It is long past due time for Greece to sit down and engage in tough negotiations with multinationals so they no longer engage in tax minimization practices and commit to productive investments here as well as to use their global distribution networks for the advancement of local exports.
If today’s meeting between Prime Minister Antonis Samaras moves purely in the realm of “public relations” it won’t have any practical consequences and will only result in 30 second statements on the evening news.
Multinationals do business and that means you can negotiate. This requires clearly stating what you want and what you will give in return. If you just beg for concessions then there won’t be any result.
The first issue on the agenda must be transfer pricing. In the previous year multinationals took part in a “party” in this country cultivating extreme consumerism. They had massive turnover and made use of intragroup transactions. In simple words they overvalued their imports into Greece, because they did not want to show large profits that would be taxed at higher margins and they preferred showing greater profits in lower tax countries.
The Prime Minister must make it clear to the multinational representatives that this game has to stop and that transferring pricing audits will be systematic, thorough and unwavering to assign breaches. Samaras should set them a two to three month timeline so that beneficial results show to the final consumer.
That is the “stick” and so the “carrot” that the Prime Minister should carry with him is that those that lower prices on the shelf to consumer products will have priority in the return of Value Added Tax owed to them by the state.
The second issue on the agenda is that there must be a framework for reciprocal benefits, just like there are in defense contracts. The Prime Minister should thank the multinationals for being in our lives for so long but explain to them that for them to continue to be present in this country, they also have to do something for Greece.
Samaras has to tell them that in the market for defense systems there are compensatory or offsetting benefits that determine that one portion of the price of the program be applied to construction in this country. That way he must demand that productive investments take place in Greece.
They should secure Greek products for their worldwide networks, and this must focus on agricultural products. There is no more efficient way to help the local economy become more extraverted that through the multinational’s global distribution networks. The recent example of Unilever’s small productive investment shows the logic of how things should progress. But to be clear we aren’t talking about just packaging goods domestically for the local consumer, it should focus on the foreign consumers of each multinational.
The third and final matter on the agenda should be to turn Piraeus, in cooperation with China’s Cosco, into a Free Trade Zone. Dubai doesn’t have massive oil wealth and its growth is dependent on tourism and the fact that it has three zones free of taxes and duties. These are kilometers long regions where all transactions are tax-free.
If there is a Free Trade Zone in Piraeus the import into Europe of goods will mean massive profits for the multinationals and simultaneously it will become an engine for growth in areas like construction, transports and logistics, as well as others.
Of course for every multinational to have access for about 30 years to this zone free of all taxes they also have to give considerable consideration and reciprocal gains. It could indicatively be an amount of 1 billion Euro up front and the money collected could go to the reduction of the national debt.
One may ask as to with the creation of this Zone whether there is conflict with our membership of the European Union? Yes, it probably does, but the circumstances in Greece are of the nature of an emergency. And as such the Treaties allow a member state under such conditions to look after its national security and we can bypass the general and restrictive laws otherwise in force.
Given these circumstances our partners in the Eurozone must either give us a “green light” for the creation of a Free Trade Zone in Piraeus or they must give us the billions that we would have otherwise got from the multinationals.
PS. The politics of polite smiles has long ago exhausted the benefits it may have had for the country. It is no time to raise our voices and make demands. Anyone that doesn’t want to or can’t do it has a patriotic duty to vacate their seat for the next person in line.