Greek Socialists Win a Landslide Victory

Although still in its first days and facing serious obstacles, Greece's new socialist government led by prime minister Andreas Papandreou has formulated a far-reaching plan to transform the country's economy.

In the words of the PASOK (Pan-Hellenic Socialist Party) manifesto, the government intends to "eradicate the division between those who make the decisions and those who are subjected to them."

Part of the program calls for the "socialization" of that part of Greek industry which isn't already nationalized. The Greek economy is now 64% government owned: telecommunications and public utilities are completely nationalized. In the past 12 months, industries in the state sector have run up a deficit of billions of dollars, a problem PASOK attributes to mismanagement. But because of the poor performance of the state sector, "nationalization" as a term is not a popular rallying cry among Greeks, which is why PASOK has chosen to call its plans for further takeovers and restructuring of existing state industries, "socialization"-a form of self-management whose details have not, as yet, been clearly defined.

Targeted for government control are: the nation's credit and insurance companies; energy and mining firms; major steel, cement, fertilizer and pharmaceutical concerns; all defense-related industries; four large shipyards; and much of the import and export trade.

This PASOK plan underscores a point Papandreou made just a few days prior to his party's landslide victory on October 18. "We are not classic social democrats concerned merely with ameliorating the economic situation," he said. "We do not intend just to give outlets to monopoly capitalism."

Papandreou may not have an easy time of it, however. First off, he inherits a country that has been ruled by a series of right and extreme right governments for most of the past 50 years. "Rusfeti" (patronage) and corruption are rife; the state administration is inefficient; and the control of the Greek economy is in the hands of a local `oligarchy' and foreign investors.

What is more, the left-wing government faces a problem common to parties which have never before acceded to power and which represent a radical break with tradition: it has not been privy to hard data on the country's economy. "We do not have access to many figures," admitted Apostolos Lazaris, the new minister of coordination and planning, in an interview with Multinational Monitor just 10 days before the October 18 election. Lazaris is in charge of overall economic planning.

Papandreou cannot dismiss the threat of intervention from the West, either, knowing full well that the U.S. was behind the overthrow of his father's government in 1967. PASOK's platform is not one which is designed to curry favor with the West. It calls for pulling out of NATO, closing American bases, and withdrawing from the European Economic Community.

The most pressing difficulty ahead, however, is economic. With an inflation rate of 30%, the Greek economy has suffered a zero growth rate and an eight-fold increase in the government deficit since 1974. Unless drastic measures are taken to reform the state structures and industry, "Greece will finish by following Turkey" into spiralling inflation, social violence, and anarchy, warned the president of the Bank of Greece, Efthimios Christodoulou, recently.

Unemployment officially stands at 3% but economic analysts say underemployment, which particularly affects graduates, youth and women, is 12-15%. Greece "cannot socially support that figure for long," says Theotcharis Papamargaris, one of Greece's most popular trade union leaders and president of the independent and radical Bank Employees Union.

Although the socializations may cost the government up to $6.5 billion, according to calculations by the previous government, the PASOK government views them as a way to reinvigorate the economy. Lazaris told Multinational Monitor that some companies to be socialized have outstanding debts which amount to more than the companies' equity capital. PASOK may convert the debt in these companies into government-owned equity shares, thus relieving the companies of debt burdens which prevented them from making investments. "We shall give them a chance to get back to production," says Lazaris.

Papandreou and Multinationals

The new Greek government intends to tackle some hefty multinational companies. Among those in sectors proposed to be "socialized" are:

• Exxon, which holds 100% ownership of Thessalonika Refining Corporation, Esso Pappas Industrial Corporation, and Esso Pappas Chemicals, respectively 3, 6, and 23 in size of Greece's largest manufacturing companies ranked by sales. Thessalonika Refining Corporation runs Greece's largest oil refinery.
• Pechiney, France's multinational aluminum manufacturer, which smelts nearly all of Greece's bauxite.
• Abbott Laboratories, Eli Lilly, Bristol Myers, Bayer and Hoechst, who share the pharmaceutical market.
• Ethyl Corporation and Dow Chemicals, both operating in the chemical sector.

The reason for these "socializations" is simple: the Socialist Party thinks multinationals play a negative role. "There is no question that there is control of the Greek economy by foreign investors," says coordination and planning minister Lazaris.

Figures on foreign control of the Greek economy were not published by the previous conservative government, and as a result are hard to come by. But Vaso Papandreou (no relation to the prime minister), a member of the central committee of PASOK, claims in a book to be published this month entitled Multinationals, The Case of Greece, that the key sectors of the economy earmarked by PASOK for socialization are in foreign hands. "Metals are controlled 90% by foreign capital; the transportation sector is 65-70% foreign owned; the chemical sector is 50% and the country's refineries and pharmaceutical industry is almost entirely in foreign hands," she states.

Figures are difficult to estimate in part because of the way foreign firms operate in Greece. "Over-invoicing" is a problem, says Lazaris. "There is no control over how much capital is imported. The result is that now we have to pay for capital which never entered the country."

Elaborating on this point, Vaso Papandreou claims that "foreign companies often say they will import more capital than they actually do." She adds that this practice "enables them to get better tax incentives and concessions. I estimate that only about 30% of claimed capital is ever imported."

