We have before us a new age. It is an age distinguished by a realignment of international geopolitical and economic correlation after the collapse of socialist regimes, and by a technological revolution which is radically transforming the conditions of economic and political planning. The world’s equilibrium is changing radically. The old political, military, and economic blocks are being displaced by new international formations and relations. Nations are being re created in the framework of larger supranational groups in order to more effectively respond to the circumstances created by the new, chiefly global, economic competition.

Three economic, cultural, and technological poles are taking shape in North America, Europe, and the Far East. The relations among these three poles remain fluid. It is most likely that this fluidity will increase in the future as in the coming decades new powerful poles of multinational rallies will add up to the existing ones. China is already emerging, slowly but steadily, as a new pole. Russia, despite the transitions it has been undergoing, will almost certainly be reformed into another politically, economically, and culturally competitive system.

Competition among these poles will not necessarily result in a global crisis, as was invariably the case in the Cold War period. It will also not result in the crises that led to the First or Second World Wars. The point at which new alliances will reach a balance remains unknown. The preconditions for the creation of the final conditions which will allow economic cooperation, collective security, and national welfare are still hard to predict.

Fluidity in our region is aggravated by the competition that is developing, and is bound to continue in the future, among the industrial countries of the West which seek to secure access to the energy reserves of the Kazakhstan, Iran, Caucasus zone. This competition will impact on the creation of conditions for stability in the region.

New threats to the collective security system in Europe, to which I have repeatedly referred to lately, constitute additional factors of destabilization. These factors have to do with the demographic explosion and the rise of Islamic fundamentalism taking place in countries of the Mediterranean and the Middle East. The economic and social upheavals occurring in our neighboring countries also constitute threats to European security. These countries have not achieved the goal of economic integration in the world market, and do not seem likely to. The population explosion, Islamic fundamentalism, and economic depression, all generate situations of internal destabilization which can spill over and create security problems in our region and in the whole of Europe as well.

On the basis of these global developments, we can summarize the factors which have to be taken into consideration in the formulation of our national and economic strategy:

a)International security and foreign policy are increasingly affected by global economic competition.

b)Global competition is now carried out on a company level rather than a state level. The postwar period in which national economies furnished with autonomous fiscal and monetary policies confronted the economic power of other states is now over. Competition, a country’s competitive capacity, is now subject to the ability of enterprises to compete on a global level. This is a new age that will have new repercussions in the shaping of our national strategy.

c)Business competitiveness has become a determinant factor of national dynamism and “negotiating power” in international relations. The countries that have national power are those which have national champions with economic power that exceed their national boundaries. If our national strategy is to be successful, this is a new point that we have to comprehend and integrate in our strategy.

There is a direct correlation between the way in which enterprises are organized, develop, and network with one another in order to improve their competitive position, and the way in which political formations between states are established.

These factors determine the international environment in which we are called upon to act. In order to shape a national strategy, however, we must take into account the room for action, we have at our disposal. Such a kind of action is determined by the dynamic correlation of three additional factors:

i)Our geographical position, which offers significant advantages but also increases uncertainty in decision making. This is, I think, the chief element that should characterize our national strategy as well.

We are a nation, with people that have the imagination and the ability to formulate a vision. We are a people that must, however, learn to take risks. We are going to build our national strategy on the belief that we can move forward, that the future belongs to us, and that we are the ones to meet challenges successfully. But we are also going to build it on uncertainty, because our region has always been unstable. The formulation of our national strategy takes boldness, faith, and risk. We shall fight our own battle and win with the firm knowledge that there is uncertainty which we will change into certainty through our national strategy.

ii)The lack of “defense depth” which is related to our geographical position and the small size of our population compared to our neighbors’ populations. Greece and some other countries such as Israel, for instance, are characterized by a lack of defense depth. We cannot defend our country simply by guarding our own frontiers. In order to acquire the necessary defense depth, we need a wider defense network; that can be achieved through a chain of defensive alliances in the greater region.

iii)Finally, the great delay in the institutional establishment of a modern, flexible, and effective administrative mechanism. Our administrative machine is an outmoded one. We need a fundamental administrative reform that will uphold the endeavors of a modern state as it shapes a new national strategy.

These characteristics will have to define both the basic directions of our national strategy, and the parameters of our foreign, defense, and economic policy, with the ultimate purpose of creating a “vital expansion space for Hellenism.”

