Social and economic resilience objectives

While the pandemic has still not completed its cycle, the energy crisis and soaring prices have added to a number of challenges that we must face. The inability to adapt to consecutive crises intensifies the feeling of insecurity, making it clear that a change of course is necessary.

In 2020-2021, the total value of financial interventions implemented by the government to deal with the pandemic amounted to 43.3 billion euros, making it the fourth largest fiscal expansion in the world in percentage of GDP. However, the effectiveness of the measures, due to their horizontal character, was not the same. We have spent about 25% of our national income, but we have a lower quality GDP. State aid does not automatically constitute new wealth, but rather additional debt.

The dramatic increase in bank deposits was not the result of economic growth, as the government triumphantly claims, creating illusions, but is mainly due to delayed household consumption due to the lockdown, and liquidity channeled through the ‘State.

As a result, the Greek debt remains the highest in the euro zone, the trade deficit has soared and the competitiveness of the economy remains weak. This policy also has side effects. As we face the energy crisis, the government has suddenly been reminded that there is no magic money tree, which it seems to ignore before, so it has run out of helpers, leaving many of the most vulnerable households unprotected.

Unfortunately, even now, after so many years of crises, the absence of long-term policies and fragmentation prevail. That’s why we need to make the most of the resources at our disposal to protect our economy by setting resilience targets.

The EU Recovery and Resilience Facility is a powerful tool, with EUR 32 billion in resources for Greece, which should be used effectively, in a targeted and meritocratic manner, away from the bad practices of the past, on the basis of a comprehensive plan for a sustainable development model. Protecting our economy from energy crises and our smooth decoupling of fossil fuels is a priority.

The country’s power grid is suffering. In many areas, it has reached the limits of its capacity, preventing the entry of new energy communities producing renewable energy sources (RES). Its interconnection remains at a very low level, both at the level of the Aegean islands and cross-border. All of the above has financial consequences, which citizens see in their electricity bills and utility costs.

Nevertheless, the network interventions included in Greece’s National Recovery and Resilience Plan are limited compared to existing needs. Only 195 million euros are intended for the interconnection of the islands, 100 million euros for strengthening resilience and an additional 12 million euros to increase its capacity by 800 MW. Nothing is planned to extend the interconnection with the rest of Europe, thus prolonging our energy isolation. However, our country must make the necessary investments immediately, so that we are ready to reap the benefits of the European Energy Union.

The phasing out of lignite, which is being implemented without a plan to deal with the social consequences in Western Macedonia and the Megalopolis region, does not also mean decarbonization. We are the only EU Member State to have increased its dependence on gas during the energy crisis. On the contrary, Germany, for example, which has been implementing a plan to withdraw its nuclear power plants since 2011, has focused on RES, with the participation of natural gas remaining stable.

But beyond investments, we also need to look at issues of market regulation, which have no budgetary costs but which have tangible benefits for citizens. Greece is regularly among the most expensive countries in Europe for the wholesale price of electricity, due to oligopolistic distortions.

Grid interventions included in Greece’s National Recovery and Resilience Plan are limited compared to existing needs

In most EU countries, most of the energy consumed is sold on the basis of long-term contracts, offering price stability. In Greece, this percentage is nil, 100% of the energy being sold daily on the stock exchange, while in Germany and France the corresponding percentage is 29% and in Italy only 11%. At the same time, the costs of the crisis cannot be borne by consumers and the state alone. It should also be distributed to large producers. It is also necessary for the Greek electricity regulator RAE to include a cap in the adjustment clause, so that the consumer knows the estimated maximum and minimum amount he is liable to pay.

Furthermore, there is a social need to increase the resilience of the welfare state, as the pandemic has shown the limits of public health services. In our country, private health expenditure represents 35.2% of the total, which puts us in third place in the EU. The main objective is to strengthen the National Health System (ESY) in general, and primary health care in particular. However, while neighboring Italy has earmarked around 10% of its Recovery and Resilience Facility funds for bolstering public healthcare, the Greek plan calls for just 4.5%.

Moreover, in a country where the population is shrinking and where inequalities are widening after 10 years of economic crisis, the problem of rising rents will have dramatic consequences, especially for young people. According to Eurostat data for 2019, 83.2% of tenants spend more than 40% of their income on housing expenses, while the EU average does not exceed 25%.

Greece’s deviation from the other Member States is chaotic. Other countries facing similar problems, such as Germany and Portugal, are using part of the Facility’s resources to fund housing policies, with Portugal building 26,000 low-rent homes. In the Greek plan, on the contrary, the only thing foreseen is the completion of the renovation program of only 100 apartments in Athens and Thessaloniki.

The examples above are part of a series of strategic priorities which, together with key regulatory interventions in the market, constitute our social democratic proposal to solve chronic dysfunctions and make Greek society fairer and the economy more competitive. .

We must not miss this opportunity.

We do not know when Greece will have more than 70 billion euros in funds from the EU Recovery Fund, European Structural and Investment Funds and the Common Agricultural Policy, all in such a short time. . The centralized way in which the government plans to use these resources is likely to lead to another failure.

* Nikos Androulakis is the leader of the Movement for Change (KINAL).

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