The European Commission needs to intervene more firmly on the Greek bailout program and apply pressure on the government for further reforms needed by the economy instead of tax increases, as is being demanded by the IMF, Evangelos Mytilineos, the chief executive officer at the Mytilineos corporate group, has told Euractiv, a news portal focused on European news.
Mytilineos believes that the European Commission is not applying as much pressure as it should to stop tax increases and instead shift the focus to structural reforms.
“Unfortunately, the bailout agreement is being driven by taxes. The IMF’s position on increasing taxes has dominated over reforms, which Greece’s public administration is continuing to strongly object to without an interest to alter decades-old habits,” Mytilineos noted. “The European Commission has a role to play here, which it is currently not playing, and this is to push for further structural reforms.”
Following a turbulent year in 2015, the Greek government has had no choice but to learn fast from mistakes, Mytilineos believes. “Any government, whether left-wing or right-wing, needs to comply with regulations if it wants the country to remain a member of the EU,” Mytilineos said. “There is not much leeway for maneuvering.”
The need for structural reforms was also highlighted in the latest Economic Cooperation and Development (OECD) report on Greece, released last week.
Energy sector reforms included in Greece’s first bailout agreement back in 2010, intended to generate competition in the electricity market and limit monopolies, have been severely delayed. However, there has ben no holding back on taxes imposed on energy. They have risen dramatically during the bailout era. Taxes imposed on natural gas consumed by the industrial sector amount to 40 percent.
“How can a Greek industrial enterprise remain competitive when tax levels in other countries, both within and beyond the EU, are 5%, 8%, 10%, 12%,” Mytilineos questioned.
The European Commission has set itself the objective of reviving the continent’s industrial sector, which it aspires will represent 20 percent of European GDP by 2020, from 15 percent at present.
This seems like a utopian target, especially if applied to countries such as Greece, where the industrial sector represents just nine percent of the country’s GDP and energy costs remain high despite the plunge in international crude oil prices.
Asked to comment on unchanging electricity prices in the local market, Mytilineos attributed the case to the structures of Greece’s economy and, especially, the energy sector. However, the corporate head said he expects to see gradual benefits for consumers within the next few months from the developing competition between main power utility PPC and privately run suppliers.
At present, PPC controls 94 percent of the local electricity market while several independent enterprises share the remainder.
Mytilineos would like to see a fall in electricity prices. Aluminium of Greece, a member of his corporate group, ranks as PPC’s largest power consumer and requires about five to six percent of the country’s total electricity production to operate.
Responding to a question on whether he considers Greece as being detached from the European energy sector’s wider developments, Mytilineos noted that gradual change was now occurring. DEPA, the Public Gas Corporation, is no longer the country’s exclusive natural gas importer as M&M, a member of the Mytilineos group, has now also entered the market. Also, new electricity interconnections with neighboring countries are being developed to increase Greece’s options.