Hellenism has never excelled in a narrow region and in closed borders. It excelled whenever there was greater room for action covering the Balkans, the Black Sea, and the Eastern Mediterranean-Hellenism’s greater region. Today, the modernization of the economy, the political and cultural revival, and the protection of our country, can only be achieved if Greece- as the sole Balkan member state of the EU-manages to handle the leading role in this play. Consequently, it is in our power to change the facts of this juncture into conditions that will allow us to redefine our position in the region. The future upgrading of Greece’s European role will depend on our ability to play the role we deserve in our geographical region, namely in the Balkans and the S.E Mediterranean.

In order to succeed in such a venture, we need to have a strong presence and to assume a definite role in Balkan politics. Moreover, we have to continuously undertake initiatives in the Mediterranean and to consolidate the belief that we are a state with reliable deterrent power-a state able to effectively confront external threats against it originating particularly from Turkey or anywhere else.

Such a role is related to the degree and the extent to which we will develop an influential and dynamic position in the power and interest alliances of the international system in which we belong. More specifically, I believe there are three prerequisites for Greece’s active and effective participation in the European and Balkan transformation making:

First, we must undertake initiatives, particularly in the framework of the European Union, that will promote economic, cultural, and political cooperation between the Balkan peoples and the peoples of the Eastern Mediterranean.

Second, we must persist in the view that Greece, as a Balkan European state, has the lawful right to substantially contribute to the interconnection of Eastern European countries with Western Institutions such as the EU, the WEE, and NATO.

Third, we must develop joint policies with powerful Balkan and Mideastern peoples, that will promote regional stability and consolidate a regime of constant resistance against any revisionary behavior of regional states and any destabilizing external intervention. Such a venture, however, takes daring, determination, and consistency. We already possess important comparative advantages: national, geopolitical, as well as economic.

National advantages arise from the fact that Greece constitutes the basis of Hellenism-a wider national whole. This whole comprises two states-Greece and Cyprus. It also has an international diaspora with considerable influential power. In this sense, it also possesses an international network which, if effectively activated, can be employed as a source of information, a lever of pressure, a negotiation tool, and a development body as well.

The second significant national advantage we have at our disposal is “our identity.” Forged throughout centuries, with its merits and demerits, the Greek identity is compatible with modern times. If the Hellenic spirit did not exist in the region, we would have to invent it today. The Hellenic spirit that was so triumphant in the past, is able to change this region from a region of instability and delay, into a region of cooperation, economic stability, and security.

The geopolitical advantages arise from the fact that Greece constitutes a bridge between the Balkans and the Middle East, Europe, Asia and Africa. In this sense, it is a state of three continents that can undertake initiatives in all directions.

Economic advantages are linked to the fact that, despite our frailties, we still remain the most vigorous and stable economy in the region; one offered the unique opportunity to utilize an important package of financial resources-the second Delors package.

So, how can we utilize these advantages?

What we need, primarily, is the implementation of “a policy of open horizons”-open to international developments and possibilities offered by our region and our position in it. The promotion of our national interests will not be attained through introversion and barren national parochialism. On the contrary, it will be achieved through the emergence of Greece as a national player, with considerable negotiating power in Europe, NATO, and the world market. We also need an overall policy in the context of which defense, and foreign and economic policy will complement and support the creation of the preconditions that will allow the strengthening of our national competitive base.

Important steps have been made in that direction. In the defense sector, a new defense doctrine is being applied which now encompasses Cyprus as part of a single national space, and widens schemes of defense cooperation with our partners in the Balkans and in the Middle East, contributing to the creation of the requisite “defense depth.” The triptych of the directions governing our defense policy is as follows:

Adjustment of the defense doctrine to the new circumstances through the enhancement of military diplomacy, the modernization of defense plans, and the rearrangement of military forces. This will result in the consolidation of our national security, the filling of defense gaps, and the creation of a single defense space to include Thrace, the Aegean Sea, and Cyprus.

Development oriented allocation of expenses by minimizing non productive expenses, redefining procurement needs on the basis of result, linking procurements with the potential of domestic industry, and, lastly, restructuring the defense industry in order to improve the national competitive base. We spend approximately $1 billion annually on imports of military material. Only 5 percent of that is allocated to the local defense industry which is essentially ailing today. It is high time we linked demand to domestic supply, when this is feasible, and developed specific quality products and services for the international market.

