A few weeks prior to the politically crucial local government and European elections, the conditions and impressions in Greece seem to change. Until recently, at the dawn of 2014, the country lay abandoned in a deep recession, without any allies, unable to attract any sympathy or solidarity.
Internationally there was more than enough suspicion, the partners and creditors treated Greece like a ruined country, Poul Thomsen looked down on ministers and most thought that the government’s days were numbered.
Both within and outside the country, everyone estimated that after the financial a political crisis would follow and that after the final blow would come at the end of May, when the European elections take place.
The scaremongers were wrong
Greece, they said over and over, will sink further in a political and social chaos and the Greek case would fulfill its usual destiny.
None of all that that was being discussed at the start of the new year seem to be confirmed. On the contrary, after the first trimester, Greece’s international status is better than ever. The deal with the troika changed the atmosphere completely.
According to the Minister of Finances Yannis Stournaras, the European Union and by extension the international financial community recognized the primary surpluses, agreed that the funding needs for 2014 and 2015 are manageable and accepted that the sources of the great imbalances, the so-called twin deficits, are under control.
The budget deficit is slowing going away and we now have a surplus in the balance of payments. The multi-bill in Parliament will address a series of problems in the market (about 300), abolishes many legally-protected cartels that existed for decades and debunks the argument that Greece does not want any reforms and seeks to stay sheltered from the open markets.
Additionally, the Greek presidency, which many ridiculed, managed to resolve the Banking Union, to come to an agreement for the creation of the SRM, the bank monitoring and rescue mechanism in Europe. Where the dominant in Europe failed, the troubled and spluttering Greece prevailed.
All of this together seems to have created the impression in the international markets that Greece is overcoming its problems, that it is on the right path and can now be dealt differently.
The comments in the international press are now glowing and some have even began talking and writing about the unexpected and impressive Greek recovery.
It is no coincidence that two of the largest Greek banks – I. Kostopoulos and D. Matzounis‘s Alpha Bank and M. Sallas‘ Piraeus Bank – acquired from the international markets with relative ease the funds the Bank of Greece demanded for their recapitalization.
The upcoming capital increase of Eurobank s expected to be just as successful, since the bank’s management has prepared and as soon as the multi-bill is voted it will open its books and confirm the participation of foreign investors. It is not unlikely that it will get a hold of the 3 billion euros needed for its recapitalization in one go.
The Greek bankers, despite what is held against them, appear prepared and demonstrate that the collapse of the Greek credit institutions was caused by external factors, it was not suited to the capabilities and growth that had been achieved in previous years.
As soon as the conditions changes, the international market praised Alpha Bank’s austere and tidy management and was particularly pleased with Piraeus Banks’ preparations and quick reactions.
The multi-bill also grants many powers, capabilities and tools to the Financial Stability Fund to achieve the bank privatizations. That means that the National Bank will be able to take advantage of the new conditions and will be able to successfully cover its capital needs.
It has also been said that after the banks, many Greek businesses will have the opportunity to draw critical funds from the international market via 3-to-5 year bond issues with a interest rate of about 5%.
Returning to the markets
The Greek economy is essentially on course to return to the markets. This will soon become apparent by how the markets will deal with the Greek State.
Those who closely follow international investors claim that “the climate for Greece is excellent”. The global economic situation as well; of all the emergent markets, Greece offers the greatest opportunities.
Investors are abandoning Russia over the Ukrainian crisis, Turkey has problems, China and Brazil are intimidating, Thailand is going through a prolonged period of political upheaval and Greece is exiting the crisis changed, with the risk under control since the debt is transnational, the currency is stable and returns offered are almost three times as much as those in Germany.
The bankers estimate that in the current international conditions of stagnant funds, at least 10 billion euros can be invested in Greek opportunities, which are able to generate huge profits in a short amount of time.
It is no coincidence that these days the representatives of 15 of the largest international banks are crowded outside the Minister of Finances’ office in order to secure their participation in the new five-year Greek bond issues which are expected before the European elections.
One cannot ignore the fact that Europe and the international financial system are soon going to make glowing comments about Greece. From now on there will only be praise for Greece.
The era of insults is over
The era of ridicule and insult is over. That is a defining aspect of the markets. When you are down, they kick you and when you are on the rise they glorify you, magically forgetting everything before. As violent as the depreciation of Greek values were, their recovery will be just as swift. In other words, we are approaching the European elections in a very different political environment.
A gust of recovery and reintegration into the international financial system will blow through the election campaign arena of misery of and daily moaning.
The government will be able to cultivate expectations and hope, it will be in the position to hand out some benefits and to claim that it can guarantee an exit from the crisis, just like the country’s stability and the people’s lives.
The opposition of course will continue condemning the losses of previous period, but if it does not go beyond that and does not encourage – in its own way – the hope of exiting the crisis, then we can expect surprises in the upcoming elections in May.
Antonis Karakousis
– Originally published in the Sunday print edition
