These days I would not want to be in the shoes of Greek prime minister Lucas Papademos, and I laud Ecevit.

These days, I would not want to be in shoes of Greek prime minister Lucas Papademos. You might ask why. The Greek parliament has adopted the austerity package despite demonstrations throughout the country. The prime minister will collect EUR 130 billion this week. Things have started to get back on track. Still, I would not want to be in his shoes. Let me tell you why. Today, I will note three main challenges I have observed.

But first, let me comment briefly on the current state of affairs. This is what I see: As per the measures adopted by the Greek parliament, the country will be granted approximately EUR 130 billion by the European Union states. So, has Greece survived now? Has the misery ended? Will youth employment, averaging around 50 percent, start to decrease? Will the Greek economy, which has been contracting for the last five years, get back on the growth path immediately? No. We are still quite far from there. To stop the bleeding and to treat the patient for recovery are two different concepts. Treatment takes time.

In exchange for the latest austerity package, Greece is to receive EUR 130 billion. The amount obtained via the previous package was EUR 110 billion. Also, the government got rid of a debt of approximately EUR 100 billion by settling with private banks. All of this adds up to EUR 300 billion. What was the overall debt at the outset, the amount the country failed to turnover in the first place? It was EUR 290 billion by the end of 2009. The conclusion to draw here is that Greece has been suffering from a tough challenge. The high level of public debt has been transferred from one agent to another. The only thing that has changed are the persons who hold the debt in their portfolios. The debt never decreases; it will be repaid eventually. The first point is the inconsistency between the toughness of the challenge and the Greek PM, who is not a technocrat. Yesterday I saw a tweet that said, “the biggest challenge for Greece is having him, an unelected banker, decide the country's future.” It appears that Greece lacks a domestic and political owner for the economic program. It will be difficult to bury this debt with the remote control of PASOK and the News Democracy. It appears to me that Turkey’s greatest luck during Kemal Derviş era was that the coalition government was able to hold together, and that Ecevit remained in power as the PM during the period the austerity package was implemented. We might have undermined its importance back then, but it was. Papademos is not Ecevit, who shouldered the political responsibility and ensure the legitimacy of the action. This is the first point.

The second point is related to the challenge: The issue is not only political. The issue is related closely to the pace of the recovery of the Greek economy. Greece does not have a set of productive knowledge and skills in order to overcome this problem via economic growth. It does not have the production capacity or skills to justify the current level of income, either. According to Harvard professor Ricardo Hausmann, the share of Greece in the world’s high-tech production is one per thousand. The share of the country in the total wealth of the world is five per thousand. It is the level of export diversity and sophistication that determines the prosperity of a country. In the words of my professor, İsmail Türk, may he rest in peace, “Greece does not have any cotton to offer,” except their beaches. This makes the situation even worse. As an unelected banker, Papademos has to tell this truth to the Greek people.

Now the third point: forget about the high public debt ratio. The ratio of the current account deficit of Greece to national income is almost 9 percent. Seeing that the fund inflows needed to finance the deficit are in danger, Greece will either have to reduce total budget expenditures or raise exports. The second is impossible due to the above reason, even if the country leaves the Euro and returns to the Drahmi. Greece needs to build the productive knowledge and skill capacity I mentioned above, via a medium-term program. Greece has to find some cotton to offer. I believe this is the harsh truth which makes life harder for Papademos as an unelected banker. I would not want to be in his shoes these days, and I laud Ecevit.

This commentary was published in Radikal daily on 14.02.2012