Networking through military agreements and the establishment of the requisite defense depth, which has already started to bear fruit. In the next month, May, a multinational military exercise will take place in the Peloponnese with the participation of troops from Greece, Bulgaria, Romania, Albania, and the USA. It is a joint exercise for aid provision in humanitarian sectors. Thus, our country becomes a center of defense initiatives for the establishment of collaborative defense schemes in the region; schemes that will promote stability and peace.

Better and more productive utilization of manpower, chiefly of scientists, via more qualitative training and vocational organization of the armed forces.

As far as our foreign policy is concerned our, Greece’s, diplomatic orientations must be firm. We belong to the European Union and should act as its member. This fact, though, does not suggest that we ignore the dynamic engendered by the American interest in the region. Nor should we ignore the historically ascertained interest Russia has displayed in the developments in the Balkan peninsula and the greater region-an interest bound to prove useful in the future, too. Still, the core problem is how, in view of these facts, we will manage to remain steadfast in our orientation towards open horizons and the open borders policy, that will enable us to capitalize on the opportunities and possibilities of communication that we have with the Balkan peoples.

An important step was our decision to lift our reservations concerning Turkey’s accession to the Customs Union. The menace Hellenism is confronted with, is significantly reduced thanks to the European orientation Turkey has adopted, which obliges it to follow the European code of conduct, respect international treaties and human rights, and develop democratic institutions. Henceforth, the monitoring of Turkey’s europeanization, the amelioration of its international demeanor, the respect of human rights and democratic institutions, becomes the responsibility and the task of the European Union’s institutional bodies. Time will tell whether or not Turkey will manage to meet the European challenge.

In parallel, the lifting of the Greek reservations on Turkey’s accession to the Customs Union, as part of an active national strategy, upgrades our capacity to negotiate in the EU and NATO about the issues of vital national interest for Cyprus and the Aegean Sea.

In other words, we are in need of a foreign policy that will assume positive initiatives for the settlement of conflicts and dare to enter into negotiations that benefit us.

The recent achievements in our relations with Albania, Bulgaria, and Romania are of paramount importance and vindicate our foreign policy. We have to realize that borders are inviolable and exist so as to unite peoples, not to divide them. To achieve this objective we need the support of all military, political, and, mainly, economic diplomacy. In this context, it is important to link our diplomacy with our economic policy. Large scale projects are not the sole concern of contractors. They are projects that can become the object of international collaboration schemes and can be harmonized with the priorities set by our foreign policy. The oil pipe of Pyrgos Alexandroupolis, the natural gas pipe, the Spata airport etc., have major economic and geopolitical implications.

A new model of organizational development is required in the economic as well as the defense sectors. This model should be based on three axioms:

a)The improvement of our performance in what we know how to do best.

b)The promotion of the production of new promising products and services.

c)The termination of production in fields that are not competitive and, consequently, not viable.

These axioms are self evident in the business sector but have not been unreservedly accepted, at least as far as their consequences are concerned, by all social and political bodies. In other words, these axioms have not yet become a genuine component of our national strategy. Consequently, if we want to claim that we do have a national strategy we have to genuinely integrate these self evident facts in it. We have not yet conquered this issue. We are lagging behind considerably, when what we need to do is push forward.

That is why I referred to these steps, which although self evident, they are at the same time hard to take. As mentioned above, international competition is no longer a competition of states but a competition of enterprises. In the international market, enterprises compete with each other on a level of specific products and services.

Countries with high competitiveness, demonstrate a significant degree of specialization. This is not the case in industrial sectors (such as the textile industry), but its true in parts of such sectors or in groups of such parts, which interact dynamically and create competitive complexes of activities. These complexes are based on the establishment of horizontal and vertical networks among similar enterprises and the creation of synergies. In this manner, the development of each enterprise results in productive and competitive advantages for the other enterprises and vice versa. Examples include the development of new varieties of cotton seed, thread, the qualitative control in the textile industry, ready made clothes, design/brand products, product transportation, and international trade networks.

Consequently, the new model of organizational development that we must promote should not be based on the low labor cost or our country’s natural comparative advantages. Nor does it depend on how much the drachma is reevaluated or on how high nominal interest rates are. The macroeconomic environment constitutes the base of the economy and it must be stable. But the base, no matter how stable, is worthless if is not accompanied by the appropriate superstructure.

