Show Hide image

The bailout is dead, long live the bailout

But what Greece needs is a plan for growth.

The agreement reached in the early hours of Tuesday is indeed of paramount significance. It draws a line under months of speculation around the Eurozone's response to the Greek sovereign debt crisis. It reduces Greece's debt obligations by more than 50 per cent and at the same time decreases the interest rate Greece has to pay for the remaining of its debt, allowing the country to turn the corner and move forward with a significantly reduced debt burden.

But it is worth acknowledging that most of the €130bn is aimed at providing "sweeteners" to private sector bondholders for agreeing to participate in the debt restructuring, to capitalising Greek banks so they don't bring down with them European banks in case of a default and to paying off interest.

What is left will be used to service Greece's remaining debt, leaving very little to be invested in the Greek economy and measures to achieve growth.

With the private sector weakened by recession, consumer confidence at an all-time low and foreign direct investment unlikely to come while uncertainty about the country's future persists, growth can only come from public sector investment.

Reducing Greek debt is an important step towards fiscal health but if the country is to prove wrong the Cassandras who argue that a default is inevitable, the EU must put together a "Merkel Plan" to be invested in growth-generating measures in Greece.

That fund should be separate to the one aimed at paying off the Greek debt and it should focus on the following things; promoting entrepreneurship and offering assistance to start-ups and small businesses across the country, rebuilding tourist infrastructure, investing in research and development, harvesting renewable energy available in abundance in the country and training the already very well educated workforce in new technologies and specialised manufacturing.

In the meantime a coalition government of national unity is needed to implement the ground-breaking reforms necessary to make the most of the investment mentioned above. A single individual or a single party cannot undertake the Herculean task of changing the Greek economy and political system.

The coalition government should commit itself to confronting vested interests by liberalising the professions and opening the economy to competition, as well as reforming the tax system and tackling tax evasion. Tens of billions are wasted every year due to tax evasion and the black economy. Equipping the system with the necessary mechanisms to collect taxes effectively and, above all, fairly can make an enormous difference to Greek finances.

At the same time billions can be saved by downsizing the public sector, mainstreaming its operations and making it more efficient in delivering true public value and services.

Last but not least, the clientalistic relationship between the electorate and their elected representatives must be severed, and for that to happen a combined effort is needed, both by ordinary Greeks and their leaders.

"Buying" votes in return for political patronage is responsible for the unsustainable size of the Greek public sector. Offering assistance for start-ups and SMEs, re-awakening the Greek spirit for entrepreneurship and making the economy fertile for competition and open to new entrants will offer more employment prospects and make a job in the public sector less appealing.

Taking those steps will go a long way towards regaining the trust of Greece's EU partners as well as that of the markets. Changing Greece cannot happen overnight so trust is imperative if Greece is to be given enough time and space to reform its political system and re-engineer the economy, which is the only way to achieve growth.

The future for Greece and its people does not have to be dire. The EU has invested a lot in helping Greece and the Greeks have sacrificed even more to remain in the Eurozone. Avoiding a default is in Greece's, in the EU's and the UK's interest. But without growth all this effort and sacrifice will be for nothing.

Petros Fassoulas is chairman of the European Movement.



Petros Fassoulas is the chairman of European Movement UK

Photo: Getty Images
Show Hide image

What's to be done about racial inequality?

David Cameron's words on equal opportunities are to be welcomed - now for some action, says Sunder Katwala.

David Cameron made the strongest, clearest and most high profile statement about ethnic inequalities and the need to tackle discrimination ever yet offered by a British Prime Minister in his leader’s speech to the Conservative Party conference in Manchester.
“Picture this. You’ve graduated with a good degree. You send out your CV far and wide. But you get rejection after rejection. What’s wrong? It’s not the qualifications or the previous experience. It’s just two words at the top: first name, surname. Do you know that in our country today: even if they have exactly the same qualifications, people with white-sounding names are nearly twice as likely to get call backs for jobs than people with ethnic-sounding names? … That, in 21st century Britain, is disgraceful. We can talk all we want about opportunity, but it’s meaningless unless people are really judged equally”, said Cameron.
While the proof of the pudding will be in the eating, this was a powerfully argued Prime Ministerial intervention – and a particularly well-timed one, for three reasons.

Firstly, the Prime Minister was able to root his case in an all-but-universally accepted appeal for equal opportunities. It will always prove more difficult in practice to put political energy and resources behind efforts to remedy discrimination against a minority of the population unless a convincing fairness case is made that values cherished across our whole society are at stake. Cameron’s argument, that any party which tells itself that it is the party of the ‘fair chance’ and ‘the equal shot’ must have a response when there is such clear evidence of discrimination, should prove persuasive to a Conservative Party that has not seen race inequalities as its natural territory. Cameron argued that the same principles should animate responses to discrimination when it comes to race, gender and social class. Put like that, wanting job interviews to be fair – by eradicating conscious and unconscious patterns of bias wherever possible – would strike most Britons as offering as clear a case of the values of fair play as wanting the best baker to win the Great British Bake-Off on television.
Secondly, Cameron’s intervention comes at a potential "tipping point" moment for fair opportunities across ethnic groups. Traditionally, ethnic discrimination has been discussed primarily through the lens of its impact on the most marginalised. Certainly, persistent gaps in the criminal justice system, mental health provision and unemployment rates remain stark for some minority groups. What has been less noticed is the emergence of a much more complex pattern of opportunity and disadvantage – not least as a consequence of significant ethnic minority progress.

