ATHENS – Two years after he was elected and ran into a firestorm of criticism, Greek Prime Minister Antonis Samaras had been enjoying a break in the social unrest that brought down his predecessor, but even while the country shows signs of recovery, there are signs of rising trouble again.
Outwardly, there is little of the sizzling tension that erupted into protests, strikes and riots after then-Premier and previous PASOK Socialist leader George Papandreou accepted the first of what would be two bailouts of 240 billion euros ($327 billion) from international lenders, and the devastating austerity measures that came with them.
In a detailed analysis, The Financial Times noted that Greece seems back to normal, by most appearances, with no riots in Syntagma Square across from the Parliament, and record amounts of tourists pouring in this summer for a second straight year.
There are still protests – such as the fired cleaning ladies demonstrating outside the Finance Ministry – and occasional strikes by different sectors of workers, and Samaras’ coalition government of his New Democracy Conservatives and PASOK faces court challenges overruling the pay cuts, tax hikes, slashed pensions and worker firings he imposed on orders of the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB).
After contracting 25 per cent since early 2008, the economy has stabilized and might show miniscule growth later this year or next. The government had a 1.5 billion euro primary surplus and floated a five-year bond for three billion euros, the first since the bailouts began four years ago.
Beneath the calm, however, fears remain about the future of the country, which two years ago threatened the collapse of the Eurozone. “Risks have diminished substantially but a new constellation of economic and political risks may threaten reform implementation and economic recovery,” Lucas Papademos, prime minister from November 2011 until April 2012 told FT.
Sharp falls in incomes and “extraordinarily high” unemployment “have provided support to political forces on the extreme right and radical left”, he adds. “The greatly improved capital market conditions are not yet reflected in the Greek economy.”
The government is still locked in debate with the Troika over more than 600 unfinished reforms and a one billion euro installment is being held up until it’s settled. Samaras also wants debt relief from the money Greece borrowed as the debt still remains 174 percent of Gross Domestic Product and 315 billion euros, ($430 billion).
The extremist Golden Dawn party has seen all its 18 lawmakers arrested or locked up pending a trial in November on charges of running a criminal gang but still remains third in popularity on the back of an platform opposed to austerity as well as hordes of immigrants still pouring into the country in search of asylum or a jumping-off point to reach other European Union countries friendlier to them.
Investors are showing greater interest – if only because Greece is still paying higher interest than most municipal investors amid uncertainty over its political and social unrest re-emerging. Politics is still a confrontational sport in Greece second only to tax evasion.
“With such uncertainty, the worry is that financial markets have mispriced Greece. Hedge funds profited initially when the country neared collapse. But demand for Greek debt this year has been inflated by global investors desperate to eke out yields, even by just a few basis points, in an era of historically low official interest rates,” FT noted.
Other critical problems remain, including still-runaway corruption even as the Samaras Administration moves to lessen penalties for those caught with their hands in municipal or state enterprise coffers.
“The reforms have failed to tackle vested interests, such as trade unions, monopoly suppliers and incumbents, which have opposed steps to free up and diversify the highly regulated economy. Without reform, many critics believe Greece will fail to attract the foreign investment that will be essential to making any recovery sustainable,” FT reported.
Earlier this year, the OECD made more than 300 recommendations on ways to boost competition. Among the damaging anomalies it identified, for example, were rules making it impossible for foreign dairies to supply milk in time for it to be sold as “fresh,” making Greeks pay more for fresh milk than other Europeans, especially amid criticism the dairies operate a cartel and collude to set prices – which are rising in a crisis.
There are good signs too. China is investing big and that country’s top leaders came to meet with Samaras and tour prospective acquisitions, and is stepping up its hold on the port of Piraeus, which it has transformed into a draw for countries wanting to use Greece to get into the EU.
But the banks are still very weak and needed 50 billion euros from the bailouts to stay solvent, and still aren’t lending while demanding Greeks crushed by austerity meet their obligations – apart from New Democracy and PASOK which got 250 million euros in loans that aren’t being paid back.
But perhaps the biggest test comes in February of 2015, more than a year ahead of the next scheduled national elections when the coalition runs head-on into the major opposition Coalition of the Radical Left (SYRIZA) which threatens to block the two-thirds majority needed to elect new President.
If Greece’s fractious political parties cannot agree on a candidate, parliamentary elections will follow. If that happens, the anti-austerity SYRIZA, could become the biggest party and perhaps form a new government.
The post A Summer Break, But An Uneasy Calm Still Hangs Over Greece appeared first on The National Herald.Source: The National Herald