28.07.2011 Novi magazin 13

We are paying the price of the crisis by a lower quality of life

We are paying the price of the crisis by a lower quality of life
We have made a great step forward in the organizing of the country, but the standard of living has not been raised and the citizens are dissatisfied. The fact is that the economy is functioning better than last year, says the Prime Minister Mirko Cvetkovic in an interview with Novi magazin.

The truth is that the economy resources gave a lot less and worse results than all of the Government’s resources, but that is a logical consequence of the economy crisis and we couldn’t influence it. When you compare the current state with the state from three years ago, you can see that the reforms have been continued, that the economy didn’t crash and that no one is trying to dispute the fact that that we are paying the price of the crisis with the lower quality of life. We have made a great step forward in the organizing of the country, but the standard of living has not been raised and the citizens are dissatisfied. The fact is that the economy is functioning better than last year, says the Prime Minister Mirko Cvetkovic in an interview with Novi magazin.

The Government’s three year work report has come across general dispute as well as some negative reactions. How do you interpret that?

When you compare the current state with the one from three years ago, you can see that the reforms have been continued, that the economy didn’t crash and that no one is trying to dispute the fact that that we are paying the price of the crisis with the lower quality of life. We have made a great step forward in the organizing of the country, but the standard of living has not been raised and the citizens are dissatisfied. What is encouraging is that the economy has begun to function better than last year. At the end of my first expose I also asked that the effects of the Government should be judged based on facts and not preconceived notions.

But, people do not live on preconceived notions but on real facts?

Let’sanalyze the work of this Government based on the context which is often forgotten. The Government was formed based on a clear political program. What happened three years later? We have made considerable, somewhere even historical steps in all of our projected goals. We have ended the cooperation with the Hague Tribunal. In European Integrations, to which we started from zero, we have fought our “white shengen”, overcame a series of important hurdles on our way to Europe and now we are at the threshold of receiving the candidate status and the date of the beginning of the negotiations. That didn’t happen by accident, but is a product of some serious work. Besides, we have significantly reformed the country, even though there is still work to be done there, we have professionalized the army, and after many decades we have started reforms in many sectors…I am not running away from the fact that as the captain of the team I hold the biggest responsibility.

The critiques are unilateral. The truth is that the economy resources gave a lot less and worse results than all of the Government’s resources, but that is a logical consequence of the economy crisis and we couldn’t influence it.

Do you think that after three years the government has used the crisis as an opportunity to reform Serbia?

I think that this government has used the opportunity for the continuation of the reforms in all other spheres. In economy, the essence of the reforms is to place the industry and the economy in a competitive environment and let them achieve results on their own without the meddling of the government. I don’t think that the crisis has given a chance to the government to get out of those obligations. Our job was to stop the crisis from destroying the economy, and we achieved that. Even in developed countries, just like in history, the government has a more active role in the economy after a crisis…

Just in some, not in all of the countries?

...Well, mostly yes. The most important ones that we observed came to the rescue of the bakers sector.

In our economy there is a healthy part and a part that needs to be reformed. During the mandate of this government NIS has been sold, there was an effort to sell JAT and Telekom…Among five or six of the most important public companies, this Government was ready and started making key ownership changes, with just maybe EPS and the Railroad being left aside. And there was a much better chance for it some seven or eight years ago.

On the other hand, the crisis has made the poor even poorer and that was when the Government had to actively step in. On the social plan we didn’t rely just on the mechanism of welfare but also on the system of the economy aid. To me every grant in the economy is basically welfare.

We have made certain efforts, but we haven’t succeeded with Jat and Telekom. Seen as a whole, and taking into account the given circumstances, we did a lot. 

This Government has one more year; will it continue with the changes?

We are continuing with the reforms in the part that is within the government’s program orientation. We have no reason to enter into the restructuring of the Railroad, because it is a process of the reform of the railroad that has been on for several decades. We have made a completely new model which sees the Railroad being divided by activity into a couple of companies. That means that those who has trains will be able to do transport, but the government would pay for taxes for the use of the infrastructure. 

When EPS is concerned, the Government thinks that it should not be dismantled and sold “piece by piece”. We think that we should enable the arrival of the big electricity producers into a system that works on a base that function mostly on private ownership. We have completed the tender for the TPP Kolubara B of 700 megawatts. Edison got that job. We didn’t have that much success with the TPP Nikola Tesla 3, so we will do it again.

The distribution of the EPS’ shares will follow after that. 

The public companies on a local level received the least help.. Everyone is talking about some 560 public companies, and some 500 and more of those are on a local level. We will see what will happen to them after the passing of the Law on the decentralization. With that we will create the institutionalized base for the municipalities to take more responsibilities.  

Speaking about the deficit, there is a lot of talk in Serbia about the possibility of the Greek crisis overflowing into Serbia. As a Prime Minister are you frightened, not by the overflowing of the crisis, but by a Greek scenario in Serbia?

In Greece they have a crisis of the state, not of the entrepreneurs. We haven’t bought the Greek debt papers and I don’t see how the crisis could overflow into Serbia. And I don’t believe that the Greek private entrepreneurs would withdraw their investments from Serbia.

As for the possibility of the Greek scenario in Serbia, no one is taking care there about the order of sizes. We are talking about whether Serbia will get literally one billion Euros from the IMF.  And in Greece it is about a 130 billion Euros loan. So, there are no worries that the Greek scenario will happen here.

No one is talking about the amount of money, but about the model of the state’s behavior?

Well, the model generated the problem. Our model cannot generate such a problem as long as we hold the laid out macro framework by which the budget if defined. We have the Law on the fiscal responsibility which says how the deficit should go…

But Greece had it too, and it also had European standards, and the politicians didn’t stick to it?

...We stick to the law and that is the difference. Last year we had a deficit of 4,7 percent of BDP, and we planned it to be 4,8. This year we have 4,1 and we will not cross it. Next year we will have 3,2 and we will do the same. It is very simple.

There is an impression that there are too many attacks on the privatization in the public, on the process itself and on the concept. Even with the coalition partners stepping out and publicly saying that the privatization was evil. What is your interpretation of that?

There is a fundamental misunderstanding of the privatization. It is given the task of creating new jobs, which can be heard in many of the critiques. The privatization, according to the textbooks, is decreasing the number of jobs, but is increasing the efficiency. The new jobs should be created by the Greenfield investments. But there wasn’t a Greenfield here that would absorb the unemployment created within the process of the privatization.

I interpret the relationship towards the privatization also by the fact that we are one of the rare countries whose population didn’t survive all the misfortunes of communism and afterwards had to move to the construction of the free market. That is also a difficult process, but the people who survived communism never wanted to go back to that system. Our country fell apart because of nationalism and not because of the bankruptcy of communism. That is way a certain number of people still dream about those days and see everything taken from the free market as negative.

There is a free market in every country, and the entrepreneur is on a pedestal. So, the entrepreneur is a positive character of the market economy in every country…

Except is Serbia?

...Except in Serbia and that is very strange. That is, actually, making it difficult for the people who want to get into entrepreneurship to receive the adequate social satisfaction for it.

author: Miša Brkić source: Novi magazin
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