in the spring, the situation has improved, markets remain nervous, I think that in the end if the action of implementing the program proceeds successfully, markets will be fully convinced. My sense is that the key issue is to implement the program as it was agreed in May and this is the decisive test.

How do you view the EU? Has it stood up to the challenges?

I think 2010 was a very difficult year but the EU has proved the ability to manage the crisis.

Read the interview

Leggi l’editoriale di Tommaso Padoa-Schioppa

No puede negarse la evidencia. La salida de la crisis está siendo más trabajosa y lenta de lo pronosticado, pero Europa parece haber cogido el buen camino. Cautas esperanzas flotan sobre el lago de Como, a unos cien kilómetros al norte de Milán, cerca de los confines con Suiza. Cada año, The European House-Ambrosetti reúne en la Villa d’Este de Cernobio a la flor y nata de los economistas, banqueros y expertos internacionales. El foro de la semana pasada dejó claro que las dos orillas del Atlántico están divididas más que nunca, con Obama que orquesta planes de estímulo a la economía y los ministros europeos que aprietan el cinturón y no sueltan ni un euro.

Entre las dos estrategias, Tommaso Padoa Schioppa (Belluno, 1940) prefiere la segunda. Ex ministro de Economía con el Gobierno de Romano Prodi y ex banquero central europeo, este economista italiano es uno de los padres espirituales del euro y de la Unión, tanto que hoy preside Notre Europe, la fundación creada por Jacques Delors en 1996 para investigar y pensar en la Europa unida. Su experiencia internacional le valió hace pocos meses el nombramiento de presidente de la Fundación IASC, un órgano internacional independiente que establece los criterios de contabilidad de las empresas y las reglas de transparencia con las que estas comunican sus datos al mercado. Como tal, acaba de volver de un viaje a China, durante el cual se entrevistó con el presidente del Banco Central. Desde principios de agosto es también consejero del Gobierno griego en cuestiones económicas, bancarias, fiscales y en la gestión de la macrodeuda pública de Atenas.

Pregunta. La economía mundial tarda más de lo previsto en volver a crecer, y hay quien teme una segunda recesión. Justo ahora, Europa y EE UU toman caminos distintos.

Respuesta. Sin duda estamos encarando una fase de frenazo. Si esto va a desembocar en una segunda caída, lo descubriremos con el tiempo. No ayuda el hecho de que se haya desvanecido el profundo acuerdo internacional que acompañó la fase más aguda de la crisis. EE UU apuesta por estimular la demanda con instrumentos fiscales y monetarios. Europa busca el equilibrio de sus arcas públicas y no comparte la idea de que la prioridad sea volver a toda costa a crecer como antes de la crisis. Es una manera muy distinta de leer la realidad.

P. ¿Quién lo está haciendo mejor?

R. Creo que la Unión Europea está demostrando que es más sabia, más consciente de la exigencia de encontrar equilibrios duraderos a largo plazo. Ya no nos enfrentamos a la emergencia; hay que tomar caminos más reflexivos. Si la crisis explotó por un exceso de deudas y de liquidez, la cura inmediata para evitar el colapso de la producción era producir más deuda y emitir moneda. Pero al cabo de los años, esta no puede ser la única solución. Si no, volvemos a empezar.

P. Es decir: mejor crecer poco o nada, pero de forma sana.

R. Lo importante es crecer de forma sostenible. Debemos buscar una fórmula que no lleve a rupturas dramáticas como las que hemos visto a partir de 2007. El objetivo de la política económica no es volver a tomar el mismo sendero que nos ha llevado a la crisis global. Aquel camino no era sostenible. Es el momento de poner en orden las cuentas públicas. Y me parece que Europa es más consciente de ello que EE UU.

