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The Rejuvenation of the Greek Economy: The Path to Growth


The Economic Forum took place in the King George Hotel located at Syntagma Square of Athens on Tuesday, October 7, 2014. There was a special tension in the air for when Venizelos, Deputy Prime Minister and Foreign Affairs Minister spoke, he mentioned immediately what was primarily on his and everyone elses' mind. For when he had agreed to speak at the Forum, he had not imagined this to be in the week when a vote of confidence was to take place in Parliament.

That vote took place a few days after the Forum, that is on Friday, 10th of October 2014. The government survived since the outcome was 155 votes for the ruling coalition and 131 votes against. However, the real significance of the votes cast has to be seen in the light of what lies ahead. Within the next four month a new president for the Republic has to be voted into office. As this is only possible, if the ruling government can muster at least 180 votes, the vote of confidence proved that the ruling coalition cannot count on the 27 independent votes. If the government fails to muster the necessary 180 plus votes, it means automatically that general elections will have to be held.

With Syriza, the party of the opposition under the leadership of Alexis Tsipras, knocking so to speak at the door, there was to be noticed unease amongst the Ministers of the current government when they spoke about whether or not Greece is about to exit the crisis.

Hence given the high prospects of a change in government come the next general elections, this discussion about the economy of Greece came at a crucial turning point. As a matter of interest, the assessment made in the Forum can be defined best by ending up at the question, whether or not the Greek state together with the Greek economy can finally stand up on its feet? The last five years have been extremely hard on certain sections of Greek society and to which the Ministers speaking at the Forum referred to only as the sacrifice the people have made. They did not go far enough to admit that the crude measures applied as part of the austerity policy were not only extremely unjust, but have made things far worse than need to be. Thus the prospects for the future have to be scructinized, if they are really as positive and substantial, as some of the Ministers claim.

The various speeches made clear that exit from the crisis has but one meaning, namely to opt out of any dependency upon the IMF and therefore to become free from the scrutiny of the Troika. No economic data can really be convincing enough to be able to claim that the Greek economy is out of the crisis and on the way to growth. Likewise not everyone believes that Greece is really out of the worst. Rather the entire motivation can be best understood at best as a wish to get free of this outside interference. Greek pride has been deeply wounded by this need to comply to the demands of foreign lenders. Hence the claim that the Greek economy is about to exit out of the crisis can be equated and best understood as a kind of recoil of national temperament. It is a wish which goes along with a good portion of illusion fostered especially by Syriza, the opposition party, that a new deal can be struck and even a further hair cut may be possible, so as to reduce the Greek debt. Consequently a decisive psychological moment is sought by the politicians rather than something concrete. 

That illusions can make some wishes real is no doubt a part of the reverse to a self fulfilling prophecy that everything shall only get worse. Optimism has a role to play in any economy, but to the extent that is justified in the Greek case, here some doubt may be more of an act of prudence. After all the Greek debt stands now higher than what it was in 2009, namely around 178% of the GNP, so that only the need to repay that debt has been postponed to a largely unknown future. And it is being done by clever accounting tricks and econometrical tricks working with all kinds of indicators so that the public still does not know the true extent of the crisis.

Given the prospects of a political change as to which party will come into power in near future, it was said repeatedly at the Economic Forum, that uncertainty is something which business does not like. At the same time, they call for changes or rather reforms. If the political establishment has been unable to deliver that, it would be high time to alter that. Otherwise the wish for political stability could easily translate itself into a seeming continuity of the current government. It would further cement only all the faults in the system most of which are caused by bad practices and abuse of privileges granted by dubious forms of understanding power as the legal form of governance. Many things have not been corrected or changed since the start of the crisis at the end of 2009. As a matter of fact the average voter believes nothing substantial has change and thus they do not believe the current political elite will ever be able to reform the way politics and the economy work. They are anyhow too much intermeshed.  

If business interests prevail and entrepreneurs continue to support the Conservative forces, it will only highten the risk for not only unjust measures being applied in future. These interests will harm Greek society due to a focus on such mega projects which supersede the life taking place at local level while mistakes shall be made due to not having succeeded in institutionalizing a 'continuity of learning'. The latter stands as a term for cultural adaptation needed to be continued if present limitations are overcome and therefore future needs can be met. It is not sufficient to say there is an aeging society while the youth emigrates, for that will leave the acute situation of unemployed youth and therefore a dependency from the aged who have still a pension in an even worse situation than now. For what happens to that youth when the elderly people all die out? 

Once despair grips many in society, then it means despite of having gone through a crisis, nothing has been altered to give some prospects for future generations to find their way. Instead, the youth shall be over exposed to the most dangerous way of masking reality, namely to normalize the abnormal and therefore to be out of tune with what would constitute a liveable life.

Hatto Fischer


Post-script: repeatedly it is stated that Greece shall only recover, provided global and European developments remain positive so as to allow an increase in exports from Greece. Come November and the EU Commission forecasts dismal prospects for 2015 and 2016.

European Commission cuts forecasts: Reuters

The European Commission released its eagerly anticipated economic forecasts today, and the news isn't good. According to Reuters' Robin Emmott, the report says that the Eurozone will need another year before it is able to post even modest growth numbers, and inflation is expected to remain low (with high unemployment) until 2016. The biggest hindrances to the Continental economy came from France and Italy, but commissioner Pierre Moscovic told press that "there is no single and simple answer." Though the data do not signal a return into outright recession, the indicators from Europe remain fairly dismal.

Read full article at Reuters


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