Keep on running
Prime Minister George Papandreou is a fit man who enjoys jogging. It’s a good thing he’s been working on his stamina all these years, because he’s going to need it. Papandreou returned triumphant from Brussels last week having secured the first eurozone-led financial assistance package of its kind. The involvement of the International Monetary Fund in the scheme may not be ideal and the details of how the process would work, if Greece ever reaches financial meltdown, remain sketchy – but the deal brokered by France and Germany is a significant achievement for the Greek government and the European Union. However, it’s just one long stride in the marathon Greece has to run. Plugging a hole in public finances is one thing, making the changes necessary to ensure they are watertight in the future is going to demand considerable levels of energy and staying power. Papandreou returned from his Brussels foray to find there are still many battles to fight on the home front – opposition to tax reforms and spending cuts remains strong and, in this climate, the government must attempt to open up so-called closed-shop professions, such as notaries and cab drivers, overhaul a wheezing pension system, stamp out tax evasion and corruption while ensuring that it can borrow at a reasonable rate. Greece dipped a toe into international markets again this week with the issuing of bonds. Buoyed by the support shown in Brussels last week, it managed to bring down the yield on its seven-year note to 5.9 percent compared to 6.21 percent earlier in March. It’s positive the rate is falling but when one considers that the yield on bonds issued by Portugal, the country which some regard as the «next Greece» due to poor finances and the fragility of its political system, was between 4.2 and 4.3 percent, it’s clear what a long distance we still have to go. The problem for Papandreou and his financial team is they have to take steps quickly to regain credibility on international markets so the cost of borrowing continues to drop while at the same time carrying out structural reforms whose impact will not immediately be felt, or appreciated, by the public. It’s like introducing a series of sprints in the marathon but Papandreou appears in no mood to let up now. It was announced this week that a bill to liberalize closed professions would be brought forward by several months to be submitted in May. New tax regulations were being debated in Parliament this week and are due to be passed after Easter. However, even sterner tests, such as shaking up the country’s pension system, lie ahead. These are changes that will have to be carried out while the economy won’t be showing any growth and unemployment will be rising. There is a moment that all marathon runners dread: the wall – it is when they hit a physical and psychological barrier that brings them grinding to a halt. Given an incredibly heavy workload, the threat of widespread public opposition and resistance within PASOK, the government will undoubtedly come to a point over the next few months when giving up rather than continuing will seem like the logical option. A great deal will depend on what they choose to do at this crucial time. We will find out whether Papandreou, and indeed the rest of us, have the stamina to keep up or whether we are all going to collapse in a crumpled heap at the side of the road, wishing we had been better prepared for this test of endurance.
