>>abirached: this week on world business... >>: fighting off a modern greek tragedy, greece has been facing serious financial turmoil. but the new government is determined to recover, we ask finance minister giorgos papakonstantinou how. >>: the public sector is very inefficient, the public sector wage bill has got to be controlled. >>: planning one of the largest road rollouts in history, why india needs to invest in infrastructure now. >>: infrastructure is the biggest single bottle neck we have for india's future. >>: and as president obama begins his reform of the banking sector, we speak to chairman of the us housefinancial services committee barney frank >>; the sheer volume of the bonuses makes it bogus when the banks argue they can't afford higher taxation.

>>abirached: hello and welcome. i'm raya abirached and this is world business, your weekly insight into the global business trends shaping our lives. the last few weeks have been especially tense for the greek government. pressure has mounted from the eu to manage the growing debt crisis and reduce the budget deficit, as greece found itself caught in a perfect economic storm. >>: greece has a fiscal mountain to climb. >>reporter: the country is struggling with a massive debt of just under 300 billion euros and a public deficit of 12.7 percent of gdp. >>: the scale of the problem is so huge it threatens the stability of the entire euro zone and already thcurrency has fallen to its lowest level in years. yet despite this the eu has made it clear it will not bail

the ailing country out. but has approved greece's recovery plan. >>: the greek government is aiming to stamp down on corruption, cut public sector jobs, slash social security by 10 percent and overhaul the tax system, including a proposed 90% tax on bank bonuses. by the end of this year greece plans to drop the deficit to 8.7% of gdp before pushing for the 3% required by the eu by 2012. >>: despite the mess, investor interest remains high and the country easily sold 8 billion euros worth of bonds last week. investor attention may also shift to other high debtors in the med region, notably spain, portugal and italy. >>: another 16 billion will arrive as structural funds from the eu and greece's tourism and shipping sectors are already showing some signs of recovery. eckart sager caught up with the greek finance minister in davos and began by asking what the countrycan do to stave off bankruptcy.

>>papakonstantinou: it's not an easy task. and it's not a task that can be done overnight. we are now in the middle of the storm, however we've had a ccessful bond offering a few days ago, we went out for 3 to 5 billion euro, we've got an order book for 25 billion, ended up getting 8 of that. so, we believe that as soon as people see the implementation of the stability growth programme that we've tabled to the european commission, which has gotten good reviews and as soon as they see the budget being executed properly and as soon as they see that the tax reforms are actually being legislated then spreads will tighten, markets will relax and we will have the time to do these necessary reforms that this government is absolutely committed to. >>reporter: there is a lot of pressure on you right now and there has been a lot of rumours in the papers that potentially you need to look for european bailout. is a bailout inevitable you think or can you avoidit? >>: absolutely not. there is no such scenario in our plans for a very simple reason.

we have to do what we have to do. and we are absolutely committed to doing so. with the decision from ecofin in the 15th and 16th of february, the greek economy will be monitored very closely, results will be seen on a monthly basis and there are specific targets, deadlines, milestones for us to achieve. and that's very significant because it will show to our european allies, to world markets as well as the greek citizens of course who have put us there that we are indeed moving to the right direction and tacklinga very serious fiscal deficit. >>reporter: there was also a lot of word about either greece leaving the eurozone or being kicked out of the eurozone. can you just clarify it to our audience? >>: it's a completely absurd scenario, no country will leave the eurozone and even though we will know that some of what is happening at the moment has to do with speculative attacks on the eurozone, we have seen it in the past, the eurozone will survive this. >>reporter: there have been also rumours that you were asking china to buy up to 25 billion euros

