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Gloomy forecasts for Greece in 2016

22 December 2015 / 22:12:26  GRReporter
2813 reads

Anastasia Balezdrova

The year 2015 that is ending was filled with many, dramatic events for Greece. The radical left SYRIZA party came to power in January and managed to turn into votes its longstanding opposition to the bailouts and the policy of austerity.

It formed, and quickly at that, a surprising coalition with the far right and populist party Independent Greeks and began its opposition to creditors, which lasted several months and brought Greece a step away from exiting the euro zone and even the European Union. In mid-July Alexis Tsipras signed the third bailout to the regret of the majority of Greek voters who voted "no" in the referendum convened by his government on 5 July. Meanwhile, Greek banks closed, capital controls were introduced, and Greeks spent two weeks in queues before ATMs.

The signing of the third memorandum caused a split in SYRIZA but the party hardliners refused to support it in parliament and formed a new party. Immediately afterwards Tsipras called new parliamentary elections and won them again, but with a lower rate. Three months later, his parliamentary majority fell to 153 members in the 300-seat Greek parliament. Obviously this is hampering the Greek Prime Minister who has postponed to the first months of 2016 the voting on the most painful reforms, namely of the pension system and the introduction of taxes on farmers.

In an interview with Greek writer and political analyst Sakis Moumtzis, GRReporter presents the hard balance of the past year and its forecast for the uncertain future.

Mr. Moumtzis, the past year was very dramatic and eventful. What were the positive things in it?

A positive fact is certainly the collapse of the confrontation between the supporters and opponents of memoranda (the bailouts to the Greek economy - author’s note). The signing of the third, left memorandum by SYRIZA has made clear to the majority of Greek society that the notorious "other path" does not exist. The memorandum was, and is, the only choice. All who argued that there were other options were disproved. When they tried to implement their ideas, the country faced the danger of exiting the euro zone. They signed the memorandum and this dividing line disappeared. Now we have to see how the arrangements will be implemented.

That was the only positive event of the past year. There were many negative ones.

The government of SYRIZA and Independent Greeks has survived, despite the occurrence of all those things you described. Do you think it will be able to survive in the coming year too?

I do not think it will be able to do so. There are two very serious issues before it, which need to be resolved, namely the pension reform and taxation of farmers. The government cannot deal with them with its majority of 153 MPs. It will either ask for support from the pro-European opposition or announce elections.

I consider possible the first of these two options because the convening of elections would mean leaving the euro zone, as stated by EU Commissioner for Monetary Affairs Pierre Moscovici. I.e. Greece's creditors that are also its partners are no longer tolerating other similar solutions, which take the form of extortions.

Therefore, in order for Alexis Tsipras to secure the voting on these bills, he would be forced to seek support from the pro-European parties. What they would want in return is the subject of a major discussion.

How would you comment on what is happening in New Democracy? What do you expect 2016 to bring to it?

The course of the first round of the party elections and especially the results were very interesting. My opinion was that holding elections at this point was not the right step. Evangelos Meimarakis should have remained an interim leader and the new leader should have been elected in May, after the congress.

But in the end, the "blue" preferred to organize elections at this point for a very specific reason, namely that the lack of opposition in recent months actually provided support to the government. There was a massive participation in the elections and although the result is apparently not clear, in my opinion it is actually clear that Evangelos Meimarakis is holding the lead, due to the support from former Prime Minister Kostas Karamanlis.

On the political level, this means that we will surely witness an "exposure" of New Democracy to the government of SYRIZA and Independent Greeks but it is not yet clear in what form this could happen. I.e. whether it will be political support as a result of an agreement or if it will be support for some voting in parliament.

Things would have been quite different if one of the contenders for leadership of New Democracy, namely Adonis Georgiadis, had won about 20-22% of votes, which would have made clear that the dynamic party wing had a higher potential than the 11% it won. I am saying this because Meimarakis’ opponent Kyriakos Mitsotakis is a moderate politician and he is not a supporter of acute confrontation and polarization.

We must not forget the fact that the European People's Party is calling for support for Alexis Tsipras. Creditors have provided extremely large sums to Greece and they see no other solution on the horizon. Therefore, there should be support for Tsipras in order for him to deal with the situation.

Do you believe that New Democracy will split if Evangelos Meimarakis wins the second round of party elections?

No, I do not think so. Such a possibility would have existed if his opponents had been Apostolos Tzitzikostas or Adonis Georgiadis. He himself knew that the majority of New Democracy could not support his nomination. He just wanted to show his position about what was happening. In the case of Apostolos Tzitzikostas, however, there was a real probability of him running in the second round of elections and fighting for leadership. If things had developed in this direction, the party would have been at risk of splitting. But this danger does not exist with Meimarakis in the lead.

Would it be possible for Kyriakos Mitsotakis to separate from New Democracy and establish a new party if he lost the elections?

He would do so only if expelled from New Democracy. But Meimarakis is not such a person. He is an experienced politician, a man of balance and there is no reason to remove him. Under these conditions, Kyriakos Mitsotakis would hardly resort to such an action. His last name is too "heavy" for such a thing. In addition, he is aware that on the basis of age, he is the next potential leader of New Democracy. He anyway is number two in the party at present.

What is the political subtext of the sale of Finansbank to Qatar National Bank by the National Bank of Greece? How do you expect the Greek economy to develop in 2016?

This action was necessary. As for the buyer, apparently Qatar had submitted a better offer. Anyway, the emirate has investments in Greece. The National Bank of Greece will receive a considerable amount of money. Especially considering the fact that Finansbank has brought revenues to the National Bank of Greece from 2012 until the present day. Buying it had become the object of attacks by PASOK and the party threatened with a criminal persecution and trial Governor of the Bank at the time Thassos Arapoglou. Actually today this bank saved the National Bank of Greece.

