A Country Under Pressure: Looking For A Way Out …

• July 7th, 2012
• Posted by EUEditor

COMMENTARY: It can seen as a great squeeze on a vulnerable country: a credit squeeze, outside demands on how the country’s finances must be run, pressure from mass immigration, weakening economic production, internal divisions over political ideology.

By Lee Duffield and Fallon Smith.

IN THE LAP OF THE GODS

What would the ancient gods have thought of it all; not that they were any strangers to tragedy, and the balm of love. The classic thinkers? Now would be a  time to be led, and nourished by questions from Professor Socrates of Athens University; Prof. Plato might have frowned on modern ideas of state-craft, and proposed some truly dramatic solutions.

But, in truth, whatever help and intervention comes from outside, Greek people today recognise and insist that in the end they must deal with this crisis on their own resources, in their own  terms.

TALK OF OPTIMISM

They have elected a government that puts together former political opponents, to try to forge a consensus approach, and government leaders are this week proclaiming some optimism about how it will go.

The Finance Minister, Yannis Stournaras, comes from New Democracy party (Nea Demokratia), centre-right in philosophy; and he says the government program is creating achievable goals.

It calls for, among other thing:

1.    Increased foreign investment in Greece
2.    Investigating the possibilities of locating and exporting natural resources
3.    Investigating the possibilities of selling government assets
4.    Investing money, and courting overseas investment in the tourism and maritime industries which already underpin the Greek economy.

Mr Stournaras says this Government must succeed because for Greece “there is no alternative”.

TROIKA UNCONVINCED

His proposal is hinged on the government being able to implement its plans in collaboration with the “Troika”, the group of institutions that have been bank-rolling Greece in its crisis over sovereign debt:- the European Commission, the European Central Bank, and the International Monetary Fund.

Adding to the headaches, those bodies are saying loudly, they have yet to be convinced.

Their latest issue of guarantee funds designed to give Greece access to affordable rates for state borrowing, €10-billion, has been delayed, as is said in Athens, by “bureaucratic red tape”.

To hear officials of the Troika tell it, they have yet to be satisfied that the government in Athens has completed enough of its undertakings to them; such as, a cutting of numbers in the public service, viewed by these auditors as unaffordably large and a field of wasteful political patronage.

AGREEING ON “POSITIVES”

There is better agreement however on what might be called the “good” aspects of the EU-IMF debt package for Greece, a set of measures other than the financial guarantees.

One is a concerted effort to get Greece compliant with requirements for the issue of more Structural Funds from Brussels. These funds have been a highly effective way for smaller and weaker economies to catch up with the healthy economic and living infrastructure of the larger ones. A country like Germany, or Britain, will contribute more to the European Union than it takes out; one like Ireland or Portugal, will contribute less than they take out, as they take delivery of structural funds. In both those countries, money used for projects like a telecommunications system or highways created pocket economic miracles in the past.

In another case, assistance is being offered for deregulation, where controls are seen to be blocking productivity, as with the complex licensing of road haulage operators, causing impediments for farmers wanting to get their produce to market.

IMMEDIATE MOVES

Mr Stournaras, the Finance Minister, has affirmed that semi-trailers will be immediately on the policy agenda.

That agenda also includes an immediate quest for big money, to now build on the experience of the tourist industry, and its invaluable resources from Mother Nature and  the creative minds of the ancients.

In that area, with already 100000 visitors each year from Australia,  it’s planned to entice still more people to make the journey from the other end of the Earth.

Privatisation is a prospect; the port of Piraeus, referred to by Ministers as a “great port at the heart of Southern Europe”, is effectively up for sale; along with the railways.

To make it tasty, Nea Demokratia wants to ditch the present tax system, which consistently fails to bring in enough revenue for the government’s needs, and set up a well-managed flat tax, at 15%.

Greek taxpayers, or perhaps tax evaders, mostly declare they overlook paying their dues, because the government does nothing for them – a vicious cycle.

SELL-OFF OF ASSETS

This week the government was looking at plans to review the actual title deeds on government properties, to clean up a messy situation and get certain assets into shape, suitable for a sale.

A sell-off of public assets, if it does not degenerate into a fire sale, would bring in a huge inflow of badly needed money, but with it, more pressures, adding to the squeeze: investors from Beijing or Moscow, as well as the United States or the EU, will impose their own demands.

Adding to all that, one senior government figure this week issued a reminder, and a warning: any reform program will have to attack the problem of official corruption, a well dug-in culture of the peddling of influence.

Likewise, the “grey economy”, then might start to recede: as an EU member, Greece might see less of doctors, for instance, collecting an extra fee in cash, in  the hospitals; not to mention tradesmen, accountants, many others.

A LONG WAY – IN A HURRY

It is a long way to go in a hurry.

The Greek migraine does not lend itself to rapid solution by way of a government program and technocratic restructuring of the economy.

The political system has had an enormous shock.

The great political party of the Papandreou family, Pasok, the “party of government” since the fall of military usurpers in government (1967-74), and before, is reduced to a rump in parliament – a minority group in the coalition playing second fiddle to Nea Demokratia.

NEW FORCE ON THE LEFT

To the left, a new radical movement, Syriza, has blossomed in size, now forming  the parliamentary opposition.

In the arithmetic of the election results last month, it can claim a majority, or at least a very strong plurality of the popular vote.

It will block any programs where it can, if they promise to further undermine the standard of living of the people; and as that party will see it, undermine their dignity as well.

Trade unions also are committed to defending the interests of their members, both long term, and in response to any immediate changes that may harm them.

In Athens this week, there’s a general expectation that as government actions take hold, resistance will begin in earnest in the Autumn, with the prospect of strikes and serious protest in the Wintry streets, as 2012 draws to a close.

ADD MORE TROUBLES

Other troubles add to the squeeze.

Greece has 1.5-million immigrants with many more arriving from outside of Europe; most are poor; there is stress and strain, including the advance of the Golden Dawn –  nationalists on the extreme right wing, getting unprecedented support out of public feeling against this heavy tax of immigration.

Greece has an image problem that small business operators, politicians and the “man in the street” blame on international news media.

Reporting of street disturbances is blamed for another slow year for tourism this Summer; many people scared away by the idea of getting caught up in a conflict. News media are being urged to explain more; to remember to mention the positives.

IN TROUBLE, BROKE, BUT POOR?

Greece used to be a poor country, but today it is not.

Said one senior overseas diplomat in Athens this week: “It is not Somalia; they have no money right now; the only source for the government to service debt is the EU package; but still it is an OECD country with a fairly good standard of living, and rated among the 30-to-40 main economies.”

Keeping up with the rest of the EU may be a tough haul, but when asked it they should drop the Euro currency, or even leave the EU, over 80% of the public say “no”.

This is after all a part of Europe, not at the fringes of the world.

Reference

ND Party, Athens, “National Plan for Exiting the Crisis”,  excerpts from the presentation by the President of Nea Demokratia, Antonis Samaras, Chamber of Commerce and Small Industry, 31.5.12.

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