By Antonis Karakousis
If one attempts to evaluate the true position of the Greek economy, one will see that it has to a large extent wrenched itself free of fundamental dangers, yet it is still in a sense on hold.
Public finances, after a long period of difficult adjustment of expenditures and revenues, are under control. Although the adjustment is structurally problematic because the weight has fallen on taxes, without the necessary progress in combating tax-evasion, for now the danger of sliding into a new deficit cycle is limited.
Additionally, credit dangers have receded, despite the continued capital controls, imposed in June, 2015.
After the successful outcome of the banks’ stress tests, the four systemic banks have been exempted from painful recaps and have won valuable time and can dedicate themselves to the restructuring of the private sector and the normalisation of the conditions of funding the economy. Hence, that source of uncertainty seems to be retreating.
Moreover, the observable activity of saved businesses indicates that on the level of the real economy, the adjustment has largely been achieved. The evolving restructuring of the private sector can yield more healthy, competitive entrepreneurial schemes that will be able to draw new resources, in order to fund investment plans for expansion and modernisation.
Still, the economy overall is not progressing in accordance with expectations, as if something is holding it back and binding it. The recovery lacks momentum, and growth remains weak. The truth is that, just as our partners and creditors, most producers and creators remain suspicious and cautious.
They do not trust the government. They believe that at the first opportunity it will backpedal, that in its efforts to cling to power it is capable of sacrificing everything that was secured with so much effort and sacrifice.
The economic team, and ministers Tsakalotos and Houliarakis in particular, who are negotiating and know the problems of the transition from one phase to the next, are trying to offer assurances that there will not be reversals and backpedaling. But they are desperately alone, as one sees from the propagandistic attacks to which they have been subjected by the PM’s office and ERT state television.
Hence, the climate does not favour the flowering of the economy, nor the desired investment take-off. Essentially, there is not enough trust to mobilise healthy entrepreneurial forces. They see opportunities but believe the political dangers are stronger.
For the country to escape from this peculiar “on-hold” situation, it needs a clean, clear, and persuasive signal of economic renewal.
Mr. Tsipras cannot emit that signal, simply because he lacks the necessary external trust and confidence. He is betrayed by his current divisive rhetoric and his absolutely problematic past.
