Greece faces the end of the rescue plan

The ruins of ancient Greece have come to symbolize astronomical debt with bailouts included, 450 reforms, 4 governments in 8 years and austerity unimaginable in the modern world.

But cautiously, and despite obligations to the euro zone beyond 2060, the Greeks and Europe are ready to chart a new course, after what seems like an endless saga. In 2009, Greece announced that its deficit was higher than declared, prompting the euro zone and the International Monetary Fund to launch an initial bailout for reforms that sparked protests for months. In 2011, private creditors were forced to reduce Greek debt by 50%, which was followed by the first of four changes of government. The second bailout came in 2012 with two more executive changes. The latter have implemented severe austerity measures, triggering new protests. The left-wing Syriza party eventually succeeded in forming a government and introduced capital controls. Despite the fact that 61% of Greeks voted against the reforms in a referendum, Syriza agreed to the terms of a third bailout. In 2017, the IMF approved an agreement and the European Commission recommended the end of the program. After heated debates, the Eurogroup accepted the end of the program for August 20, 2018.

To get out of the bailout, this government carried out continuous reforms and achieved quite large budget surpluses. To achieve this, in a country where the unemployment rate is high, taxes must remain high, which is not attractive to foreign investors, who are essential for growth and job creation.

The reality of Greek companies

Greek maritime transport continues to occupy the first position in the world, despite the turbulence of the long economic crisis. Los navieros griegos controlan más de la cuarta parte de la flota mundial de petroleros de crudo, casi una de cada cuatro barcos de la flota mundial de graneleros de cargo seca y algo más del 15% de la flota mundial de buques cisterna para químicos y otros products. In 2017, maritime trade increased by almost 17% compared to the previous year, and is estimated at around 9,140 million euros.

The data for such an important sector for the Greek economy as maritime transport is truly impressive. Despite the fact that the Greeks represent only 0.15% of the world’s population, the ships that carry 20% of the world’s maritime trade are under Hellenic control. However, the shipping industry, suppliers and Greek society in general continue to face serious problems due to excessive taxation.

The president of the Greek Union of Merchant Marine Engineers, Athanasios Evangelakis, is not optimistic that the problems generated by the crisis will be solved after the end of the rescue programs: “Will there be a repeal of all this, of the anti-union laws of previous years? The opposite will happen. These laws will remain in place, and any kind of growth will be built on the rubble of labor rights. So the question is: growth of whom and for whom?

Trade in the country’s largest port has been hit hard by the economic crisis. Piraeus union president Nikos Manesiotis says that in the past nine years one in three stores in the city have closed: “A business like mine, with a net profit of 70,000 to 75,000 euros, and there are companies that have these profits, pay taxes of 55% to 65% out of these 75,000 euros we have to deduct this type of tax and we have 30,000 euros, out of 30,000, however, I am obliged to pay an additional 20,000 euros for insurance contributions, because I have an income of more than 70,000 euros Finally, after a year of effort and hard work with a net profit of 70,000 euros, I only receive 10,000 euros, i.e. less than 1,000 euros per month.

Some believe that by the end of August, Greece will have passed the reef of the financial crisis. But many believe that the cracks in the hull of the Hellenic ship are deep and that it still needs many repairs before it can sail again.

“Positive” transformations for Greek society

Greeks are also not reaping the benefits of increased foreign investment over the past two years. Hellenic Deputy Prime Minister Yanis Dragasakis believes his country’s society will soon see improvements.

euronews: What led us to show where Greece is heading now after years of suffering?

Yanis Dragasakis, Deputy Prime Minister of Greece: I brought a small boat to represent the new journey that we have to do now as a country and I also brought something that for us is a compass. This is our new growth strategy. In fact, Greece has for the first time a national growth strategy, which describes the objectives and the means, what we want to do and how we will do it, and where we want to go. Even if something goes wrong in the markets, we have reserves, we have large surpluses. All these factors are enough to inspire confidence.

AND: Ultimately, growth comes down to a strategy, a clear sustainable plan. He has one?

NOT A WORD : We know that in 2021 we will have achieved certain objectives in certain sectors. Therefore, we have targets and timelines for people to check the government’s work. The second thing we are saying is that we have already institutionalized stability in certain sectors. For example, if a large investment arrives in Greece, it will have the same tax regime for 12 years, that is, no one can change it. So when we talk about investments in Greece, we are talking about strengthening a dynamic that already exists. The sale of non-performing loans (NPLs) and the restructuring of many companies have begun.

AND: How do you intend to find the balance between the needs of the population and your program of reform?

YD: I would call it: ‘How to return normalcy to citizens’. This is a crucial question. We will restore collective bargaining for workers. We will abolish the law that froze the minimum wage, but there will be certain processes that will allow its growth and we will get there. This is why we speak of inclusive growth.

AND: So who will pay in the end? Will they be corporations, will they be individuals?

YD: We are in dialogue with the business community on the taxes we need to reduce. Profit taxes or investment taxes can be reduced, the depreciation rate can be increased. We have decided that in the first year, 70% of the funds will be used to reduce taxes and 30% to increase expenses.

I: What won’t your government change?

YD: Wages. We are going to create the conditions which will allow the workers to seek, through negotiation, the improvement of their incomes. In retreats, new cuts will be avoided. I say this because reforms are identified in a negative context, now we are talking about changes, transformations such that people will see their positive outcome.

Full interview with Yanis Dragasakis, Deputy Prime Minister of Greece (in Greek).

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