I believe that the sale is in the right direction, because the situation in the Turkish economy is not clear. I.e. Finansbank has a specific price today but we do not know what it will be after a few months, in view of the constantly deteriorating relations between Turkey and Russia.

Therefore, selling it was a successful action that filled the coffers of the National Bank of Greece in an extremely difficult economic environment in Greece. Privatizations are carried out very slowly and I am very reserved about the implementation of the already signed agreement for the privatization of regional airports. I think that various bureaucratic "traps" will be placed in order to slow down this process. The reason is that no SYRIZA member wants the agreement and the local authorities are unhappy because they will lose their power in this way. I think that the battle will be serious, especially for airports. As Minister of Employment, Dimitris Repas also signed the decisions on the liberalization of various professions but did not issue the relevant ministerial decisions afterwards, thus simply not applying them. Greece has a world patent for such things and creditors already know it.

Is this not a contradictory position of creditors - to demand support for Tsipras, although his government obviously does not want to implement the arrangements?

They are pressing the opposition to support him and on the other hand, they are pressing him to implement them. I guess this behaviour is distracting them, namely to sign commitments and then to return to Greece, saying that he has been blackmailed and a coup against Greece has been carried out. It is beyond their rational logic. In fact, they are aware that they have against themselves not only SYRIZA but also an entire system that is totally irrational.

Under these conditions, how will the Greek economy develop?

The problem in Greece is not economic but political. If the intervention in the economy ceases and it is left to freely develop, exports and tourism will start functioning and revenues from maritime transport, which suffered from capital controls, will be restored. Thus the economy will gradually develop.

But the main issue is to complete privatizations. Not for the revenues to the state funds, but above all for the investments that buyers will make. For example, the railways must be sold not for one but for half a euro so that they be modernized and operated as modern commercial rail transportation. But the government is not interested in this. It wants the railways to continue to be a state-owned company where trade unionists are in command, arranging appointments of the clients of the political system. This applies to all state sites and companies. Indicative is the example of the former Athens airport in Elliniko, which from "the best site in the Mediterranean" is becoming a migrant camp. There are prospects but there is no desire. That is why I am saying that the Greek economy has dynamics but the problem is political.

Do you think that what has been happening in recent weeks is a good reason to assume that the EU and Greece have found the right solution to the refugee crisis?

This problem has a wide scope and I would say that there are no right and wrong ways to resolve it. Solving it is certainly very difficult because we are talking about thousands, millions of people and most of them are in poor condition. And in this situation, those who really are refugees and those who are just migrants must be ‘filtered out’ as well as who of them are terrorists and how many they are. Because we see that even 10 people are enough to cause major problems.

Germany showed generosity by receiving a very large number of refugees but this caused serious reactions inside the country. Angela Merkel is being criticized for this decision even by her own party. On the other hand, those countries that are at the core around Germany, namely Poland, Hungary and others have closed their borders.

And here we must note the responsibility of the first government of SYRIZA and Independent Greeks (from January to September), which in fact invited these people, implying that Greece's borders were open and the country was a place of reception. Thus, there was the phenomenon of people from Morocco and Tunisia going a long way round to enter Greece instead of moving to Europe via Spain or Italy. In addition, we must not forget that the civil war in Syria started in 2011-2012. But until the beginning of this year, there was no such influx of refugees. This means that a signal has been sent that these people have received and they have begun to arrive in Greece. Someone should be politically accountable for this.

Greek society has suffered a lot over the past year. Incomes have shrunk, taxes have increased, the country is politically and economically unstable. Is society ripe for reforms?

No, not at all. Greek society is not united. It is divided into two - the society of the state sector and the society of the private sector. The latter is in a state of uncertainty, in very difficult conditions and, most importantly, the people who have jobs, whether they have their own business or if they are employees, do not know whether this job will exist the next day or month. While those employed in the public sector are following a common practice - they are protesting and the only thing that is happening is the cutting of their very high salaries by 150-200 euro.

The big problem, however, is pensions and the major "battle" will take place precisely in connection with this issue. They are ‘enclosed’ behind various legal orders and mostly behind the decisions of the Supreme Administrative Court that defined pension cuts as illegal. Currently, the state budget is financing the payment of pensions with 14 billion euro a year, which is threatening the country's economy. Pensions of about 3-4,000 euro are still paid even today. And so as not to affect retirees from state-owned enterprises, state-owned banks, the military and judges the government is now preparing to cut pensions amounting to 800 euro.

Greek society is segmented and its privileged parts do not want to lose their privileges. These people are selfish. For example, a pensioner who receives 1,500 euro per month does not want his or her pension to be cut by 200 euro with which the state could open a job position but prefers to take the money and give it to his or her unemployed grandson/granddaughter.

As I said, the economy of Greece requires a political solution to implement privatizations, and freedom from state intervention. Thus, it will be able to recover within one year. They are not doing this however. I do not mean only the current government but the entire political system.

Of course, it is not only the politicians’ fault but the citizens’ too. When farmers are refusing to pay taxes, pensioners with high pensions are refusing to forfeit a portion of them, and total chaos is reigning in universities that is not irritating university professors, then we are talking about a sick society.

All this is driving young and better-educated people to go abroad to fulfil themselves. In the years to come Greece will be society of old people, devoid of any productive force. The bad thing is that no party is turning to address this problem. Its other side is that the people with the best qualifications and best recommendations are going abroad and the mediocre are staying here. Society and economy are not built that way.

Tags: PoliticsEconomicsGreeceReformsPrivatizationRefugee crisisForecast for 2016Sakis Moumtzis
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