It’s not looking good
Future historians will peer at chapters about the developments in Greece today and wonder what on earth was going on. So let us step back and look at things from a distance.
Greece was supposed to go to the polls in 2016, not in January as was the case because Parliament failed to elect a president. A few months later, however, Prokopis Pavlopoulos was voted into the post, even though he could have been in December.
In December last year the Greek economy was showing signs of a rebound, either because it had hit rock bottom and the only way was up or because reforms started bearing fruit. Either way, it had been predicted that 2015 would be a record year for growth. Foreign investors were putting their money in the country’s banks and showing unprecedented interest in the privatization of its airport and ports, as well as other smaller investments. Greece was very close to being granted a precautionary credit line and re-entry into the lending markets.
No, it was not a success story, but it was a country poised to rebound with a little bit of political stability and consensus. We are not forgetting the list of painful measures that were still pending or the cost of austerity on society, but the adventure we have voluntarily embarked on today will come at a heavy price and hurt the most vulnerable even more. The wealthy may have to pay more taxes, but the further rise in unemployment and the recession that will almost certainly appear will weigh on society as a whole.
Greece wasted three months in fruitless negotiations that will result in two or even three more years of misery at best. Foreign investors will not even entertain the idea of a Greek investment without watertight guarantees. We lost three months and opened a massive fiscal pit all by ourselves, losing the benefits of everything that had been painstakingly achieved since 2012.
The state, meanwhile, is on the brink of failure in the name of a heroic negotiation that is supposed to end in smiles with the Europeans unconditionally agreeing to everything the Greek government wants.
So let us assume that a small deal is achieved today and the bigger one in June.
I personally believe that it will contain almost all of the painful measures we referred to before. The real problem will be afterward. If any reforms and privatizations agreed are in fact implemented, we could see a kind of left spring, with the stock exchange rebounding and investors returning. However, I fear that what will happen is that every measure, every privatization and investment will be fought from within the government.
This is the worst-case scenario because it means that not only will we be in a completely stagnant state within, but we will also lose whatever shred of credibility we have left abroad.
