'Now a deal has been done, what lies ahead for the Greek economy?' diff viewer (0/1)

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Now a deal has been done, what lies ahead for the Greek economy?	Now a deal has been done, what lies ahead for the Greek economy?
2015-07-18 15:10:19 UTC	2015-07-19 11:37:24 UTC (about 20 hours later)
In the week when Greece’s economic drama peaked, six men conducted a ritual at the site that speaks of everything Europe cherishes most. At sunrise, and then again at sunset, they marched in perfect synchronisation to the top of the Acropolis. There, with rare solemnity, they sang the national hymn, saluted the Greek flag and then marched back down again.	In the week when Greece’s economic drama peaked, six men conducted a ritual at the site that speaks of everything Europe cherishes most. At sunrise, and then again at sunset, they marched in perfect synchronisation to the top of the Acropolis. There, with rare solemnity, they sang the national hymn, saluted the Greek flag and then marched back down again.
The predictability of such a ritual – at the single greatest monument to democracy – contrasted vividly with what was going on below: a make-or-break vote in parliament, an economy in meltdown, closed banks, capital controls, popular uncertainty and protesters hurling petrol bombs at police. “What we now desperately need is to diminish the uncertainty,” says Professor Yannis Caloghirou, who teaches economics at the National Technical University of Athens. “The banking system needs to be stabilised, we need to get back on the road of normalcy.”	The predictability of such a ritual – at the single greatest monument to democracy – contrasted vividly with what was going on below: a make-or-break vote in parliament, an economy in meltdown, closed banks, capital controls, popular uncertainty and protesters hurling petrol bombs at police. “What we now desperately need is to diminish the uncertainty,” says Professor Yannis Caloghirou, who teaches economics at the National Technical University of Athens. “The banking system needs to be stabilised, we need to get back on the road of normalcy.”
On Monday, Greek banks will open after three weeks of closure. That, and the decision to grant Athens a €7bn emergency bridging loan – vital to averting a looming default in the form of a €3.1bn payment to the European Central Bank, also due on Monday – will help restore a semblance of normality to a country that has come perilously close to resembling a failed state.	On Monday, Greek banks will open after three weeks of closure. That, and the decision to grant Athens a €7bn emergency bridging loan – vital to averting a looming default in the form of a €3.1bn payment to the European Central Bank, also due on Monday – will help restore a semblance of normality to a country that has come perilously close to resembling a failed state.
The age of innocence, the optimism that dominated society after the fall of the junta, is over	The age of innocence, the optimism that dominated society after the fall of the junta, is over
The yearning for stability cannot be overestimated. Even by the standards of what has become an epic struggle to keep bankruptcy at bay, the last month has been high in drama. Emotions have swung back and forth as violently as events. From a determined defiance – embodied by the resounding rejection of further austerity in a referendum on 5 July – Greeks have been forced to eat humble pie, their first ever far-left leader, Alexis Tsipras, caving in days later to demands for tax rises, spending cuts and pension adjustments, under threat of ejection from the eurozone.	The yearning for stability cannot be overestimated. Even by the standards of what has become an epic struggle to keep bankruptcy at bay, the last month has been high in drama. Emotions have swung back and forth as violently as events. From a determined defiance – embodied by the resounding rejection of further austerity in a referendum on 5 July – Greeks have been forced to eat humble pie, their first ever far-left leader, Alexis Tsipras, caving in days later to demands for tax rises, spending cuts and pension adjustments, under threat of ejection from the eurozone.
As anti-austerity protesters lobbed molotov cocktails at riot police outside parliament last Wednesday, Greek MPs voted through the measures set as condition for opening talks on further aid for their debt-stricken country.	As anti-austerity protesters lobbed molotov cocktails at riot police outside parliament last Wednesday, Greek MPs voted through the measures set as condition for opening talks on further aid for their debt-stricken country.
Though the harshest package yet – over the course of three years, Athens will be forced to make €12bn in savings – more legislators supported the policies than at any time since Europe’s debt crisis erupted in the Greek capital in late 2009. “Most of us realise this is our last chance for a fresh start,” says Anna Asimakopoulou, an MP with the conservative New Democracy party, which wholeheartedly backed the measures.	Though the harshest package yet – over the course of three years, Athens will be forced to make €12bn in savings – more legislators supported the policies than at any time since Europe’s debt crisis erupted in the Greek capital in late 2009. “Most of us realise this is our last chance for a fresh start,” says Anna Asimakopoulou, an MP with the conservative New Democracy party, which wholeheartedly backed the measures.
