Bust to Boom: Greece’s Comeback Story Has Some Big Caveats Too

ATHENS – From the dark days of a financial and mental depression brought by an economic and austerity crisis that almost pushed Greece out of the Eurozone, there’s been a return to seeming prosperity. But not for all.

Greece relied on three international bailouts of 326 billion euros ($349.31 billion) from 2010-18 – most of it will take decades to repay and the debt is still 170 percent of the Gross Domestic Product (GDP.)

But driven by the then-ruling New Democracy government of Prime Minister Kyriakos Mitsotakis, who lifted COVID-19 health restrictions to lure tourists returning in droves and attracted foreign investors, the economy is rebounding.

In a review of the turnaround, Eric Reguly – European Bureau Chief for  Toronto’s The Globe and Mail – recalled covering a riot in downtown Athens in February, 2012 when anti-austerity rage and smoke and teargas and Molotov Cocktails filled the air in battles between protesters and riot police.


A few months later he met then-finance minister Yannis Stournaras, now the Bank of Greece Governor, and noticed bullet holes in the window and being told of a bullet sent in the mail.

“Today, no one is trying to kill him; it is the economy, not the city center, that is on fire,” he wrote about the unlikely recovery that Mitsotakis said was a “success story” – even though wages haven’t come back and a 6 percent growth in 2022 wasn’t enough to lower a 24 percent tax on food.

Mitsotakis won a first round of elections May 21 with a resounding 20.72 percent margin, doubling the vote of the SYRIZA party he booted in July, 2019 snap polls and is favored to do it again in a second round June 25.

Mitsotakis fell six seats short of a parliamentary majority and hopes the next ballot will bring him enough seats to rule outright, without a coalition partner, and keep the recovery coming.

It was roaring back like a freight train – and voters even set aside a head-on train wreck that killed 57 and a surveillance scandal that plagued Mitsotakis to give him a ringing endorsement.

The bailouts came with attached big pay cuts, tax hikes, slashed pensions and worker firings that produced an exodus of scores of thousands of Greece’s young and best-and-brightest for other countries, but many are returning now.

“The Troika’s loans-for-austerity demands robbed the country of its economic sovereignty and prolonged the deep recession. Eventually, the tough-love measures brought Greece back from the brink and pushed the economy back into growth, though the process took longer than anyone expected,” wrote Reguly.

The unemployment rate has fallen from 28 percent – nearly 50 percent for the young – to 10.9 percent and Foreign Direct Investment (FDI) hit a 20-year high in 2022, although much of that is being used to buy up properties financed by Greek banks and not setting up new businesses.


Stournaras – who said that campaign promises by the leading parties can’t be met because there’s not enough money yet – said Greece still has a long way to go before being a modern, competitive economy but is closing on investment grade status to speed that more.

But the current account – the trade in goods and services – is in a deep deficit of 9.7 percent of GDP and the national investment rate is still only half the European Union average despite the roaring growth that’s seen continuing.

There’s other obstacles: tax evasion, a notoriously slow court system that takes 10 years or more to deal with major cases, and oligarchs controlling shipping, the media, and construction, discouraging investors.

Mitsotakis’ government spurred digitalization of the notorious bureaucracy in which it wasn’t uncommon in public service offices to see aging papers piled in boxes on the floor while bored workers smoked and drank coffee at their desks.

Mitsotakis got major Information Technology (IT) and high-tech giants to set up shop in the country, one luring another and counting on that sector to push Greece faster into the 21st Century.

Nikos Papathanasis, the Greek-Canadian University of Toronto engineering graduate who was Alternate Minister of Development and Investments until the government dissolved for elections, said foreign investment is spiking.

Microsoft plans to spend about 1 billion euros ($1.07 billion) to open three data centers and a training site outside Athens and Google, Amazon and TeamViewer are in the country too, the piece noted.

Danae Bezantakou, Chief Executive of Navigator Shipping Consultants  said previous governments looked at businesses as something to be milked, not as social and economic value creators.

“Ten years ago, even five, if you were profitable, that just meant you would pay more taxes,” she said. “The system punished entrepreneurs, like they were doing something bad. This government has changed that mentality. We’re not just starting restaurants and coffee shops here,” she said.

George Tzogopoulos, a Greek lecturer at the European Institute in Nice, SAID he still has worries that Greece could revert to its pre-crisis ways that produced generations of wild overspending and runaway patronage.

The Troika of the country’s European lenders that ended surveillance of the economy aren’t looking over the shoulders at the Finance Ministry now to keep tabs on spending.

“They are no longer putting pressure on Greece, so Greek politicians have the opportunity to spend as much as they like without direct supervision,” he said, but Stournaras said he thinks there will be financial discipline.

He said that Greece has a decade-long grace period, after which the payments on its high debt will rise by about half, to make the economy more competitive and greener. “We have 10 years to exploit this window of opportunity,” he said. “Our competitiveness is still low.”


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