P. ¿Qué riegos comporta el hecho de que se haya esfumado la estrategia común entre las dos orillas del Atlántico?

R. Hay riesgos vinculados al hecho de que, como creo, EE UU haya emprendido una cura equivocada, y luego hay riesgos que derivan del hecho de haber abandonado una fórmula común. Los primeros preocupan porque en el mercado global necesitamos que todos los actores vuelvan a crecer de forma sostenible y segura, alejando los fantasmas de la quiebra de hace dos años.

P. ¿Y los segundos?

R. Creo posible que Washington presione a la Unión Europea para que esta modifique su estrategia. Puede ser que las tensiones entre las dos economías ricas aumenten y lleguen a causar tensiones comerciales, políticas y financieras. Una perspectiva bastante preocupante.

P. Entre los Gobiernos europeos que han puesto en marcha planes de austeridad, España tiene más que otros el problema de la destrucción de empleo. Si no se crece, ¿cómo se pueden crear puestos de trabajo?

R. Hay muchas formas para fomentar el empleo. Apoyar el mercado laboral con una política presupuestaria expansiva es solo una de las soluciones posibles. La más sencilla, inmediata y ficticia. Existen muchas fórmulas que no tienen incidencia negativa sobre el gasto público y que igualmente ayudan a crear empleos.

P. ¿Alguna sugerencia?

R. Hay que empezar reformando el mercado del trabajo hacia una mayor flexibilidad.

P. Hace unos días, el Fondo Monetario Internacional recomendó a Zapatero rebajar la protección de los contratos fijos para reducir la temporalidad en el empleo. ¿Está usted de acuerdo?

R. Creo que el FMI da en la diana. Las fuertes protecciones a unos condenan a otra buena parte de la población, la más precaria, a no tener defensa alguna. Vivimos en un mundo donde una persona no puede sentirse protegida solo si tiene un empleo estable. Por supuesto, son necesarias garantías sociales que ayuden en los momentos críticos de la flexibilidad. Pero la gente tiene que poder cambiar de trabajo de manera fluida y menos traumática.

P. Mientras Europa y EE UU encaran otro momento delicado, China vuela igual de alto que antes de la crisis. ¿Nos van a salvar los chinos?

R. Hay que mirar hacia Oriente. La capacidad de exportación de los países desarrollados tiene que dirigirse hacia los que están creciendo. Es una gran oportunidad de arrastre. China es un país inmenso que necesita muchísimas cosas y ahora tiene los recursos necesarios para hacerse con ellas. Su crecimiento actual es un proceso de salida de la pobreza. Por eso parece impetuoso e imparable. La gente allí se compra las cosas por primera vez: coches, zapatos, neveras… Hay que entender qué es lo que buscan, lo que compran.

P. Algunos en Europa parecen más asustados que emocionados ante la oportunidad.

R. Tomemos por ejemplo un sector como el textil. Las empresas más listas ya trabajan con China y para China. Otras siguen sintiéndose amenazadas por ella. Cuando hace unos años Italia obtuvo de la Comisión Europea unas restricciones a las importaciones desde Pekín, la mitad de los productores eran europeos. Para ellos, cualquier barrera con el Extremo Oriente era dañina. Otros estaban encantados porque les parecía una ventaja.

P. ¿Ganan los primeros?

R. Pues sí. Estoy convencido de que tienen razón los que saben vivir de forma competitiva en un mundo abierto. Los que quieren encerrarse creo que se equivocan y viven fuera de su tiempo.

Link all’articolo

Leggi l’editoriale di Tommaso Padoa-Schioppa

TPS Projet giu 2010

JM: The Euro zone debt crisis reached a crescendo in May but already a second wave of market and economic uncertainty is upon us. Here to discuss the Euro zone policy and economic outlook is Tommaso Padoa-Schioppa, one of the founding fathers of the Euro and the European Central Bank. Mr. Padoa-Schioppa, thanks very much for joining us. Good day. There’s seems to be a sense within markets certainly that there’s a lack of policy coordination and cooperation on a global level. Do you agree with this?