Unlike any of his immediate predecessors, Tsipras has the support of the majority of the opposition – no small thing in a crisis that until now has kept parties bitterly divided.	Unlike any of his immediate predecessors, Tsipras has the support of the majority of the opposition – no small thing in a crisis that until now has kept parties bitterly divided.
	Related: Eurozone ready to start formal talks with Greece over €86bn bailout
“But if he doesn’t implement these reforms, Greece won’t turn around,” says Asimakopolou, sitting in Athens’s cavernous, marble-floored parliament. “And not only has he said he doesn’t believe in them: around a third of his party have voted against them and want the drachma back.”	“But if he doesn’t implement these reforms, Greece won’t turn around,” says Asimakopolou, sitting in Athens’s cavernous, marble-floored parliament. “And not only has he said he doesn’t believe in them: around a third of his party have voted against them and want the drachma back.”
The corridors of parliament are plastered with paintings – many evoking the glories of ancient Greece, probably the single biggest factor in the country’s acceptance into the then European Community in 1981. As the “mother of all democracies,” the fount of European civilisation, argued the then French president, Valéry Giscard d’Estaing, Athens could not be excluded from the continent’s biggest project. “Our entry to the EC was the second most important date in Greek history after the war of independence,” says Thanos Veremis, emeritus professor of political history at Athens University. “If we left the eurozone, we would have to adopt policies that would lead very quickly to the country leaving the EU – and that would be a national catastrophe.”	The corridors of parliament are plastered with paintings – many evoking the glories of ancient Greece, probably the single biggest factor in the country’s acceptance into the then European Community in 1981. As the “mother of all democracies,” the fount of European civilisation, argued the then French president, Valéry Giscard d’Estaing, Athens could not be excluded from the continent’s biggest project. “Our entry to the EC was the second most important date in Greek history after the war of independence,” says Thanos Veremis, emeritus professor of political history at Athens University. “If we left the eurozone, we would have to adopt policies that would lead very quickly to the country leaving the EU – and that would be a national catastrophe.”
Tsipras appears to have come to the same conclusion. But after five months of fraught talks with the EU and IMF – the lenders that have shored up the Greek economy to the tune of €240bn since mid-2010 – his spectacular U-turn has come at considerable personal cost.	Tsipras appears to have come to the same conclusion. But after five months of fraught talks with the EU and IMF – the lenders that have shored up the Greek economy to the tune of €240bn since mid-2010 – his spectacular U-turn has come at considerable personal cost.
The ray of hope offered by the reopening of the banks – and the ECB’s decision to raise the cap on liquidity assistance, on which they depend – has been greatly dimmed by the severity of the rescue deal. The emergence of so many dissidents in his own Syriza party (39 did not back the programme) has clearly taken Tsipras aback.	The ray of hope offered by the reopening of the banks – and the ECB’s decision to raise the cap on liquidity assistance, on which they depend – has been greatly dimmed by the severity of the rescue deal. The emergence of so many dissidents in his own Syriza party (39 did not back the programme) has clearly taken Tsipras aback.
The terms exerted on Greece are so tough that rebels have ample cause to block the passage of laws along the way – starting with a major vote on tax increases this Wednesday.	The terms exerted on Greece are so tough that rebels have ample cause to block the passage of laws along the way – starting with a major vote on tax increases this Wednesday.
Even if a three-year bailout programme of as much as €86bn is finally agreed – following votes by the German Bundestag and other European parliaments on Friday to open negotiations – few economists believe it will return the country to financial viability.	Even if a three-year bailout programme of as much as €86bn is finally agreed – following votes by the German Bundestag and other European parliaments on Friday to open negotiations – few economists believe it will return the country to financial viability.
Most say the measures are so recessionary they are bound to further exacerbate Athens’s economic depression – even if the overhaul of the pension system and other structural reforms are long overdue. In contrast to Spain, Portugal and Ireland – countries that have emerged from bailouts intact – Greece’s downward spiral will continue.	Most say the measures are so recessionary they are bound to further exacerbate Athens’s economic depression – even if the overhaul of the pension system and other structural reforms are long overdue. In contrast to Spain, Portugal and Ireland – countries that have emerged from bailouts intact – Greece’s downward spiral will continue.
