by
N. Peter Kramer
Confidence in Greece's financial system seems to be returning as the country prepares to exit the last of the draconian bailout programmes in August 2018. "Instead of our own words, I would like to highlight what recently was said publicly on behalf of the European Commission by the Commissioner for Economic Affairs, Pierre Moscovici. He made clear that Greece will be again, from August 18, a regular member of the Eurozone. As was the case with Portugal, Ireland, Cyprus after their programmes; without additional programmes and with no additional commitments.'
The progress Greece made has been reflected in the country's cost of borrowing. Greek sovereign bond yields have dropped dramatically and declined in the last 12 months. Early in 2017, Greece returned to international debt markets for the first time in three years. And last November, the Greek debt management agency announced plans to replace its crisis-era debt issues with a series of new five year notes that will add liquidity to the Greek government bond market. It allowed Greek companies, including two of Greece's leading banks and the country's largest cement producer Titan Cement, to return to the private debt markets.
Also in November, the Greek government announced a further easing of capital controls after bank deposits rose for the fifth month in a row. Greek banks are reducing their reliance on emergency central bank funding; they borrowed half the level of a year ago in October. The easing of capital controls and reduced bank dependence on official funding show that Greece is emerging from a years-long squeeze that has cramped the economy.
Tourist spending in Greece is also on the rise. The latest central bank data show that tourism receipts are up almost 10% from a year ago. The spending totalled €13 billion in the first nine months of 2017, up €1.2 billion from the same period a year before, the Bank of Greece made known.
The perspectives look positive, but the price is high
The perspectives look positive, but the price is high, very high. Comparing the Greece of today with the country of eight years ago is shocking. For instance, the unacceptable high unemployment rates especially among young people; many pensions are nowadays on an inhumanly low level; the quality of health care for all is not consistently optimal; many teacher jobs have been cut. It is all the result of the austerity programmes the EU has forced down the throat of Greece. The German Finance Minister Schäuble and his Dutch colleague Dijsselbloem, President of the so called Eurogroup, were particular culprits.
The real wrongdoers in the negotiations with the Greek government were, in the eyes of the Greeks (but not only in theirs), the experts (whatever that are) representing the Eurogroup, the European Central Bank (ECB) and the IMF, the so-called Troika. In his book 'Adults in the Room', the former Greek Finance Minister Varoufakis calls their way of negotiating 'financial waterboarding': 'Like waterboarding a prisoner, in this case a Eurozone government is brought to the edge of asphyxiation. But just before an actual default, the creditors provide just enough liquidity to keep the suffocating government alive. During this brief respite the government passes whatever austerity or privatisation measures the creditors demand.'
In the meantime, both Schäuble and Dijsselbloem have lost their ministerial status. The German became President of the Bundestag, the parliament of his country, a more ceremonial function; the other disappeared into oblivion after his party was wiped out in the Dutch Parliamentary elections. As a consolation, he is allowed to chair the Eurogroup one more time in January, but without the right to vote…
