2014: Make-or-break year for Greece

2014: Make-or-break year for Greece

For the first time in many years this is a budget of “recovery, prospect and hope” promised the Greek Prime Minister Antonis Samaras late last Saturday after the slim victory his government won on the economic program for the coming year.

Earlier, in his closing speech, addressing a full House, he claimed that his government had succeeded the impossible: “For the first time in years, our country will not need to borrow”, he said. The “real revolution is achieving a primary surplus in order to increase the negotiating capability of the country”, he added although he accepted that the negotiations with the representatives of the country’s creditors –the “troika”- are tough and that the government is at its most difficult cross point. “But we will manage, although we face an opposition that wishes us to fail”. 

Mr. Samaras spoke of 2014 being the year of “Grecovery” after six “painful” years of austerity measures although he accepted that unemployment now standing at 27% is a problem. He considered an achievement, though, that it did not reach 30% “as the opposition hoped” but promised that it will start falling in 2014. 

His right hand man, the Economy Minister Mr. Yannis Stournaras in an interview with the French “Liberation” a few days earlier claimed that Greece had completed 80% of the targets imposed on her by the EU and the IMF. “But there is still 20% to go”, he accepted, adding that there are still delicate social and political issues to be negotiated like those relating to lay-offs, forced property auctions in the case of non-serving of loans and the like. But “Troika has to understand that we cannot continue to increase taxes and decrease salaries and pensions at the same time,” said Stournaras. 

There is no doubt that even with a projected economic development of 0.6% of GDP and a primary surplus of 1.5% against a recession that is hoped to settle at 4% by the end of this year, the real challenge for the coalition government of Antonis Samaras remains the domestic front. The continuing deterioration of living standards badly hits large sections of the Greek middle classes, the traditional electoral base for both center and center right parties in Greece. This large section of the society which has been shaping up politics for several decades is very perplexed. On one hand it is being hit hard by austerity but at the same is not yet convinced by the alternative recipe offered by the main opposition of leftist Syriza. 

The party of Alexis Tsipras is still struggling to give convincing answers on how Greece will get out of the downward spiral. During last Saturday’s parliamentary debate on the new budget, Tsipras declared that his government would put banks under state control, that he would protect peoples’ money in the banks and will kick troika out. His solution is “cancellation of debt, moratorium for the repayment”. For him, and for a large part of the society, the country has lost its national integrity and is being traded off to market speculation.

So what is ahead for Greece in the new year? Should one go along with the optimism of the Greek prime minister or share the pessimism of the opposition? As Greece is taking over the presidency of the EU for the first half of 2014, many believe that the EU will increase its pressure on Greece to finish off its painful reform program. Some analysts think that the Greek government, trapped by its own choices and increasing social pressure in the coming year, may collapse. Already new political movements are emerging to cover the gap in the center ground and to prevent the onslaught of Syriza if the government falls. At any rate, it seems that until the next Euro-elections in May 2014, which may coincide with local government elections, the political landscape in Greece could look much different than now, depending primarily on the political attitude of the Greek electorate.