By David R. Sands
It was a chain of events which neatly captured the grinding economic crisis that plagues Greece: Just as a light appeared at the end of the tunnel, the train broke down once again.
In an interview last week, new Greek Economy and Development Minister Dimitri Papadimitriou said he was “very optimistic” the country had “turned the corner” addressing a crushing six-year public debt crisis that has left it wrangling with its fellow European Union members and the International Monetary Fund over bailouts, austerity and the best way to jump-start the economy.
He cited increasing business confidence at home, projections that the Greek GDP growth will continue to outpace EU averages, and what he said was the very positive reception from U.S. investors during a visit to New York earlier in the week. GDP expanded at an annual pace of 1.8 percent in the three months to the end of September, and the minister said it was realistic to see that growth rise to a rate of 3.1 percent by 2018.
The minister, who took his post just last month in Athens after nearly 40 years teaching economics at New York’s Bard College, said it was not just hedge fund managers who expressed an interest in taking a chance on the improving Greek economy.
“These were real investors,” he said. “People tell me that they wouldn’t even have talked to us a year ago, but now it’s time to take a second look” at the possibilities of investing in Greece.
But on the day the minister was speaking, the latest row between Athens and its creditors was playing out across the Atlantic.
Representatives of the European Stability Mechanism, the bailout fund set up by the eurozone countries, said they were suspending the latest debt relief package agreed to Dec. 5 to protest a new burst of social spending by the left-wing government of Greek Prime Minister Alexis Tsipras, including a $650 million Christmas payout to Greek pensioners that creditors say violated the agreement. The Greek stock market fell over 3 percent on news of the latest impasse.
Mr. Tsipras contended the holiday bonus — and proposed tax breaks for Greeks living in Aegean Sea islands dealing with a heavy influx of migrants from the Middle East — do not violate the latest debt relief package, and lawmakers in Athens approved the payout in a vote Thursday.
The episode neatly encapsulates the political and financial dilemma facing Greece since the debt crisis began. Prodded by EU creditor nations led by Germany, Greece has adopted a string of benefit cuts, tax increases and labor-market reforms in order to obtain rescue loans needed to avoid bankruptcy and a forced exit from the eurozone. Mr. Tsipras, whose leftist ruling party trails the conservatives in the polls ahead of possible elections next year, has had to walk a tightrope trying to keep the country’s creditors happy while dealing with voters who have faced years of high unemployment and service and benefit cuts.
Mr. Papadimitriou walked a similar line in the interview, noting Athens has already made some hard choices to repair its finances but that some of the recommendations coming from Greece’s EU creditors and the IMF “make no sense” if the country is to build on past gains and sustain growth in the future.
“No one would accept such a program,” he said. “And I would add that every single projection of the IMF in this crisis has been spectacularly wrong.”
He said that despite the pain, the crisis had left Greece with some advantages as it tries to attract new private sector investment. The country has an educated, talented work force, and labor costs are down 17 percent since 2010. And the country’s geopolitical position as Europe’s gateway to the Middle East is another attraction, especially with the recent expansion of shipping capacity through the Suez Canal.
Although he has consulted for the Greek government in the past, Mr. Papadimitriou is not a member or the prime minister’s party and admitted he took a couple of days to think about the idea when he was first offered the Cabinet post.
“It wasn’t for the money and I was already in a very nice place,” he said. “I’m not a magician, and I can’t pull rabbits out of a hat … but I was convinced this was a pragmatic government that understood the importance of investment in the private sector.”
**** The Washington Times – Friday, December 16, 2016