of your bonds'security of financing. the prime minister called it malicious rumours. how do these rumours start? (speaking over) >>: this is an excellent example of how rumours can take over. as any country with a large debt to service we are looking at diversification of funds. for months i have been saying that we will also go outside europe, to the us and possibly to asia. i am planning a trip at some point to asia. now where exactly this 25 billion came from i have absolutely no idea. but i ended up having to deny secondaryrumours on the back of the first ones. we had the chinese analysts coming out and saying china should not bailout greece, as if we ever asked for that, we never did. >>reporter: one of the key challenges you have, you need to raise 48 billion euros this year. will you be able to do that? >>: well, we already proved that we could raise part of that with the successful bond offering. we are, i think

we have a particular programme in terms of our debt repayment, the second quarter is the toughest, april and may are the 2 months where the biggest amount needs to be raised. we are confident that as soon as spreads de-escalate and they will do because people are seeing the implementationdistributing the growth programme, that we will absolutely be able to raise all these funds in international markets. the markets are there for us. >>reporter: it is great because you have an advantage and the advantage is that you have the population behind you, your approval rating is 70%, 60% of greeks actually feel that you know, tough reforms are justified. what would you say are the specific bitter pills that you need to swallow and you know can thisreform actually be implemented? >>: the public sector is very inefficient, the public sector wage bill has got to be controlled. the taxpays has got to broaden and go after tax evaders. the pension system is not viable as it is

and we are producing a major reform in the first quarter of this year. public administration is corrupt andwe are moving to address that. these are big reforms that are long overdue that came to the front because of the crisis and sometimes the isis offers the opportunity to tackle things that you have not done in the past. >>reporter: one thing i think which needs to be said is that greece is not alone. there are other countries within europe which are facing mounting debts, including italy, spain and portugal. do you think that the architects of the euro were rushed maybe to be too inclusive? >>: i think that no. because i think that the euro has helped all of these countries stabilise their economies, have unprecedented investment and growth. if you go to greece today and remember how greece was 20 years ago you will see, it is absolutely not the same country. even if you go to greece todayand you remember how it was 5 or 6

years ago, remember how we were in 2004. greece was poised to open a new growth cycle. we were preparing the olympic games, highly successful, we were in the midst of an investment boom, an infrastructure boom, unfortunately he had failed policies that did not tackle structure problems which were there, under the surface and had to be tackled when the times weregood. they were not. so now they have to be tackled with times that are more difficult. >>reporter: can greece regain international credibility? >>: well, you know credibility is a tough commodity. you lose it easily; it's much harder to get it back. i think that a big part of your problem at the moment is the credibility deficit that we have, more even than the fiscal deficit. for example, nobody believes our data. we are moving to make the statistic service independent, we are creating a parliamentary budget office to audit accounts, we are completely overhauling the budget process, we are legislating fiscal rules,

we'll have eurostat along us in every step of the way. so we are confident that confidence which has been lost is being getting back. >>abirached: india, along with china is one of the major economic success stories of the modern world, looking set to hit near double digit growth. but that growth could be derailed by the country's poor infrastructure. to amend the problem india's minister for highways kamal nath is aiming to build 7000 kilometers of new roads a year and was at davos on the hunt for potential partners to achieve this ambitious goal >>reporter: this alpine village - blanketed with snow and home to the wor economic forum -- is a long way to come... to find answers for building a better india. >>: but that's exactly what the country's minister for road transport and highways and his delegation from the sub-continent was here to do last week in switzerland -- on the back of news that asian economies will drive global growth.

>>nath: well while we're on a growth trajectory the challenge is not only to maintain and sustain that growth. but in a vibrant democracy we must ensure inclusive growth, growth that touches all sections of society and growth in all parts of the country. >>reporter: that's why one of the burning issues among politicians and captains of industry in davos this year was india's increasing need to invest in infrastructure... if it is to achieve its growth forecasts in the next decade. >>srinivasan: infrastructure is the biggest single bottle neck we have for india's future. our rate of investment is half what we would like it to be in roads, ports, education. >>king: india is now developing at roughly the same rate as china. it's heading right towards ten percent per annum in growth. and there is no question the transport system in india is massively under supported at the moment.

