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From today's Open Europe news summary:
Greece to pursue special economic zones to boost investment
Greek development minister Kostis Hatzidakis announced yesterday that Greece is in talks with the European Commission over setting up special economic zones, tax and possibly regulatory concessions, in an attempt to encourage investment in Greece. Hatzidakis notes that such zones would be controversial with other eurozone countries as they would give Greece a comparative advantage. Separately, both Credit Agricole and Societe Generale are in talks to sell their Greek businesses in an attempt to reduce their exposure to the crisis. Open Europe’s Raoul Ruparel appeared on Sky News over the weekend discussing the crisis in Greece.Kathimerini Kathimerini 2 FT CityAM WSJ Le Monde Les Echos
The response to the announcement that Greece may set up special economic zones in which regulations are relaxed a bit reveals the true nature of the hijacked European project. Rather than encouraging governments to compete for business, the European Union has become a giant prison in which business cannot escape increased taxes and regulations. This results in a race to the bottom whereby the most wasteful countries prevent more responsible ones from offering better terms for business and the entire continent suffers.
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If the "special economic zones" are primarily about reducing regulation, that can only be for the better, but if they're also about lowering taxes, that's going to fail specactacularly. The Greek government is not politically capable of reducing spending enough to actually balance its budget, and reducing tax revenue won't help that. Ultimately, the politicians will renege on their promises to keep taxes low in the special zones. (Ultimately may not take very long in the Greek case, either.)
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