The German head of the European parliament, Martin Schulz (SPD) proposed the setting up of special economic zones in Greece to boost the country’s economy suffering from dramatic recession. In an interview with the German weekly magazine Der Spiegel, Schulz said that in order to succeed, the plant required Greek readiness to implement reforms and a favorable investment climate in the country.
Schulz explained his vision of “Greek economic growth” with the establishment of a so-called “Growth Agency” consisting of EU officials and Greek politicians.
Growth-Plan: Special Economic Zones to rescue Greece
Greece has enacted a rigorous austerity program, but the country also needs a strategy to get the economy back on growth track. Martin Schulz (SPD), President of the European Parliament, wants to protect Greece from the crash with investment programs and concurrent EU control. Cuts alone would not bring growth, Schulz said in a SPIEGEL interview, “so I’m looking for a special economic zone in Greece.”
For it, a “Growth Agency” should be created, Schulz demands. In this agency, European and Greek politicians should jointly identify promoting eligible projects and control the cash flows. “This is a piece of control, but also mutual trust,” said the SPD politician. The Greek government would have to accept that European officials implement reforms on Greek soil. “But these [EU officials] are not hostile occupying force, but auxiliary instrument.” Prerequisite for this SEZ is a commitment to the euro in Greece, a willingness to reform in Athens and investment allowances for companies that invest in Greece.
The idea of Special Economic Zones is being favorite by the Greek government as well that has already submitted a relevant request to EU-Commission. Target is to win investors with low contributions [or even taxes?] and less bureaucracy. Proposed regions are the south of Crete and Peloponnese. From there, products would be delivered to European market. (SPIEGEL)
The plan of Martin Schulz sounds in my ears like a nice “economic growth bubble” for internal German consumption for his social-democrat friends.
Where will the funding comes for the SEZ? Schulz does not elaborate. He may not even know about financial funding finesses. For example, European Funding for Cohesion Policy (ESPA in Greek) does not allow control by the EU as to where and how the money will be spent on national level. Schulz did not elaborate as well about who will control the “Growth-Agency”.
Really mean Greeks – and possible other mean EU-citizens – would raise objection and express suspicion that worth-promoting investment projects would be the ones submitted by relatives and friends and friends of friends of Agency members. A common practice at least in the European South and possible in the North as well.
Martin Schulz also forgot to mention the funds needed for the adequate infrastructure of SEZs like ports, airports and transport highways. Oops! I almost forgot that ports and airports are about to privatized if Greece sticks to Troika program.
Is it coincidence that Samaras’ origin is from south Peloponnese, and some of Nea Dimocratia high ranking officials come from Crete?
PS United they go, alone we fall – HA!
Special Economic Zones are NOT bubble zones when handled right. On the contrary, the right SEZs are EXACTLY what Greece needs. I have written about that since over a year.
The way Schulz describes it is WRONG! An SEZ is no place for government planning, for government “steering capital”, for government “identifying project”, etc. An no place for special perks, either. An SEZ is simply an excellent place to do business. A place freed of red tape and other hindrances which make Greece presently such a lousy place to do business. Since one can’t change the whole country from A-Z in a short time, one has to start with “pockets” where one can start from scratch in a near-perfect way.
Where does the money come from? Well, from private investors (primarily foreign investors) who recognize the benefits of an SEZ. Investment capital flows by itself to those places which offer attractive business environments. More on that in the link below.
http://klauskastner.blogspot.co.at/2012/08/special-economic-zones.html
that’s what I mean too: Schulz’s proposal is wrong. Politicians and EU officials to patronize investments? nepotism and corruption are near.
Well Klaus, we’ve had this discussion before on an other forum… The only thing this will accomplish is that instead of being a good PASOK/ND puppet, the Greek civil servant becomes a good EU puppet, trained up by EU puppet masters. It will do absolutely nothing for what Greece needs, it will do everything that the EU needs.
It has been made abundantly clear over the last year or two that whatever it is the EU has in mind, it is NOT in the interest or for the assistance of the people of Greece, Portugal,Spain, Italy or Ireland.
The one and only objective is to save the larger economies in a bankrupt system. What it actually accomplishes is not even the saving of these economies, but simply the postponing of their inevitable implosion.