so the first thing to say is anything is welcome to improve the transport sector because without this improvement that economic growth is going to be stalled. >>reporter: with traffic mushrooming by up to ten percent annually and an automotive industry growing at 12 percent -- government and big business are clearly aware of the challenges. that's why kamal nath has an ambitious plan -- to build 7,000 kilometres of new highways every year -- that's 20 kilometres a day. worth 70 billion u-s dollars over two years, it's one of the world's biggest programs of public-private partnerships. >>nath: we have the second largest road network in the world. we have 3.4 million kilometers of roads and there is a huge deficit here. roads is something that covers all parts of the country. roads impacts agriculture, industry and trade. >>reporter:

india is looking to emulate its larger neighbour china - where beijing's development of a world-class network of roads has helped fuel rampant growth. >>munjal: without the basic infrastructure we will never be able to make it. we will never be able to take off. we will probably have to be there on the ground. we need people to move across the nation. we needgoods to move across the nation. >>nath: india is the second largest producer of fruits and vegetables, 40 percent of them rot because they never reach the market place. so it impacts agriculture and when these roads move into rural india, they generate economic activity which is very important. rural purchasing power increases; so it has a very all inclusive dimension to it. >.reporter: that inclusive dimension also extends to land acquisition. it's the biggest challenge facing india'sroad builders right now. unlike china, india is painstakingly compensating

thousands of small landowners, across the country -- a democratic process that complicates and delays plans. >>mahindra: if the government gets its act right together, uses the funds which are pouring into india today to invest in infrastructure, which anyone who has been to india knows is woefully inadequate, then i think we would have found the magic mantra to really kick start growth on a higher level. >>reporter: part of nath's mission in davos... looking to attract billions of u-s dollars in foreign direct investment for india's roads. a decade ago money poured into the sub-continent's it industry - now its time for bitumen and concrete. >>srinivas: infrastructure yes, there's lots to be done in india and then there's lots of opportunity, there's asignificant focus by the current government to focus on the physical infrastructure. there are lotsof opportunities for companies to invest in to this. >>premji: i think it is absolutely crucial, because it stimulates growth, it stimulates investment, it stimulates

employment and it gives communication to villages, because these are not projects in large cities they are projects which are interconnecting small cities, interconnecting cities to cities, interconnecting villages. >>reporter: for every one 22 thousand dollars spent on rural roads in india, 163 people are lifted out of poverty, according to the world bank. this is especially important in a country of 1.2 billion people, many of whom are the rural poor. >>: yet plans are now in place for several mega-roads costing over one billion u-s dollars a piece,7,000 kilometers of expressway network could soon link up india's more remote centres. >>abraham: this should have been done ten years ago, but you know better later than never. so i am glad they are doing it at least now. but the point that i really want to emphasize here is, for long you know the assumption in a lot of poor countries has been; we are too poor to afford the infrastructure. i actually look at the causality the other way, which is,

we are poor because we lack the infrastructure. >>reporter: thousands of new roads, stretching across india look set to change the lives of millions and in the process change the face of the country. >>abirached: still to come on world business... >>: not punishing the banks but protecting the economy. we ask chairman of the house financial services committee, barney frank about the forthcoming financial regulation in the us. >>: and the sport combining snowboarding and skateboarding that is already a hit with the skating community >>: a new kind of board meeting...and the rest in just a moment on world business... >>abirached: in his state of the union address president obama claimed that the us needs a healthy financial market, but not a reckless one

to achieve economic recovery. according to barney frank, chairman of the house financial services committee, the president should be able to sign new regulation to ensure this by the spring. our executive editor alan friedman caught up with congressman frank to find out more. >>friedman: mr. frank, you have taken a strong position along with the obama administration on the question of bonuses and us banks. what's your feeling about what justice needs to be done? >>frank: well there's two issues there. well, first of all, there is the overall amount, which is wildly excessive by any standard of what i think of what's just compensation but the government is not in charge of that. we do say that the shareholders should have to vote on it. the fact is, that the board ofdirectors have proved to be pretty weak reads when it comes to standing up to the ceo and vice versa. they shine each other's shoes, very happily. so we do, in the bill that we passed give the shareholders the right to vote on that, it's to express an opinion, it's

