October 3, 2016
It is a turning point for the Syriza-led government. After more than one year since the painful agreement on a third bailout for the country has been reached, the society and the business world are suffocating under the burden of tax hikes, lack of liquidity from the banks, weak improvement of macroeconomic factors. Unemployment has fallen around 23-24%, mainly through public-funded temporary programs or programs of life-long learning, but there is still a transition gap to make this effort take structural features, thus re-iterating the economy and the market towards generating jobs and increasing employment rate.
The reform agenda of the government is more of an orchestrated endeavor to keep the society o its feet under conditions of economic downturn. Essentially, Syriza is managing a crisis in a far better way than the previous governments had managed to, but this cannot flourish as long as the European institutions do not acknowledge that austerity programs have completely failed even before they have been implemented.
The government has given priority to healthcare sector and the protection of the most vulnerable social groups, and it has been pretty good so far despite the continuous pressure from the creditors to minimize spending. Greece is in state of humanitarian crisis and this is something creditors should finally deal with. Economic figures as well prospects for recovery can still generate hope, but in real terms, with respect to daily life, the majority of the Greek people are suffering and developing negative perspectives on the course of the domestic economy.
In this pressing context, the second review of Greece’s bailout deal should conclude by the end of October, followed by the release of €2,8 million tranche. The biggest part of this amount will be directed to the market, hoping to give a breath for the following months.
On the debt issue, May’s Eurogroup statement on the roadmap towards reprofiling national debt has to be put forth. Agreement on short- and mid-term measures has to be accelerated so that the Greek government can have something solid in its hands. The German government is delaying the discussion and the respective negotiations, aiming at controlling grievances inside CDU and CSU that see a possible debt relief as a very negative development that would trigger similar demands from other Eurozone member-states, like France, Italy, Spain and Portugal.
So far, the Greek government has been efficient in diplomacy, building alliances in the European South, but also inside the European Commission and the ESM. It takes to see how powerful conservative German policy remains, especially as the county enters into political campaigning towards presidential elections of autumn 2017 and Chancellor Merkel is no more as powerful as she used to be.
Find Dimitris Rapidis on Twitter: @rapidisDimitris Rapidis