All this at an incredible cost to the general public in Greece, Spain, Portugal, Italy, Ireland and wherever else the EU decides it can go and steal whatever they can to postpone the bankruptcy a little longer.
At this stage people’s income has been taken, their social security systems, their health care systems. Now through the “privatization process”, the nations assets are being stolen. There is simply no other word for it, it is theft on a grand scale. Why? because the whole thing went from a good idea to a system hijacked by the greedy few, and turned into a gigantic Ponzy scheme. For which Joe soap is made pay.
I get the feeling that you and others have a deep mistrust of “normal” private sector activities. By such activities I certainly don’t mean the type of things which have happened in Greece in the last decades. Neither do I mean the short-term orientated behavior of publicly-traded corporations with a capital markets orientation elsewhere.
I mean the regular private, typically family-owned businesses which always display a long-term orientation and focus on sustainability. Those are the businesses which really create value. For example, despite Siemens & Co., the backbone of German industry are those seemingly infinite middle-market businesses where something like an ROE is the last steering instrument which the entrepreneur would use.
Those are, in my opinion, the kinds of businesses which the Greek economy needs. Earlier this year, I visited with the owner of a vineyard near Thessaloniki. After an hour’s conversation with him, I knew that – as a banker – I would extend credit to him. Why? Because he was the typical entrepreneur who cared about his business, his employees, the reputation of his company, the quality of his products, etc.
The last thing Greece needs is some foreign company which comes to Greece to take advantage of some subsidy only to leave when the subsidy is consumated. Greece needs long-term investors, middle-market entrepreneurs like the owner of the vineyard. And foreign middle-market companies can bring a lot of know-how to Greece, including know-how about corporate governance!
Claus, I remember very well, how the small businesses were swallowed by the big chains in Germany, and how people had to change profession at 55+. But thank God, Germany has a social state, to guarantee lowest pensions, accomodation, basic goods and other nice things.
Take a trip through the South German country side and count the number of middle-market manufacturing companies you find along the way. Most of them would NEVER sell out to a multinational and/or privte equity firm.
Give it another few years and we’ll see how much of a choice they have on that matter. If their business is worth something, it will be taken over, like it or not. If it isn’t worth something, rules and regulations will close them down to prevent “interference” in the “market”.
20 years ago Ireland was dotted with B&Bs everywhere, absorbing any amount of tourists that decided to visit the country. Their motto? Céad Míle Fáilte (1000 welcomes). EU rules and regulations put these people out of business by making it too expensive for them to comply with the rules. Simultaneously, the Hiltons, Wyatts, Continentals and other Hotel chains constructed hundreds of hotels all over the place and took the business of them.
Today? You hardly find a B&B worthy of the motto, and most of the hotels are closed. A thriving, indigenous industry run by and for the people killed off for short term profit.
The EU have done it in every country in Europe, the only reason Germany hasn’t fallen victim to this is the position of power it holds within the EU. But that position does not make Germany immune from the real power in Europe, the money-men, anonymous, faceless entities without nationality, loyalty or morals. It only saves Germany some time…
I don’t know about the middle manufacturing sector, I know about small tradesmen, artisans, shopwoners even in South Germany. Family businesses like in Greece.
Klaus,
where on Earth is the EU promoting what you call “normal” business? Nowhere, they are not interested. Small business is a pain in the back side, they do indeed care about their business and their people, which makes it impossible to put them in the box the EU wants us all in.
The EU is owned, run, managed and corrupted by huge companies and banks, and all the policies put forward by the EU are geared to accommodate these people’s quest for even more money and even more power. The small business you are talking about is of absolutely no interest to them, and the sooner they are gone, the better.
What these guys are interested in is who offers them the cheapest table to perform their 3-hat tricks on so that they can reduce, if not avoid their tax liabilities. The IFC in Dublin being a very good example of such a cheap table to play on.
Each country in the EU has it’s own Governmental Industrial Development Agency with the brief to attract industry. It’s nothing but a race to the bottom. Whoever offers the best “concessions” gets the prize. When the concessions run out, the business is gone. Just think about Ford shifting form Belgium to Ireland, Dell from Ireland to Poland, Peugeot from Romania back to France, etc. That is all the EU is interested in. Kudos to you for given a credit line to your wine grower in Thessaloniki. The EU would not come anywhere near him.