TPS: To some extent, it’s true that now that the most acute phase of the crisis is over, countries tend to revert to their own policy agendas. In the meantime, the situation from country to country and from areas to areas is completely different and I think we are in a phase in which growth will be much less homogenously distributed across the world than it was before the crisis and I think rightly so.

JM: But how much of a risk does this pose to financial market stability and also to the recovery prospects?

TPS: Global recovery is underway but in an uneven way and I think this is understandable and justified. Emerging markets are growing faster, mature economies are growing more slowly and I think this is inevitable. Markets have to understand that but policies have to indicate clearly that they are able to manage global imbalances better than they did before the crisis.

JM: Do you think there’s been a lack of clarity on policy, the transmission of the message from certain policy makers in the last few weeks and months?

TPS: We will see what the G20 will bring. In the June meetings, it was clear that United States and Europe have different priorities on the macro policies and this may in fact be a source of discussions and possibly, of tensions in the future. European Central Bank President Jean-Claude Trichet again repeated his calls in Jackson Hole last week for fiscal tightening, for fiscal responsibility or else we would risk a lost decade.

JM: Does Europe have the balance right between monetary policy operations and fiscal measures?

TPS: On the whole, I think it has the balance right. What is understandable is that there is a wave of national fiscal consolidation programs. What I would like to see is some more stimulus to come from the EU as a policy maker. I’m not referring to monetary, but more to fiscal and other measures. But the one, talking of monetary policy, the one size fits all measure we have in the Euro zone, surely is more difficult to implement in times when as you say, economies are growing at different rates. Germany on one hand, Greece on the other.

JM: This is a big problem for the ECB right now, isn’t it?

TPS: Not more than, in any monetary union, even in the United States, there are different regions of the nation which grow at different rates and the single monetary policy is perfectly compatible with these differences. It is so in Europe, it has been so in the first decade of the Euro, it will continue to be so. So to consider that differences within the area are an argument against the monetary union, in my view, is a complete misconception.

JM: But should the ECB be focusing policy more towards the countries that are facing difficulties as opposed to the countries which are doing reasonably well?

TPS: The country at which the ECB looks at is Euro land, it’s not individual regions within Euro land. And it looks at the price stability for the area as a whole. It may point to a region on end country differences, but not as a factor that should influence the overall policy.

JM: Now you’re recently back from China, talking to policy makers there. What’s your sense from policy makers in Beijing about their view on the world economy?

TPS: My visit to China was related to my position as Chairman of the Trustees of the IFRS Foundation. So my discussions were not particularly on macro policies. Yet I did meet the Finance Minister, the Governor of the Central Bank. I was in Korea and Japan for similar context. The overall impression is that China as an emerging economy, will continue to have very strong growth, and that the problems they have to manage are those of a fast-growing economy rather than risks of a slowdown. For Japan, of course, it’s completely different. Korea stands somehow in between.

JM: Finally, and Asia as a whole, you said you were traveling through the region. Do they have confidence in the Euro and European policymaking?

TPS: I would say yes. Clearly, the Euro area, in spite of the tensions of last spring, is in many respects, in a much sounder macroeconomic situation than the United States and this is clearly recognized by people I have met in the East.

JM: Mr. Padoa-Schioppa, thanks very much for talking to Reuters Insider. I’m Jamie McGeever, and this is Reuters.

The video interview

Sept. 3 (Bloomberg) — Former European Central Bank board member Tommaso Padoa-Schioppa said Europe has to rely more on domestic demand to fuel economic growth.

Padoa-Schioppa, who is also an advisor to the Greek government, said Greece is on a “long journey” to recover from its fiscal crisis and that the government’s first steps are “positive.” He was speaking in a Bloomberg Television interview from Cernobbio, Italy.

Link of the article

Programma AMBROSETTI key Issues al 01 09 2010

“Villa d’Este”, Cernobbio – 3, 4 e 5 settembre 2010