After Eight Years, No Fanfare, Greece’s Bailouts End Aug. 20

In this Thursday, May 18, 2017 photo an elderly man holding an umbrella walks during rainfall in central Athens. Greek retirees say they are struggling to survive on ever dwindling pensions with repeated cuts imposed by successive governments as part of their country's three international bailouts. (AP Photo/Petros Giannakouris)

ATHENS – Plans for a celebration canceled in the wake of July 23 wildfires that killed 96 people, three international bailouts of 326 billion euros ($372.15 billion) will end Aug. after more than eight years that brought millions of Greeks brutal austerity and harder lives.

Prime Minister and Radical Left SYRIZA leader Alexis Tsipras has claimed he’s bringing a recovery without mentioning, if so, it’s largely because he reneged on anti-austerity promises, which have seen his popularity plummet to as low as 10 percent.

The government will use 9.5 billion euros ($10.84 billion) from the last bailout installment of 15 billion euros ($17.12 billion) – from a third rescue package of 86 billion euros ($98.17 billion) that Tsipras said he would never seek nor accept but did both, as a cash buffer for up to 22 months before trying to make a full market return.

“I don’t see a reason for jubilation concerning our exiting the memorandum (bailout) because … you may be jumping out of the frying pan into the fire,” said Thanos Veremis, Emeritus Professor of history at Athens University told Reuters.

“Most people have been taxed dry, people are completely immersed in paying the tax man, with little money left on the side to put into your business and therefore improve and grow,” he said.
Since the debt crisis began in 2020, four successive governments have tried to keep Greece in the Eurozone through devastating pay cuts, tax hikes, slashed pensions and the sale of state assets, continued by Tsipras and his coalition partner, the pro-austerity, marginal, jingoistic Independent Greeks (ANEL) imposed after swearing to end them.

There are some green shoots showing, if only because rock bottom was hit. The economy, which shrank by 26 percent, is recovering slowly, mostly thanks to record tourism seasons and with the government slowing paying its bills to build a primary surplus that doesn’t include interest on debt, the cost of running cities and towns and state enteprises or social security, nor some military expenditures. Unemployment has come down from near 28 percent to 19.5 percent despite essentially no government programs to help the jobless.

“If there is a lesson that we learned from the crisis it is that, under any circumstances, you must try to protect macroeconomic stability,” Panos Tsakloglou, Chief Economist of the previous coalition government told Reuters.

“Populist policies that may win some votes today and have disastrous effects some years down the road must be avoided at all costs. Otherwise, sooner or later we will end up in the situation we are in now,” he said.

But the Washington, D.C.-based International Monetary Fund (IMF,) which took part in two first bailouts of 240 billion euros ($273.97 billion) but stayed out of the third given by the Troika of the European Union-European Central Bank-European Stability Mechanism (EU-ECB-ESM), is skeptical the economy will grow fast and strong enough and that the debt is sustainable.

Tsipras continues to give rosy expectations for Greece as an election year looms in 2019 and with his party far behind to the New Democracy Conservatives they unseated in 2015.

“Greece is regaining its political and economic independence,” he said, but the post-bailout period will be costly as two previous test bond sales of 3 billion euros ($3.42 billion) each sold but at interest rates more than three times higher the bailouts and with a recent debt relief deal not bringing lower rates but only a longer time to repay.

“Basically, what is going to happen when we leave the bailout is that we stop borrowing money at 0.5 percent from our Eurozone partners and start borrowing on the bond market at 4.5 percent,” Nicos Voglis, boss of a sandwich bar in central Athens told Marketplace.

“I don’t think that is anything to celebrate. It’s not something to have a party about. Come on!” he said. Tsipras’ claims there will be a “clean exit” on Aug. 20 were long ago dashed by the creditors who said the economy will need monitoring for years to make sure fiscal targets are hit and that he doesn’t renege on reforms to them the same way he did against reforms to voters.