The same applies for infrastructures, i.e. for both large and small scale projects. They can have a development result, only if they utilize and link viable economic activities. In the same sense, when preparing and evaluating the economic policy, we shall have to focus our interest on the development result. The latter has to be valuated on the basis of modern financial and fiscal terms, and not so much on the amount of the expenses and investments. I often hear that a certain amount of money was invested in such and such development projects in such and such development sector. Development is not measured according to the money spent. If money is wasted, there will be no development. On the contrary, we must measure development according to the result. We must assess activities not depending on how much we spend on development, but on the basis of what we gain from our efforts-what the development result is.

Paradoxically enough, in the postwar period the development result in Greece was never assessed. How much did we spent on development? What was the development result we obtained? Why was there no correlation between the expenses for development and our development result? It will be very interesting to look back in history and attempt an assessment.

The time has come for us to shift the weight of our collective efforts to results and to assess every investment on this basis. From negotiations about procurement offsets, to the call for tenders and awarding of public works, or the partner selection procedure, the determining criterion must be the contribution of the project or the expense to the, bolstering of our national competitive base. Development will come from the dynamics of national production in the international market, from the creation of differentiated products and quality services, as well as from collections of such products for which there is active demand.

Today, 55 percent of the industrial product exports comes from only 55 activities, out of a total of 2,400 included in a corresponding industrial classification. Moreover, there are very few products or services that have acquired a share, even a small one, of the international market (as is the case in shipping).

It is time we adopt a more aggressive policy. Such a policy will allow our “national champions” to stand out, and will boost those enterprises that manage to face international competition, by securing corresponding market portions for their products and services.

To the question “what is the cardinal dynamic comparative advantage that we must develop today?”, the answer I give is the following: individual and collective entrepreneurship and all those activities and institutions that mobilize it. If we want to strengthen the national competitive base, we must successfully combine four important factors that may schematically be presented as the vertices of a development rhombus.

These four factors are the following:

a) Active demand for products and services. At present, this presupposes higher growth rates with investments and exports as the driving force. A fact that is compatible with the convergence program.

b) Competitive entrepreneurial organization. This implies priority in research and development, as well as in the utilization of new technologies particularly in informatics. It also implies boosting competition in closed and oligopoly sectors. Moreover, it suggests development of the economic potential through mergers or close cooperation between enterprises, so that they are in a position to successfully compete in the international arena.

c) High level of suppliers and networking of domestic and international enterprises with research centers and distribution and trading centers. This objective can be achieved by drawing on the funds of the Community Support Framework and Community initiatives through the proper mobilization of the Confederation of Greek Industries, chambers, and the enterprises themselves.

d) Continuous training and formation of staff. Considerable funds are already being spent for this purpose. In the 1994 1999 period these funds will exceed 1 trillion. Drs.1 In order to obtain a development result, the training and formation programs must be either closely intertwined with the sought-after productive transformations of the enterprises, or adjusted to the needs of local communities. Otherwise, we run the risk of wasting funds and allowing certain speculators to become rich to our detriment.

The aforementioned points constitute the four factors which determine national competitiveness. Still, it is not enough to successfully implement, the infrastructure and demand policy, the competition policy, or the staff training policy. In order to achieve a development result, we must combine these policies. An example from the area of defense industry suffices. Today, the operational needs of the Armed Forces and the considerable expenses on equipment and supplies, are not linked, either with the capabilities of national enterprises or with the specialization of staff. This is also the case in the Greek Economy as a whole. The initiatives or actions promoted, do not necessarily complement each other, and their benefits in strengthening the national competitive base are debatable.

From my perspective, this is the greatest danger surrounding the utilization of the B Delors package-either not absorbing the funds earmarked for productive restructuring in a timely fashion, or not managing to combine various operational programs and specific measures so as to produce development results. Our major concern should be that in 1994, out of a total of 800 billion Drs worth of available funds, absorption of CSF funds by the industrial sector was nil. The same applies to the sector of Research and Development, while the absorption percentage for the modernization of Public Administration was barely 10 percent.

An immediate priority is the mobilization of healthy and productive enterprises in the private as well as in the cooperative sector of chambers and their collective bodies. The aim is to restructure them and increase their productivity and performance through the four policies mentioned above.

