Greek Bailouts Over, But Economic Crisis Isn’t

(AP Photo/Petros Giannakouris, FILE)

Three international bailouts of 326 billion euros ($370.2 billion) ended for Greece on Aug. 20, 2018 after eight years but the effects are lingering with the ruling Radical Left SYRIZA – claiming a recovery – admitting it has failed to rein in tax cheats or corruption.

The monies from the original Troika of the European Union-European Central Bank-International Monetary Fund (EU-ECB-ESM) – the IMF was replaced by the European Stability Mechanism (ESM) in a third rescue package of 86 billion euros ($97.66 billion) in 2015, propped up an economy brought to near ruin by runaway spending and patronage and governments working hand-in-hand with oligarchs and business interests.

That created a crisis and brought austerity in big pay cuts, tax hikes, slashed pensions and worker firings that saw the Gross Domestic Product (GDP) shrink 25 percent and create an exodus of scores of thousands leaving to find work and a better life elsewhere.

“I still think the crisis exists. It’s more than in one field now, (it’s) not only (a) financial crisis, but it’s a crisis of our values … I don’t think it’s better now … it is really a stressful period for Greece,” Stavros Dimopoulos, a 23-year-old university student told CNBC in Athens.

Greece had been surviving on the bailouts and when they ended, on a 22-billion euro ($24.98 billion) cash buffer from the third until seeing a full market return. Two 3-billion euro ($3.41 billion) test bond sales and another 10-year bond in March were sold successfully, but at interest rates more than three times higher than the bailouts.

A man sells snails at Varvakios market in Athens, Monday, April 23, 2018. (AP Photo/Thanassis Stavrakis)

“We love our city, we love our weather, we love the Greek people, but we are scared and afraid in a way, because the situation is not that good,” Dimopoulos told the news site about he and his friends feel, echoing many previous sentiments since 2010 by others.

“We have to try harder and harder to make our own money … Sometimes we are talking (about going) abroad: If it is going to be better for us to leave Greece or if it is going to be better to stay in Greece and try harder. It is in our minds.”

Many of the country’s best and brightest, entrepreneurs and the young have gone for good, although some have trickled back amid signs of a slow recovery, missing their homeland, family and friends while many said they won’t return except to visit.

In 2016, about 20,000 people aged between 25 and 29 left Greece, as well as about 14,000 from 20-24, data from analytics company Oxford Analytica showed, a rate more than two times higher than before that period.

“Some kids are educated, and they don’t find jobs, so they are going to (the rest of) Europe, which is a loss for Greece. But we hope they come back again in 20 years,” 57-year-old Nikolas told CNBC.


With Prime Minister Alexis Tsipras, reneging on campaign promises, burying workers, pensioners and the poor with an avalanche of taxes, raising the corporate rate to 29 percent and hard-core elements in his party trying to keep out investors he said are key to a recovery, Greece’s rebound could be long in the making.

FILE – People walk in front of the Greek Parliament, in central Athens, on Monday, Jan. 28, 2019. (AP Photo/Petros Giannakouris)

The loans won’t be paid back until 2060 and Tsipras, in an election year, has been trying to wiggle out of some reforms and austerity measures that drove down his popularity ratings so far he’s now double digits behind to the party he easily defeated, New Democracy, twice in 2015.

Income tax for those earning more than 40,000 euros ($45,427) is 45 percent and 22 percent for the first 20,000 euros ($22,714,) although many rich have secreted their money away in foreign bank accounts and pay little, or no, taxes and get away with it.

The government has responded with a barrage of confiscation of bank accounts of debtors to the state and now planning raids on safe deposit boxes while failing to force all companies and professionals to give receipts and use Point-of-Service debit and credit card machines so tax cheats can’t accept only cash to hide their income.

Greece’s unemployment rate is still the highest in the Eurozone with successive governments doing next to nothing about it despite promises to have jobs programs. Tsipras raised the minimum wage by half what it had been cut, four years after he said it would and too late to help those who’d already left the country.

The jobless rate is still about 21.7 percent but the government crowed that’s an improvement although there are more than 881,000 people without a job, not counting those who fell off rolls when benefits expire after a year.

The IMF’s country report on Greece this week said the government intends to pay off as much as 60 percent of its debts to the agency of 9.5 billion euros ($10.79 billion) in the first two bailouts. Paying 4.6 billion euros quickly ($5.22 billion) could save tens of millions of euros in interest.