The narrative isn’t going anywhere

The narrative isn’t going anywhere

The prime minister has adopted a narrative without which it is obvious he could not manage and may even have preferred to give it all up. He believes that the successful completion of the review by the country’s creditors on Greece’s progress in implementing its bailout commitments will directly lead to a period of growth and a rebound that will offset the political and social impact of the measures that he will be forced to push through in the next few weeks.

The European Central Bank’s quantitative easing program, an inflow of structural funds from the European Union and a positive reaction from the markets toward the end of the bailout review would help put the country on a new path, the premier thinks.

This dream, however, may well prove untenable, for three reasons.

To begin with, the planned hikes in taxes and social security contributions will dry up the market by autumn. It is also doubtful to what extent these planned revenues will be collected, meaning that the economy will once more lose its fiscal equilibrium.

The second problem is that the impact of the capital controls imposed last summer is becoming increasingly evident as time goes by. We may, for example, experience a situation in the next few months whereby tourist numbers increase and tourism revenues decline because businesses in the field would rather keep their money abroad, safe from any new adventures. The same, unfortunately, appears to be the case in shipping. This is the money that will be missed from the market and the country’s performance indices.

Last but not least, Greece’s biggest problem is that growth will never come, no matter how many reviews are successfully completed, with this government and this cabinet. Many ministers are openly hostile to entrepreneurship and investment and the deep state is waging its own guerrilla war against them, even against investments that have the government’s blessing at the highest level.

Greece could, indeed, soar once more – it is already very close to rock bottom – but it needs an entirely different policy approach to taxes and contributions and an entirely different investment environment. As long as the state and the majority of ministers regard investment and business with abhorrence, the narrative that Prime Minister Alexis Tsipras has come to believe will need a different person to put it into effect.

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