Let’s assume that the negotiations with Greece’s creditors will come to a close late one night in May with an agreement on debt restructuring and the country’s inclusion in the European Central Bank’s quantitative easing program. This would likely spark an investment rally and restore the markets’ faith in us, possibly to a sufficient degree so they would start lending to us once more. On paper, things look good – to some extent at least.
The value of Greece’s assets appears to have hit rock bottom and they are starting to look appealing, not only to the bottom-feeders but also to major investors. From now and until 2019, Greece faces no major institutional barriers, no critical debt repayments and no elections of any kind. Potential investors have some idea of what lies ahead and can look to the prospect of a center-right government. This is important because uncertainty repels capital.
Prime Minister Alexis Tsipras is very well aware of the stakes at hand. Without big investments and without returning to the markets, all he has to look forward to is a dead end. The Europeans, the Americans, the Chinese, everyone wants to sell Greece as an investment destination. Each for their own reasons. All, however, are waiting for tangible evidence that Greece is eager for investments and can push them forward by bypassing the beast that is bureaucracy. Just like his predecessors, Tsipras is also coming to understand that nothing important can get done in this country without an intervention from the highest ranks of government.
Investors, however, don’t have the time to wait for Tsipras to pressure his ministers, to run every investment proposal past general secretaries and managers, to whip his party into line. The completion of the deal for regional airports was a good omen, despite all the drama that preceded its conclusion.
What Greece needs now is a strong, tangible message being directed outward, like the completion of another important deal, and a leader who takes control over those who stand in the way of investments.
Tsipras is trying to have it both ways, as usual. But you can’t pander to a small minority of fanatics and be convincing to the markets at the same time. Experience has shown that Tsipras is perfectly capable of getting tough, but takes quite a long time to do so. Maybe the role of representing the nation for attracting investments is not one that suits him. But, if he does not embrace that role, he won’t get anywhere and neither will the rest of the country. And investors will forget us again until the next elections, whenever they take place.