Greece is not out of the woods, yet | The Daily Star
12:00 AM, August 30, 2017 / LAST MODIFIED: 01:11 PM, September 11, 2017

Greece is not out of the woods, yet

For many years now, Greece has been considered the “sick man” of the European Union (EU). The Greek economy was on the verge of collapse right after the major world economic and financial meltdown that happened in 2009 and 2010. Thanks to the financial assistance from IMF, EU and the European Bank (ECB), Greece was able to avoid declaring bankruptcy and stay on the path to economic recovery. It's been a few years since then, and I undertook a ten-day visit to the birthplace of Western civilisation to see first-hand how the country is doing, and most importantly to assess how the ordinary person fared during the brutal years of budget cutbacks and austerity measures imposed by Greece's benefactors. In my view, it was a close call and the Greeks have a few more years to go before it can finally say “we survived!”

A few words summarising what happened is in order. The Greek government borrowed heavily during the period 1999-2007 to fund extravagant projects, including the 2004 Summer Olympics in Athens and to cover up its practice of deficit financing. Greece's debt-to-GDP ratio rose to 127 percent in 2009 and to 146 percent in 2010. Greece faced the twin challenges of inability to service its international debts and meet its domestic obligations. In May 2010, the IMF, ECB, and European Commission (EC) offered a bailout package of more than 110 billion Euros on a quid pro quo basis: Greece promised to undertake a programme of structural reforms (drastic spending cuts, tax rises, and labour market and pension reforms), other austerity measures, and privatisation in return for the loan to be released in four tranches. 

Unfortunately, Greece dragged its feet in implementing its side of the bargain, and needed a second bailout in 2011. In an article published by The Daily Star on July 15, 2011, entitled “A Greek Tragedy”, I wrote very pessimistically, “Only time will tell if Humpty Dumpty, after the fall, can be put together again. Or are we in for a long-drawn out Greek Tragedy!” Many, including myself, were sceptical if the Greek electorate would put up with the budget cuts, reduction in public services, and regulatory oversight by bureaucrats in Brussels. There was the possibility that Greece would leave EU and trigger a “Grexit” crisis.

Fortunately, however, since those dark days of 2014, the Greek economy appears to have been on the mend. Unemployment has dropped from a peak of 27 percent to 23 percent, and the national budget has had a surplus in the latest quarter. Of the three countries—Italy, Spain and Greece—in the EU which were hit the hardest by the economic crisis of 2009-2012, Greece has made the most remarkable comeback.

For the past few months, I wanted to visit the country which received such poor grades from me. And even now, many European journalists who got tired of Grexit have coined the term “Greecis” for “sick of Greece”. What is life like for the average person? Why hasn't Greece pulled out from EU and why does it still use the Euro? These are some of the questions I had when I landed in Athens on August 12th. My first impression is that while the man on the street hates the government's belt-tightening measures, Prime Minister Tsipras has managed to keep the creditors happy. And a majority of Greek citizens want to remain in the EU! However, there are still some big uncertainties that lie ahead for the Greek economy.

My travels in Greece took me to the bustling bazaars of Plaka and Omoniya in the heart of Athens and to the flea market in Monastiraki on the foothills of Acropolis, as well as to the tourist attractions in Delphi and Agora. We also wanted to visit the island of Crete, the “honeymoon capital” in the Mediterranean Sea. The cab driver who took us from the airport to the hotel confirmed that Crete has seen a sharp increase in tourists coming in from all corners of Europe, but it is still not at a level comparable to the pre-Crisis days. Business owners in every commercial centre we visited on the island, including the “souks” (small shops) in Chania and Heraklion, confirmed that there has been an uptick in tourist cash flows. However, there is also a mood of despondency and Cretans point to the “good old days” of yesteryears. 

The hard-nosed bailout negotiations with EU have also taken its toll on the Greek mood and psyche. They feel very apologetic for their past economic policies and citizens point their fingers at the politicians. Protest demonstrations are an everyday feature and during our stay, on the night of August 19th, a section of the city centre near Omoniya was cordoned off to foreigners. The next morning, police in riot gears could be seen patrolling the streets in front of our hotel, and the uniformed officers advised us to avoid certain areas. 

On the positive side, Greece is still a great bargain, and the major tourist attractions such as the Parthenon and other historical sites are very well-maintained, and the Mediterranean islands of Santorini, Crete and others offer great bang for the buck. While Greece has very few major industries, the Ministry of Culture appears to have done well to preserve and promote its historic sites. The infrastructure, including transportation, and the hospitality sector and facilities are still in A1 condition. And finally, the culture of hospitality is ingrained among the Greeks and that is likely to keep the appreciative tourists from the resurgent European economies and beyond coming back and back again.

Dr Abdullah Shibli is an economist and works in the ICT industry.

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