Most strikingly of all, in educational outcomes, historic attainment gaps between ethnic minorities and their white British peers have disappeared over the last decade. In the aggregate, ethnic minorities get better GCSE results on average. Ethnic minority Britons are more likely, not less likely, to be university graduates than their fellow citizens. 

As a result of that progress, Cameron’s intervention comes at a moment of significant potential – but significant risk too. Britain’s ethnic minorities are the youngest and fastest-growing sections of British society. If that educational progress translates into economic success, it will make a significant contribution to the "Great British Take-Off" that the Prime Minister envisions. But if that does not happen, with educational convergence combined with current ‘ethnic penalties’ in employment and income persisting, then that potential could well curdle into frustration that the British promise of equal opportunities is not being kept.  Cameron also mirrored his own language in committing himself to both a ‘fight against extremism’ and a ‘fight against discrimination’: while those are distinct challenges and causes, actively pursuing both tracks simultaneously has the potential, at least, depolarise some debates about responses to extremism  - and so to help deepen the broad social coalitions we need for a more cohesive society too.

Thirdly, Cameron’s challenge could mark an important deepening in the political competition between the major parties on race issues. Many have been struck by the increase in political attention on the centre-right to race issues over the last five to ten years. The focus has been on the politics of representation. By increasing the number of non-white Conservative MPs from two to seventeen since 2005, Cameron has sent a powerful signal that Labour’s traditional claim to be ‘the party of ethnic minorities’ would now be contested. Cameron was again able to celebrate in Manchester several ways in which his Cabinet and Parliamentary benches demonstrate many successful journeys of migrant and minority integration in British society. That might perhaps help to ease the fears, about integration being impossible in an era of higher immigration, which the Home Secretary had articulated the previous day.

So symbolism can matter. But facial diversity is not enough. The politics of ethnic minority opportunity needs to be about more than visits to gurdwaras, diversity nights at the party conference fringes and unveiling statues of Mahatma Gandhi in Parliament Square. Jeremy Corbyn’s first speech as Labour leader did include one brief celebratory reference to Britain’s ethnic diversity – “as I travelled the country during the leadership campaign it was wonderful to see the diversity of all the people in our country” – and to Labour bringing in more black, Asian and ethnic minority members - but it did not include any substantial content on discrimination. Tim Farron acknowledged during his leadership campaign that the Liberal Democrats have struggled to get to the starting-line on race and diversity at all. The opposition parties too will no doubt now be challenged to match not just the Prime Minister’s rhetorical commitment to challenging inequalities but also to propose how it could be done in practice.

Non-white Britons expect substance, not just symbolism from all of the parties on race inequalites.  Survation’s large survey of ethnic minority voters for British Future showed the Conservatives winning more ethnic minority support than ever before – but just 29 per cent of non-white respondents were confident that the Conservatives are committed to treating people of every ethnic background equally, while 54 per cent said this of Labour. Respondents were twice as likely to say that the Conservatives needto do more to reach out – and the Prime Minister would seem to be committed to showing that he has got that message.  Moreover, there is evidence that ethnic inclusion could be important in broadening a party’s appeal to other younger, urban and more liberal white voters too – which is why it made sense for this issue to form part of a broader attempt by David Cameron to colonise the broad centre of British politics in his Manchester speech.

But the case for caution is that there has been limited policy attention to ethnic inequalities under the last two governments. Restaurateur Iqbal Wahhab decided to give up his role chairing an ethnic minority taskforce for successive governments, unconvinced there was a political commitment to do much more than convene a talking shop. Lib Dem equalities minister Lynne Featherstone did push the CV discrimination issue – but many Conservatives were sceptical. Cameron’s new commitment may face similar challenges from those whose instinct is to worry that more attention to discrimination or bias in the jobs market will mean more red tape for business.

Labour had a separate race inequalities manifesto in 2015, outside of its main election manifesto, while the Conservative manifesto did not contain significant commitments to racial inequality. The mid-campaign launch in Croydon of a series of race equality pledges showed an increasing awareness of the growing importance of ethnic minority votes - though the fact that they all involved aiming for increases of 20 per cent by 2020 gave them a slightly back-of-the-envelope feel. 

Prime Ministerial commitments have an important agenda-setting function. A generation ago the Stephen Lawrence case opened the eyes of middle England to racist violence and police failures, particularly through the Daily Mail’s persistent challenging of those injustices. A Conservative Prime Minister’s words could similarly make a big difference in the mainstreaming of the issue of inequalities of opportunity. What action should follow words? Between now and next year’s party conference season, that must will now be the test for this Conservative government – and for their political opponents too. 

Sunder Katwala is director of British Future and former general secretary of the Fabian Society.