As odd as it may seem, Greece is beginning to stabilize and move forward. I am not oblivious to the pain and suffering brought on by the crisis, nor the new challenges that lie ahead when the austerity measures for 2013 start to bite. But our European partners – under pressure from other forces as well – have decided to put an end to speculation about Greece’s future in the eurozone. At the same time, the situation is beginning to improve in the rest of Europe as well, as Spain appears to have dodged the bailout bullet, and Italy and France are now able to borrow on reasonable terms.
Given the relatively positive environment overall, Greece will most likely start regaining some of its lost credibility, from the markets, from depositors who have taken their money abroad and even from investors. This is a vital part of recovery, because without faith in Greece’s future in the eurozone, no one can estimate how much further the country might tumble into the abyss of recession.
On the domestic front things also seem to be gaining momentum, starting with the justice system and oversight mechanisms that are getting into gear. As much as some may argue that the recent wave of prosecutions and investigations are simply foils to divert people’s attention from the measures, the country has never before seen such powerful people being put under scrutiny and in some cases even behind bars. The people see this as a sign that the country is turning over a new leaf.
Much is also being done in terms of improving the operation of the state mechanism, from the management of hospitals to the promotion of non-cash transactions that are so important in getting a handle on tax evasion. Is this enough to get Greece out of the mess? Of course not. The biggest challenge is to change the prevailing mentality toward entrepreneurship and business, because without these, growth will remain out of reach. To achieve this, the government will have to pass a lot of reforms that will require the support of Parliament and ensure that key positions are properly staffed.
Meanwhile, banks are the ones that will ultimately determine what kind of growth we will have in the next few years. If they choose to help out the serious small and large businesses that are suffering as a result of the crisis, the country will see healthy growth. If they opt instead to continue propping up badly managed and nonviable businesses in order to serve certain other interests, they will drive the final nail in the coffin of any healthy business that has managed to survive this far. Thankfully, there are enough Greek bankers who have been around long enough to know what is what, and who have the integrity to play an important role in the rebuilding of the Greek economy.