hard to find a way to make it binding, but it's hard to think that they would ignore the opinion. beyond that there is a federal interest in discouraging the kind of bonuses that incentivize too much risk. they've had a situation which is best described as heads they win, tails they break even. they take risks with other people's money, if the risks pay off they are rewarded, if risks blow up, they suffer nothing. and in the worst case, the risks appear to have paid off in the short term, a little while longer it turns out theyhaven't and they don't even have to give back the gains. so our bill does mandate that every regulator impose restrictions against that kind of bonus. the final point is this, president obama just very sensibly said in payment for all of the assistance that banks got, during the crisis th caused,when whad to try and right the economy. it was the tarp but it was also various forms of liquidity from the federal reserve and the treasury that they are going to have to pay back about 10 billiondollars a year for the next ten years. the banks claim if we do that though, they will have

no money to lend, i wish they were lending more now. in fact, the bonus pool is many, many times that and of course money that's paid for bonuses come out of the lending pool just as much. so the sheer volume of the bonuses makes it bogus when the banks argue they can't afford higher taxation. >>friedman: politically in the united states, the surprise election of ted kennedy's successor, a republican, does that put both health care and president obama's proposal for special bank fees in jeopardy or will those pass? >>frank: yes and no. it puts health care in more jeopardy, i hope it will pass, we will keep fighting, it does make it harder but there is an awful lot of appeal there and i can't believe that every sile republican, including scott brown, including some moderate republicans as they describe themselves frommaine, that they want to go into the elections as the defenders of the absolute status quo. but on financial reform, no, i do not think that that will be stopped. even though senator brown said he was against it, i know there are republicans who will vote for it. in fact it was something the congress

initiated, when we passed the original tarp bailout in 2008, i and some other insisted that we put in there this mandate that the money all be repaid by this sort of tax so i don't think it will jeopardize that tax. >>friedman: so in a word, the tax on banks you think will be approved by the house and the senate this spring? >>frank: yes, definitely, and we will get that money and it's a, by the way, partly a way to start reducing the deficit. >>friedman: sure, and speaking of the deficit, how worried are you that with the successful obama adnistrationstimulus program that's saved the economy, nonetheless the deficits will be high and america will have serious high unemployment and high deficits for years to come? >>frank: well that's true only if we continue what i think is a very mistaken military policy. we are still in iraq, i do not know why. i was against going to iraq in the first place. if we had not gone into iraq, we could've paid for health care more than enough. the iraq war, an unnecessary war, in fact a damaging war to the us, who it cost over a trillion dollars. the us is far overextended in the military field

and if we get sensible and cut back on this military overextension then the deficit becomes manageable. and that's going to be my two sense for the next few years. >>friedman: what's your feelings about the way the asians, the europeans, the middle east, the rest of the worldis seeing the obama administration compared to the bush administration? are you feeling like thereis a better reception for the us these days? >>frank: oh, absolutely. there are some specific criticisms of president obama but i think the way people look at president obama internationally is best summed up in the words of a 20th century philosopher ofwhom i am very fond, henry youngman, and mr. youngman's great philosophical wisdom was in the question and answer, how's your wife? compared to what? and when people do compare to what, president obama looks very good.

