If Pasok wins, economy faces 'socialization'

Among new words being coined in Greece these days, not a one is more on the tips of tongues than kilonikopiisis.m In the best translation, it means "socialization." To Greeks, however, the word belongs to Andres Papandreou, who has yet to explain its full meaning.

As leader of the leftist Panhellenic Socialist Movement (PASOK), Dr. Papandreou's campaign for next Sunday's election caused him to tone down his once-Marxist rhetoric to attract Greece's wavering centrist voters. Rather than call for nationalization of private companies, as many of his youthful followers would have liked, he chose a new phrase -- socialization.

The word is enigmatic, like Mr. Papandreou himself, and helped dispel fears among many Greeks that Pasok would bring about full state control of the economy. The list of companies to be "socialized," originally about 300, has shrunk to fewer than 100 during the campaign.

"Papandreou knows the benefits of free enterprise," says a member of the New Democracu government. "He knows economics better than almost any [other] Greek. But he also knows what he has to say to get elected."

Just how far left a Pasok government would go, however, is not clear. Dr. Papandreou calls himself the "Mitterrand of Greece," a curious description, since the new leftist French minister is anti-Soveit, pro-NATO, and pro-Common Market -- all of which Papandreou is not.

In an interview, George Varfis, Dr. Papandreou's leading economic adviser, explained the specifics of Pasok's economic positions. Mr. Varfis resigned this year from the ruling New Democracy's Ministry of Coordination, where he was on the Greek negotiating team for entry into the European Community. He also worked with the noncommunist industrial nations' Organization for Economic Cooperation and Development (OECD).

"Socialization will not be a rigid policy," said Dr. Varfis, who holds a doctorate in law and economics from the Sorbonne. "But it will mean more participation for workers in the plants and more authority for local officials in dealing with pollution and other problems. And the government will sets levels of production.

"The cement industry, for instance, is essentially a monopoly. It can keep prices high. The government has an interest in socializing it."

Other industries slated for "socialization" are fertilizers, shipbuilding, defense-related industries, and minerals, such as bauxite. "Minerals belong to the Greek people and cannot be exploited for short-term interests," Dr. Varfis stated. Companies deeply in debt would also be targets for government control. Private banks would be given more worker control.

Mr. Mitterrand's nationalization of five major industrial corporations and 36 banks is expected to cost over $9 billion. Where will Pasok find the tax revenue to pay for socialization? "It is difficult to say," Varfis admits.

"Right now there is uncertainty in the economy. Papandreou will announce a two- to four-year program to bring back certainty."

Papandreou, who has served as chairman of the economics department at the University of California, would like to reduce government spending from 14 percent of the gross domestic product to 10 percent. "But it is difficult to say what concrete measures we will take. Perhaps we will have to 'socialize' companies with high profits," he half jokes.

"National companies are not efficiently run now," Dr. Varfis asserts. "They have three to four times more workers then they need. But we can administer them better." Young people now trapped in the bottom of the civil service "need to be given a change."

Perhaps Pasok's biggest challenge will be to stop the rampant practice of government partronage, known as Rousfetti.m Some public disfavor with New Democracy resides with people who have not been able to obtain government favors.

Pasok claims Greek wage earners and merchant do not pay $2.6 billion in taxes. "Tax evasion in Greece is enormous compared to [Western] Europe," says Dr. Varfis, who claims that 35 percent of potential taxes are not collected. "We can halve that in three years."

After first saying he would withdraw Greece from the EC, Dr. Papandreou now says tha, as premier, he will ask the Greek president (a mainly figurehead post) to hold a referendum on withdrawal.

"It is hard to tell what are the benefits of EC for Greece," Varfis says. "Presently, it does not help. Papandreou's position is to get out.

"If, however, Spain and Portugal join, then the EC will have a southern tilt. Greece may join then. Also, the EC may be functioning better." He says the stagflation of the 1970s has cracked European unity and hurt Greece.

"Right now, Greek manufactures have no advantage. We opened our frontiers. France, for instance, can sell cheese more cheapy because it is a stronger economy. Greek industry is not ready to compete, and some sectors should be protected. Our base of industries and services is not productive."

Greece, he says, gained entry only by giving in to three important concessions: (1) export of Greek tomatoes and peaches would be restricted until 1987; (2) Greek workers could be restricted from free flow in EC countries until 1987; and (3) EC countries have a safeguard clause to stop Greek imports if competition gets too tough on a domestic industry.

He says the EC should have given a seven-year transition for Common Market exports to Greece. and Greece's growing trade deficit with the EC means there should be a provision to trigger import restrictions.

The economic concessions were given because the New Democracy government of Constantine Caramanlis was more eager for the political benefits of EC membership than for the economic woes it might cause, he says.

"Greece felt isolated -- it has 80 million Turks on its border, it could not really join the Mideast community, and it was not part of communist Eastern Europe. It needed a home. And, psychologically at least, membership may prevent a military takeover, since the EC bans members with dictatorships."

"Greece has the power to negotiate a tougher deal. WE could just as easily trade with Japan or the US as with the EC. Europe needs our markets more than we need theirs."