By Ellie Ismailidou, MarketWatch
Newly re-elected Greek Prime Minister Alexis Tsipras’s cabinet was sworn in Tuesday, two days after the left-wing leader convincingly won a popular mandate to move ahead with the austerity reforms to which Athens has pledged its future.
Tsipras has vowed to end the political uncertainty that has rattled the southern European country for months.
Sunday’s legislative elections may afford Tsipras the political leeway to proceed with the tax increases, pension cuts and market liberalizations he agreed to in exchange for €86 billion ($97 billion) in bailout money, particularly after the former left-wing of his Syriza party failed to win any seats.
Some Greek citizens, meanwhile, hope for a return to political and economic normalcy. In interviews with MarketWatch, many said their concerns have turned from electoral politics to a restoration of common-sense policies that can help them restart careers and finances after months of elections and contentious debates about the country’s direction.
“Left or right—it doesn’t really matter. What we need is a government that’s willing to govern, instead of calling elections every couple of months,” said Dinos Psaropoulos, 35, an import-export manager in the textile business.
Greeks hope for an end to ‘crisis’ mode
The passing of the elections, a recapitalization of Greek banks and a gradual easing of capital controls may presage a welcome return to stability, said Thomas Wright, director of the Project on International Order and Strategy at the Brookings Institution.
But convincing Greeks to accept unpopular measures under relative stability—a “daily grind” of passing austerity legislation—may be a challenge without the threat of default, according to Wright.
“It’s going to be quieter and not as crisis-driven,” Wright said. “That’s new territory given the roller coaster of the past months.”
Greeks like Pantazis Deligiannis, a 31-year-old former civil engineer who runs a restaurant in Trilofos in the north of Greece, hope that quiet will lead to reforms that help them restart and grow businesses.
While most of his friends fled the country along with 10% of the country’s college-educated workforce, Deligiannis decided in 2011 to postpone an engineering career to return to his hometown of about 8,000 residents and open a traditional farm-to-table restaurant.
Since then, however, he complains of a complex taxation and bureaucratic system that has made running a business nearly impossible—what he calls an “overwhelming lack of sanity.”
The country’s tax system, he said, implies “a criminalization of entrepreneurship.” One of the tax reforms that stemmed from the bailout deal Greece signed with its creditors is a requirement that small businesses prepay next year’s income tax according to a projection of the current year’s profits. If, in the following year, the business makes a lower profit or posts a loss, the government is to return the overpaid amount.
“It’s like the government assumes that you will cheat on your taxes and takes pre-emptive measures that punish you in advance,” Deligiannis said.
Amid deflationary pressures and the overall economic slowdown, most businesses make less each year—if anything. Around 20% of the country’s private businesses have folded since 2010. Consumer-focused businesses have been hit hard, as private consumption has dropped 30% and food spending is down 28%.
“There is no liquidity, and we are barely getting by,” Deligiannis said. “Now we are practically required to take out credit to pay next year’s taxes, hoping the government will pay us back at the end of next year. This is insanity.”
The political uncertainty of the last six months, along with the capital controls that effectively suspended payments to suppliers outside the country starting this summer, meant Psaropoulos’s company suspended some European operations for two months because they couldn’t buy new inventory.
“We were sitting on cash but couldn’t make any payment to our suppliers,” Psaropoulos said. “Nearly 50 years of good business relations were about to vanish in a month.” Instead, he said, some suppliers eventually gave his company goods on credit, allowing them to remain in business.
The Greek government has recently begun granting industries and companies case-by-case approvals for payments outside the country. Psaropoulos’s company was recently allowed to pay outside suppliers up to €10,000 per invoice.
Greece’s uncertainty doesn’t only affect young professionals. With a revamp of the pension system required by creditors as a condition of any talks of debt renegotiation, retirees are living in fear of what could come next.
Social security benefits have already been reduced by an average of 27% since the first bailout agreement in 2010, and 45% of retirees receive monthly payments below the poverty line of €665.
Kostis Tsikinas, a retired basketball coach, has been receiving less than 50% of his pension over the past year. He is concerned that payments will be further cut or delayed, and he worries not only about his compatriots’ financial stability but their emotional state.
Various reports have shown that the crisis has taken a toll on Greeks’ mental health. A study published in February showed that the total number of suicides rose by over 35% since 2011.
“The biggest loss we can incur because of the crisis is to lose our humanity,” said Tsikinas, 64. “Because that is the only thing that money cannot buy.”
The focus remains the creditors’ agenda
Looming over the outcome of Sunday’s elections is the possibility that, with a slim parliamentary majority of 155 of 300 members, Tsipras’s coalition government, a partnership with the small right-wing party Anel, could fracture.
But for many Greeks, that is of little significance given that any other party—with the exception of the anti-euro coalition—would enforce the creditors’ agenda. Many Greeks acknowledge that despite the burden of upcoming austerity reforms, a potential failure of Tsipras’s government would be more dangerous because it would mean a return to the chaotic conditions of the summer.
Having gone to the polls for the third time in a little over six months, Greeks are suffering of so-called election fatigue and have come to believe that any government is better than no government.
“For at least the next year, all developments in Greece are determined by our commitments to our creditors,” said Dimitra Dichala, a 28-year-old attorney in Thessaloniki, the second-largest Greek city. “There is no Greek government that could take a different course without disastrous effects.”