Even the conservative government was worried about these accounting tricks. In 1976, the then-minister of economic coordination, Panayiotis Papaligouras, established a committee to check the invoices of big companies. In one year alone it found that Greece had lost $300 million through over-invoicing. At the time, however, the United States', French and British embassies successfully urged the government to take action on the committee's findings.

Multinationals may use other bookkeeping maneuvers to dodge payments in Greece. According to Theodore Pangalos, a PASOK deputy, multinationals in Greece "manipulate their costs through imports of second-hand equipment which is charged at full price," or "by overcharging on new equipment." This means companies can "declare lower profits and thus avoid taxation," he says, arguing that, in effect, multinationals can thus export a greater share of the profits than the law allows. "Coca Cola is an exemplary case," Pangalos says, claiming that "the company has never shown a profit from its Greek operations."

Multinationals have contributed to other problems in Greece-most notably, pollution. A chemical cloud hangs permanently over the Greek capital of Athens and the neighboring port of Piraeus, where one-third of the country's population and one-half of the industry is located. In the days before the election, pollution replaced politics as the main topic of cafe conversation when 60 Athenians were hospitalized after being overcome by poisonous fumes. Although some pollution comes from local industry, multinationals-particularly in the bauxite, oil, chemical, and pharmaceutical industries-are large contributors. "Foreign capital came to exploit various opportunities without taking much care about what it left behind," says Apostolos Lazaris. "Just growth is not enough for us. We would very much like to control these catastrophic developments in the environment."

The total lack of pollution controls and easy access to cheap minerals have been inviting for Pechiney whose role in the economy particularly angers PASOK. The Greek state sells electricity to this giant French aluminum-smelting company at below-cost price. For this largesse, the Greeks do not receive an integrated industry. Two-thirds of the alumina Pechiney produces is exported from Greece, which then has to reimport the finished aluminum products. "This kind of industry is not interesting for us," says Pangalos. "In any case, we will be taking Pechiney from the French comrades [the company was recently nationalized by France's new Socialist government] and giving it back to our. Greek comrades," he adds with a grin.

One final PASOK criticism of multinationals in Greece relates to the high cost of consumer goods. "In the electrical appliances sector," says Vaso Papandreou, "Siemens and Philips have managed to buy out Greek firms and create a monopoly situation whereby they can control prices."

One reason multinationals were able to take advantage of the Greek economy, Socialists say, is that there have been no effective rules concerning foreign investment in recent years. "It has been a question of bargaining between interested companies and government officials," Apostolos Lazaris says.

This is likely to change. According to the party manifesto, PASOK plans to establish a "new institutional framework which will fundamentally safeguard mineral wealth as national property." Specifically, it calls for "absolute control over the energy minerals (petroleum, uranium, etc.) as well as over the strategic mineral deposits (nickel, chromium, lead, etc.) which must be used for verticalization of industry and the acquisition of new technology."

"We are not against foreign investment; we welcome it," says Lazaris. "However, we are opposed to the practices and incentives which have been given in the past, without much thought, to foreign investors," he explains. "We want something to be left behind in terms of technology, vertical integration, development momentum and employment. This is a legitimate claim."

Such are the hopes. The fears, however, also run high. Jailed by the military junta in 1967, Andreas Papandreou, as much as any member of the new government, knows the limitations on swift radical change in Greece. The seven year military dictatorship was, according to Papandreou, "supported and bankrolled by the Americans." Like Mitterrand of France, Papandreou has "an Allende complex"-a reference now popular in Europe to the former Socialist Chilean premier who was killed in a U.S.-supported military coup in September, 1973.

PASOK officials fear attempts could be made by their opponents to destabilize the country, specifically by the closing off of international credit facilities. PASOK spokespersons doubt foreign-owned Greek industries could effectively destablize the economy on their own.

But international reaction to the leftist victory in Greece has so far been cautious. Ann Corro, U.S. Department of Commerce specialist on Greece, says: "We have to look at it from an optimistic point of view. It is a fait accompli and Greece is a democracy," adding, "we hope they don't make too many changes regarding foreign investment."

At the moment, however, the combined left in Greece, having won over 60% of the popular vote, is buoyant. "The world crisis has created favorable conditions for our measures, our ideology and our policies," says Theodore Pangalos. "We no longer face the dilemma that people believe that foreign capital is efficient and can get us out of the recession."

Involving Workers and Communities The new ruling party in Greece is eager to institute a large degree of worker control into the economy. "Self-management is an experiment that is long overdue in Greece," says Theotchoris Papamagaris, president of the Bank Employees Union. Socialized industries, PASOK deputy Theodor Pangalos says, "will operate as private industries but under the direction of workers, scientific staff, the local administration of areas where the companies function-town councils-and of course the state." The mechanisms by which these various components are to be mediated, however, PASOK has not yet announced. PASOK's emphasis on worker control indicates a commitment by the new government to transform Greece's traditionally pliant union movement. "Unionism in Greece has been dominated by collusion between the ministry of industry and government-controlled unions," says Papamagaris, adding that Papandreou has pledged to immediately reform the union structure in a way which will give unions "genuine independence."