Greece: Europe’s New Special Economic Zone

Photograph by Sipa via AP Photo

Germany’s Angela Merkel is hunting for alternatives to her austerity mantra. She needs a new message after her line was eclipsed by French President Francois Hollande’s election on a push-for-growth agenda. Among the proposals lined up by Merkel’s advisers, Der Spiegel reported, is the creation of special economic zones in Europe – areas where taxes and regulations would be lowered to stimulate job creation.

Now why does this seem familiar? Isn’t this a repackaged bundle of what the euro zone is already supposed to be doing? After all, the euro zone itself is a special economic zone of sorts, the members of which are supposed to have spent the last decade cutting costs and regulation to stimulate growth, create jobs and improve efficiency.

The German proposal, which isn’t yet official, conjures images of China’s spectacular success with special economic zones based around tax incentives for foreign investment. Turkey’s Economy Minister Zafer Caglayan today announced the creation of special economic zones to attract investments to his country, which had been in preparation for several months. “Special economic zone” could well become the new buzzword for a European growth plan — if not a euphemism for euro members in trouble. However, a plan to create SEZs is little more than a sophisticated-looking way of telling euro-zone laggards to implement structural and labor reforms they should have done years ago if they want economic growth. It will be interesting to see if Merkel adopts this as a supposedly new policy.

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