>>reporter: what happens when you want to skateboard and snowboard at the same time? >>: you keep dreaming... >>strand: the idea for freebord actually came from a dream. i'd grown up doing a lot of skateboarding and i'd recently started snowboarding and if you do both those activities you really start to understand howthey differ. and anyone who's snowboarded before you know the freedom of motion that comes from skidding or sliding, it's just this really cool thing to experience and so the idea of having that on askateboard, i was just half asleep one morning and it just came to me. >>reporter: the concept was freebord,

neither skateboard nor snowboard, but a hybrid of both. the harvard grad was convinced that if he could get the snowboard motion onto the street people would want it. >>villanueva: we have our guys that are avid snowboarders and that are looking for something to literally mimic snowboarding and you don't have to go up to a mountain and pay lift tickets and they get it, 100%. >>reporter: freebord's six-wheels means that the 2 inner wheels act like the base of a snowboard allowing for the sliding motion while the 4 extended outer whls act as edges for carving on pavement rather than snow. foot bindings on top complete the freebord design. >>: strand started designing the first freebord in 1995 while doing a masters degree in product design at stanford university in california. but with a background in high finance at lehman brothers ratherthan building boards, it's fair to say his first efforts didn't quite hit the mark. >>strand: i look back on my early boards

and they're just a joke to me right? but you put something out there and you start building some sales and some enthusiasm and you use that momentum to go back in and redesign and keep evolving the product till you get to something that really can become the foundationof an ongoing category. and that can take years because there's so much knowledge and revisioning that has to go on. >>reporter: so he did what my entrepreneurs have done: went to work in the garage to fine tune the product andgoing into debt. by 1999, strand had started freebord manufacturing based in a warehouse in san francisco. and it's not just the board design that changed over the years... >>kendall: the average freeborder has changed a bit over time but i think if you start with a snowboarder, 16 to 24, male, somebody who's willing to try something new and different. the average freeborder thoughnow is definitely getting younger, we're seeing 12, 13, 14 year old kids on the board, we never sawthat. there is a little bit of a pioneer kind of maverick to our sport where people like to be recognized

because they are doing something new and different. >>reporter: the boards retail for $230, fairly steep for a skateboard but cheap for a snowboard but not everyoneis convinced the product can carve a niche for itself. >>campbell: they're really trying to come into a space that consumers have been skeptical of, traditionally people feel like 'hey the skateboard industry is the skateboard industry, we don't need to re-invent theskateboard. yk what's this next kooky new device coming out?' >>kendall: they don't want to see a gimmick or a toy so you need to earn the respect that you're not a gimmick or you're not a toy. and we're doing that slowly and there's definitely a lot of resistance and we're gonna have a lot of resistance for a long time. >>reporter: in 2005, freebord reached a turning point. from an annual growth rate of 5 to 10 per cent, the company suddenly hit 150% growth. freebord's secret weapon, its community of riders, became known throughthe magic of video. >>kendall: video was a huge part of 2005, youtube hasn't been around that long so all of a sudden (edit) it wasthe first time we were able to articulate

to a wider audience except for just the word of mouth which is how we were growing until then. >>reporter: now the company's biggest challenge may be its role as the lone pioneer of a brave new sport. >>campbell: they're really creating an entirely new category. this is a lot of what snowboarding went through when it was starting up early on. people don't know about it, it's not already out there. so while they're kind of a big fish in a small pond, this pond is really small and it's kind of their responsibility to grow not just the brand but to grow an entire sport. >>kendall: we're trying to develop a whole new category of board sports by ourselves. when you think about snowboarding or skateboarding, they had other companies that were all pooling their resources together to develop a category. we don't have that. >>reporter: although the recession has slowed growth to between 20 and 30 per cent, freebord has responded by selling directly to its riders who are now located in 27 countries around the world. >>: and it's the riders, both as customers and as trail blazers in this new sport, who hold the key to freebord's future. >>strand: what the riders have done, they've just taken the board so far beyond what i ever dreamed could be done in terms of riding, they're blasting

down hills at 50 miles an hour or they're doing these crazytricks, they're doing all this, they're throwing their body in harms way at every turn. the sort ofpassion and commitment that they bring to the whole company is so far beyond what i could have anticipated, it's just really fun. >>abirached: that's it for this week's world business. thanks for watching. we'll see you again at the same time next week.