The Guardian — In the long and winding road of Greek debt drama, disappointment and hope have been the alternating emotions that every government has faced. With the nation’s crisis no nearer to being resolved than when it erupted seven years ago, negotiations with creditors at another critical juncture and Europe engulfed in uncertainty, the need for hope has never been greater.
“What Greece needs is a shock of growth,” the country’s deputy prime minister Yannis Dragasakis told the Guardian ahead of a crucial cabinet meeting on Monday. “We will meet to discuss a new growth strategy that will focus solely on boosting investment and reducing unemployment to pre-crisis levels, that is to say 8% in the next 10 years.”
The government in Athens is acutely aware that the public mood is darkening. On Sunday, six out of 10 Greeks said they did not believe the crisis would be over in the next decade, according to research released by the Dianeosis thinktank. Unemployment at 23% – and close to 50% amongst Greek youth – is by far the greatest obstacle to optimism.
“Of course no one knows what will happen in Europe after Brexit and after the election of [US president] Trump,” said Dragasakis, speaking on the sidelines of the annual Delphi economic forum. “But the positive scenario for Greece is also positive for Europe. And for that to happen we have to say ‘enough with austerity’.”
In navigating the country’s economic collapse, every one of Athens’ post-crisis governments has at some point attempted to change the narrative by diverting attention to development and growth. But the latest shift comes amid evidence that prime minister Alexis Tsipras’s two-party administration has gone a step further, approaching the World Bank for a €3bn (£2.6bn) loan to finance employment policies and programmes.
The move would highlight the desperation of a government tackling ever-growing poverty rates. Last week, the Cologne Institute for Economic Research said poverty in thrice-bailed out Greece had jumped 40% between 2008 and 2015, by far the biggest leap of any European country.
Tsipras has been told he will have to enforce labour market reforms and further pension and income tax cuts if Greece is to realistically achieve a primary surplus of 3.5% – before interest payments are taken into account – once its current rescue programme expires in August 2018. The country faces debt repayments of over €7bn in July and with its coffers near empty would be unable to avert default – and inevitable euro exit – if additional loans weren’t forthcoming.
“We will have to compromise,” Dragasakis admitted. “Even if such demands are totally irrational,” he said, adding that Greece’s real problem was that it was primarily caught up in an ugly dispute between its lenders over what to do with a debt load close to 180% of GDP. The IMF has projected the pile will reach an “explosive” 275% of output if not relieved – a move that Germany, the biggest provider of bailout funds, refuses steadfastly to agree to.
“What we need is a masterplan and a vision to get out of this crisis,” said Nikos Xydakis, the former European affairs minister who is now parliamentary spokesman for the ruling Syriza party. “A masterplan in financial terms but also a vision for a new identity of Greeks once this crisis ends.”
