SPIEGEL Interview with Greek Prime Minister Papandreou 'It's a Question of Survival for Greece'

All eyes are on Greece as the country tries desperately to reduce its dangerously high budget deficit and public debt. SPIEGEL spoke with Prime Minister Georgios Papandreou, 57, about massive corruption, rampant tax evasion and the effort to get his country back on track.

Greek Prime Minister Georgios Papandreou would like to remake Greece into a role model.
Hartmut Schwarzbach / Argus

Greek Prime Minister Georgios Papandreou would like to remake Greece into a role model.

SPIEGEL: Mr. Prime Minister, your country has damaged the euro and plunged Europe into a serious crisis. How bad are things for Greece?

Papandreou: Our biggest deficit is not financial, it is credibility. We know that we face major problems, and that we as Greeks are to blame for these problems. Serious mistakes were made in the past. But the citizens voted us into office because they wanted change. We want to restore faith in politics by putting our house in order.

SPIEGEL: Greece falsified statistics for years to hide its massive government debt of €271 billion ($365 billion) and its budget deficit of 12.7 percent of the gross domestic product from the rest of Europe. How was this even possible, and why didn't anyone notice?

Papandreou: That's a good question, and it's one that we're all asking ourselves. We have launched a parliamentary investigation. No one could have imagined the scope of this.

SPIEGEL: Who is responsible for it? Is it really just the former director of the national statistics office, who everyone is now blaming? Or is it the personal responsibility of your predecessor, Kostas Karamanlis?

Papandreou: Of course, a single official at the statistics office is not solely responsible. He was a political appointee of the previous administration. But I don't want to pass judgment before the investigations are concluded.

SPIEGEL: You have also accused the European Commission in Brussels of having looked the other way.

Papandreou: The EU should have controlled more rigorously in the past to ensure that the stability pact was in fact being observed -- also by us. In the future, we should provide the European statistics office with direct access to the data of individual member states. We proposed this, but not all countries wanted that much transparency.

SPIEGEL: Are you trying to blame the EU to deflect some of the responsibility?

Papandreou: No, it isn't my intention to say how bad Europe is. The EU is a unique organization, but it needs to look at this carefully to see this as a failure of the European institutions. This is part of the reason something like this could have happened. And this cannot be allowed to happen again.

SPIEGEL: Many European politicians, and the media, have sharply criticized your country. Some are even calling for Greece to be excluded from the euro zone.

Papandreou: I can understand some of the criticism. But we all have to be careful not to conduct artificial emotional debates via the media. For example, many politicians have recently said in public that they will not bail out Greece. We never asked for a bailout. But if you say that, it is as if we asked for a bailout. Such false information is very dangerous, given the very fragile situation in the world economy.

SPIEGEL: But can you understand that many Germans are worried about having to pay for Greece's lack of discipline, particularly after heavy social cutbacks in Germany?

Papandreou: I can understand the German citizens, who are going through difficult times themselves. But we aren't asking for any money from Germany, even if it is sometimes portrayed that way. We know that we have to help ourselves, just as Germany did in the past. Like any other country, however, we need to be able to borrow on the markets under normal conditions, and we need the EU's backing to achieve this. If the borrowing stays so expensive, our economy cannot function, and we won't be able to implement our reforms.

SPIEGEL: What makes you so confident that you'll be able to overcome this crisis on your own? Your goals are incredibly ambitious. No country in the euro zone has achieved anything comparable.

Papandreou: I don't think that's true. Germany had very ambitious goals, and it achieved them…

SPIEGEL: …but Germany didn't have to reduce its budget deficit from 12.7 to 3 percent of GDP within three years.

Papandreou: That is indeed difficult. But look: If our country functioned well, we would have little room for cutbacks. However, because there is so much waste everywhere, we can also save a lot.

SPIEGEL: Give us an example.

Papandreou: In a study done last year, the OECD described government-run Greek hospitals as deeply corrupt. It concluded that we could save 30 percent of the costs, which is enormous. The hospitals generated a deficit of €7 billion last year. Imagine what an unbelievably large amount of money we could save by simply introducing computers into hospitals. Until now, there has been far too little control over the purchasing of medications and equipment. In Germany, a stent for heart operations costs about €500. In Greece it costs €2,000 to €2,500. The fault lies with corruption.

SPIEGEL: Why does the Greek state function so poorly?

Papandreou: Unfortunately, corruption is widespread in government agencies and public enterprises. Our political system promotes nepotism and wasting money. This has undermined our legal system and confidence in the functioning of the state. One of the consequences is that many citizens don't pay their taxes.

SPIEGEL: In other words, you practically have to remake the entire country. How do you propose doing that?

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