This concerns mainly the small- and medium sized enterprises (SMEs). They are the ones on which the adjustment burden weighs more heavily and the ones threatened by the requisite macroeconomic adjustment and the increased international competition. The financial resources available are more than enough-for the SMEs they top 200 billion. Strategy, coordination, and activation, in general, are the prerequisites for the utilization of the measures and actions already agreed upon. The latter facilitates a better organization of the small- and medium sized enterprises and offers them easier access to new production and financing techniques, while assisting them in dealing with competition through mergers. The same measures and actions support the aforementioned enterprises in their efforts to develop networks and to increase their share in both the domestic and the international market.

In order to secure a development result in individual actions and measures, I think that we must start thinking in terms of “competitive operational programs.” The construction of Via Egnatia, for instance, will have to be integrated in a competitive operational program serving specific enterprises in Western, Central, and Eastern Macedonia and Thrace as well as in Albania and Bulgaria. It will be supported by vertical channels and other infrastructure facilities such as ports, railway networks, telecommunications or information networks.

If we adopt this rationale when considering the most important large scale projects, then, I think, we could finally talk about few but well structured operational programs at a national level-programs that would support specific complexes of business initiatives. In this way we would be able to identify five or more “Development Zones” in the whole of Greece, the dynamics of which would contribute to the strengthening of our national competitive base. Northern Greece, from Igoumenitsa to Evros, can serve as an example, since it constitutes a natural development zone with its own characteristics and demands. Especially in this zone security, diplomacy, and development go hand-in-hand.

Another example is the vertical axis joining Thrace, the Aegean Islands, the Dodecanese, and Crete which constitutes another potential development zone with a favorable effect on security and foreign policy. Accordingly, any intervention and project must aim at the same goal-the strengthening of our national competitive base with the Greek enterprises, our national champions, as a spearhead.

Understandably, the role of strengthening our national competitive base, cannot be played solely by the enterprises; it is also the state’s responsibility. The modern state must play the role of the animating spirit, the coordinator, and, sometimes, the “insurer.” It can and must, primarily, signal national effort on matters of defense and foreign and economic policy.

Today, the establishment of a modern, flexible, and development oriented state body constitutes a fundamental prerequisite for our national power and our national competitiveness. This presupposes a bold reform which will produce an effective administrative mechanism at the service of the citizen. This reform should have been effected decades ago. The Prime Minister’s proposal to set up an inter-party committee to deal with administration constitutes an important step towards the promotion of the necessary dialogue and the attainment of the requisite national consent. The establishment of decentralized intermediary administrative and development bodies can make a major contribution to the administrative reform.

Above all, however, in order to move forward, we will have to regain our collective capacity to make transparent, consistent, and daring decisions, in an environment of uncertainty. When this capacity is weakened, either as a result of political cost or strong pressure posed by organized interests, politics loses its sense and, sooner or later, its reliability.

So the issue of our national competitiveness is an issue that unites us all-businessmen, politicians, and public administrators-in a joint effort. We have to take that daring step. This is a modern age demanding modern methods. We cannot win the battle of tomorrow with the mentality of yesterday. For today and tomorrow we need new methods and new mentalities. We have to stop passing the buck to one another: businessmen are to blame, politics are to blame, political parties do not function, and finally nothing is done. We shall join our forces and say: we believe that this place has a future. We should not waste this unprecedented opportunity offered to our country. And each one of us, from his bulwark, must dare to move forward.

It takes courage. The Greeks are known for their strength to look ahead. We are the ones that must take risks. What is left for us to decide is that we can all get organized and jointly undertake the risk of creating and helping a high national strategy materialize. In this way, in the dawn of the 21st century, Greece may cease to be a mere follower of Europe, and emerge as a stratstrategic, economic factor of stability-an international player in Southeastern Europe and the Middle East. It is a role that has belonged to Greece in the past, and, consequently, belongs to it in the future. I trust it is the Greeks’ ardent desire to see it happen and we know that it all depends on us. The question is not one of whether we will attempt it, but when we will finally start doing it. The time is now. Yesterday may have been early, but tomorrow will be late. Today is the day we must make the decision, take the risk, and meet challenges with faith and self confidence. So, today, our chief obligation is to forge a powerful national development majority and create an indissoluble internal front for the promotion of the requisite synergies that will fortify our national competitive base and our national negotiating capacity.