These economic zones that are proposed for Greece are an EU proposal. Nothing to do with small business. Everything to do with clearing the path for the Siemens and Co coming in, making a killing and leaving again.
The attack on the Greek Labour laws as outlined elsewhere on this blog is another piece of that puzzle called exploitation.
This whole system was tried and tested in Ireland, Scotland, Wales, Northern Ireland, etc. so many years ago. Want to go and check how many “zones” never got build, and how many of those that did get build are waste lands? The flag ships of Irish Industry, Dell, Ford, Fruit of the Loom, Pfizer, Sempirit, De Lorean, Harland and Wolff, Bombardier, Marathon Oil, Gama Construction and many many more came and went. Took the Irish, Scottish etc. tax payer for everything they could (Concessions don’t you know), held out the carrot called “job”, and Ireland has now nearly 500,000 unemployed people. Who are being blamed for the whole debacle and made pay for it.
At the same time, the so hailed “private enterprise” is being screwed for taxes in every which way possible. Just check on the VAT situation re taxi companies (all small, private companies) in Ireland (again, sorry). This state operated scam has the potential of putting over 100,000 people on the streets, jobless. Why? Because they need more taxes to feed the EU Moloch.
The last thing Greece needs is the masters of the art of organized theft to come in and show them how to feck up the country completely to please the puppeteers in Berlin. Which is what Schultz and his zones are all about. I know you don’t agree with it Schultz or me for that matter, but is he, or the EU, going to listen? Indeed, that’s why this is the very last thing Greece needs.
Let me be a bit cute. There are exactly 3 solutions for the Greek economy longer term: foreign investment, foreign investment and, again, foreign investment. Greece’s Balance of Payments explains why. This, by the way, is true regardless whether it’s the Euro or the Drachma.
It is fair to debate which form that foreign investment should take: public investments, private investment or, best of all, the re-investment in Greece of the monies which Greeks transferred abroad. But foreign investment it has to be.
You could also have picked good examples of Special Economic Zones. China would not be on its way towards becoming the largest economy in the world if it hadn’t started with Special Economic Zones a couple of decades ago.
thereby cutely forgetting the levels of corruption etc that came with this growth. Corruption facilitated by the rules needed to facilitate the special economic zones…
Klaus, I have lived and worked in every country in Europe bar 3, I speak, read and write 6 of the languages fluently, raised an army of children and have been around at least as long, but probably longer than you have. This is what a life-time experience in (mostly) Europe tells me; Europe translates into 1 word, and 1 word only: corruption! It doesn’t matter how nicely you dress up a pig, it remains a pig, odour and all.
The one and only reason for this is the economic model pursued by Europe, at any cost. It is not a model for to benefit the peoples of Europe, it is a model for to benefit the few chosen ones, or rather self appointed few, by exploiting the peoples of Europe. That is the sad and not so cute reality of Europe.
And both Greece and Ireland are prime examples of where that economic model eventually leads to. Irrespective of how many “remedies” are applied. The BASIS is wrong, and until that changes, it will never get right. What Europe (and the world) needs is and economic system based on need, not profit. That is not advocating a return to the stone ages, it is advocating the introduction of that totally alien concept of “morality” into an economic system. Here are 2 examples of what this means:
http://www.youtube.com/watch?feature=player_embedded&v=mJySLiWdzSY
and
http://www.youtube.com/watch?v=tWALclCW6UM
Now tell me, which one of these two development programs is really long-term beneficial to society, and which one is a bank more likely to invest in?
As long as the perception that an economy is for profit instead of people, it will only get worse…
Why should any Greek trust anything proposed by the Germans?
correct: “proposed by German politicians” lol
They will open up their makiladoras in the refugees concentration camps.
“worth-promoting investment projects would be the ones submitted by relatives and friends and friends of friends of Agency members”
Nothing for the relatives of friends, or for the friends of relatives? Times really are tough 😉
For them too. I was just too lazy to write about the long list of relatives and friends in all possible combinations.