A View from Apokoronas — In a TV interview just before Christmas, the European Commission’s chief spokesman and former New Democracy MEP Margaritis Schinas, said that Greece is turning a page and that this is “because of the trust built that has been built up in Greece-EU relations over the last 7-8 years. In August, 2018, the bailout memorandum as we know it ends, and it is the first time since 2009 that an adjustment programme will have been completed’’ Schinas added, offering a resounding statement of support to the present government.
This statement by the commissioner is typical of the recent upsurge of supporting comments made by high ranking EU officials, representatives of the lenders and European country leaders who replaced overt hostility towards ‘the leftist’ Mr Tsipras with praise for his ‘achievements’, acknowledging his ‘efforts to comply’ with the imposed ‘reforms’ instead of resisting, or trying to delay the inevitable, as his predecessors had done in the past.
What a difference the last two years have made. The EU, faced with a whole new set of problems have developed a completely new attitude towards the same Greek government that only two years ago they were trying to depose by withholding bank liquidity credit, forcing capital controls and threatening it with uncontrolled bankruptcy.
Confidence is indeed returning and with it the prospect of big investments from Europe and beyond seeking good returns for their money . But the work of the government has not yet finished, by any means.
The final evaluation before Greece’s exits the current bailout programme needs to see the remaining 80 to 100 ‘prior actions’ completed. These mostly structural reforms, some of which were agreed back in 2010 under the terms of the first bailout memorandum but were never implemented, while the fiscal measures demanded for the next two years have already been approved in advance by the Greek parliament.
The remaining actions that have to be implemented before Greece can return to full market financing of its huge loans at the end of the current support programme, relate to privatisations, bad loan management, the opening up of professions and labour legislation measures that will make it easier for big investors to maximise profits on privatised assets.
The welcoming of Greece back into the money markets with the support of Europe is a bit ironic. It is a political decision not dissimilar to the decision of Europe to admit Greece in the single currency in the first place, being fully aware of the true state of country’s finances- even though they later blamed Athens for deception. Only this time the statistics are supplied by the lenders themselves.
All the same, it is difficult to understand how a country that in 2009 was excluded from the markets because its debt reached 104% of its GDP, is now considered a good bet after seven years of miscalculating growth rates by the lenders, the imposition of recessive policies by the advocates of austerity, a level of national debt reaching 180% of the country’s GDP and no willingness to re discuss the offer of debt reduction made back in 2012. And all that at the end of seven years of saddling Greek tax payers with more loans to rescue – as outgoing Eurogroup chief Jeroen Dijsselbloem admitted – European banks.
The political decision to welcome Greece back into the world of money markets by labelling its debt and the levels of surplus targets sustainable is not only convenient for the lenders who can now shelve the issue of debt reduction, but it also shows that perhaps the path the Greek government chose, is probably the second best option for a country condemned to a lifetime of austerity by Europe’s political hostility and ‘loony economics’ that argue that austerity brings prosperity and growth.
The best option, in my opinion, would have been either an early bankruptcy and Grexit in 2010 or, later in 2015, a break from the euro, when Wolfgang Schaeuble offered (on behalf of the institutions?) a generous loan reduction just to get rid of the unruly lefty Greeks.
That was not to be however, as the assessment of the mood of the country by the government was that the vast majority of the population wanted to remain in the euro ‘at any cost’ – even though the only evidence for that came from opinion polls – with opposition politicians at the time urging the government to capitulate immediately to the lenders’ unreasonable demands without negotiation, even though when they were in power themselves they had been avoiding the implementation of unpopular measures.
The cost of staying in the euro was never adequately discussed, other than to simply repeat -over and over – that life with a national currency would be ‘even worse’. Perhaps it would have been for those making these statements.
The effects of the the internal devaluation within the Euro, in terms of impoverishment and reduction in the standards of living for vast majority of the population were never compared to the impact of a devaluation of a new national currency, as there was never any discussion allowed by the political classes. But it is a decision for which the Greek taxpayers will have to carry on paying for many years – decades – to come.
But now, with the government well down the path of quick implementation of the lenders demands, there is no reason to suspect that Athens will hold back to its commitment to implement the remaining structural changes, with priority given to reforms aimed at benefiting large investors and corporate financial interests.
And considering that the bulk of the corporate foreign investments were made in the burgeoning tourist industry, these changes will, more than likely, succeed in turning Greece into a nation of part time waiters, while the more skilled are seeking employment elsewhere in Europe.
As the end of the programme approaches, now that the european lenders had their fill of Greek national assets, it is time for Greek governments to turn their attention to the sort of reforms the lenders did not demand. Things that the lender supervisors have never forced Greek governments to reform – They never said, for example, “deal with bureaucracy or we will close down your banks”.
But under a looser supervision regime, there is an opportunity to start implementing the reforms that most of the people in the country crave, that is the simplification of a labyrinthine and often outdated administrative law that encourages bureaucracy. A fair taxation system. Investments in services. Dealing with corruption and tax evasion. A speedier legal system. Policies that will encourage small business startups and small investors.
And there was probably never, in this country’s history, a better time to start on these reforms that will improve the everyday reality of the Greek citizens.
Let us hope that this moment will not go down in history as another missed opportunity to to improve the lives of the people of this country.
Y Xamonakis
