Does Greece need to be in the black before it can be green?
The road to Copenhagen is paved with good intentions - and pockmarked with tough choices. Take those faced by Greece, for example.
George Papandreou, Greece's recently elected leader, made "green growth" one of the central themes for his election campaign. After winning with a hefty margin, he appointed his country's first ever environment minister, a dynamic woman named Tina Birbili. And he wants to get more companies to harvest the country's wind and sun.
There's only one problem: Money.
With the government's budget deep in the red, "Greece is learning that if it wants to go green it may need to get back into the black first," says Mark Medish, a senior adviser and visiting scholar at the Carnegie Endowment for International Peace and one-time U.S. Treasury official for international affairs.
Sun and wind energy might be good investments in the long term, but in the short-term they are capital intensive and require hefty subsidies. And spare capital and budget dollars are things Greece doesn't have at the moment.
"Greece's fiscal situation is truly terrible," said a recent Goldman Sachs report. This year, Greece's public debt soared past 100 percent of GDP and might reach 110 percent next year. Its budget deficit - hit by falling tax receipts and free spending ways of the previous government - is expected to be 9.1 percent of GDP in 2010, far above the European Union's guideline of 3 percent.
Recently, when the property arm of state-owned company Dubai World said it couldn't make a debt payment, nervous investors in sovereign debt drove up the cost of insuring Greece's debt. Bond spreads have been widening, making it more expensive for the government to borrow money.
Yes, "green growth" can mean new jobs. But a government on the brink of fiscal crisis isn't good for jobs. Papandreou has to make sure to keep the country afloat.
It's a stark choice in Greece, but to some extent it's what a lot of countries are struggling with as they head to Copenhagen: a tradeoff between long-run climate and economic benefits versus short-run investment costs, even if some new green jobs ease the adjustment.
-- Steve Mufson
Steven Mufson| December 8, 2009; 11:00 AM ET Save & Share:
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