“To return to growth we need exports, and at 27% of GDP they are not enough to lift the economy,” says Panagiotis Petrakis, who teaches economics at Athens University. “The negative effects won’t last as long as previous programmes, because there are not many sectors left that can be destroyed. But much will also depend on political stability and how Greeks react when the measures are eventually felt.”	“To return to growth we need exports, and at 27% of GDP they are not enough to lift the economy,” says Panagiotis Petrakis, who teaches economics at Athens University. “The negative effects won’t last as long as previous programmes, because there are not many sectors left that can be destroyed. But much will also depend on political stability and how Greeks react when the measures are eventually felt.”
The prospect of political instability – the biggest impediment to foreign investment — has been heightened by speculation that Tsipras will call fresh elections once a bailout deal is reached.	The prospect of political instability – the biggest impediment to foreign investment — has been heightened by speculation that Tsipras will call fresh elections once a bailout deal is reached.
	Related: Greece debt crisis: reforms will fail, says ex-finance minister Yanis Varoufakis
Among the MPs in the governing Syriza party who reluctantly endorsed the reforms, talk is now focused on turning defeat into victory. When banks re-open on Monday, capital controls will remain in force, with depositors limited to withdrawing €60 a day: but at least, they say, liquidity will return to the market. “We all feel huge pressure politically, ideologically, psychologically,” admits Makis Balaouras, a veteran leftwinger who became the face of resistance to military rule when he was tortured in the runup to the regime’s collapse in 1974. “But this deal does offer the promise of debt relief, and with it we win time to tackle tax evasion, corruption, vested interests: all the things the left needs to do in power.”	Among the MPs in the governing Syriza party who reluctantly endorsed the reforms, talk is now focused on turning defeat into victory. When banks re-open on Monday, capital controls will remain in force, with depositors limited to withdrawing €60 a day: but at least, they say, liquidity will return to the market. “We all feel huge pressure politically, ideologically, psychologically,” admits Makis Balaouras, a veteran leftwinger who became the face of resistance to military rule when he was tortured in the runup to the regime’s collapse in 1974. “But this deal does offer the promise of debt relief, and with it we win time to tackle tax evasion, corruption, vested interests: all the things the left needs to do in power.”
But Balaouras also worries that Greece is being pushed too far. In the current climate, nothing can be ruled out – not least improved showings for the neo-Nazi Golden Dawn party, now desperately trying to assert itself as the only credible force against austerity.	But Balaouras also worries that Greece is being pushed too far. In the current climate, nothing can be ruled out – not least improved showings for the neo-Nazi Golden Dawn party, now desperately trying to assert itself as the only credible force against austerity.
“Europe is being so stupid,” he says. “There is going to be a drop in living standards, people will react and if Syriza is perceived to have failed, it will be the fascists, Golden Dawn, they will turn ~~to next.”~~	“Europe is being so stupid,” he says. “There is going to be a drop in living standards, people will react and if Syriza is perceived to have failed, it will be the fascists, Golden Dawn, they will turn to next.”
Professor Konstantinos Tsoukalas, Greece’s pre-eminent sociologist, believes that the nation has reached a watershed. “The age of innocence, the optimism that dominated society after the fall of the junta, is over,” he says. “The great mistake was that everybody believed we could continue marching towards a material paradise – that the growth of the economy, the rise in living standards could go on indefinitely when the unending promise of unending progress is never a given.”	Professor Konstantinos Tsoukalas, Greece’s pre-eminent sociologist, believes that the nation has reached a watershed. “The age of innocence, the optimism that dominated society after the fall of the junta, is over,” he says. “The great mistake was that everybody believed we could continue marching towards a material paradise – that the growth of the economy, the rise in living standards could go on indefinitely when the unending promise of unending progress is never a given.”
Tsoukalas, who has sided firmly with Syriza in the battle to save Greece – representing the party as an honorary MP in parliament – is all too aware of the irony of history: those who think they can control events are, he says, inevitably disillusioned.	Tsoukalas, who has sided firmly with Syriza in the battle to save Greece – representing the party as an honorary MP in parliament – is all too aware of the irony of history: those who think they can control events are, he says, inevitably disillusioned.
“I don’t think we will ever get over this crisis: people never get over moments that change collective attitudes,” he says. “The Greeks never got over the 1922 Asia Minor disaster, the French never got over their humiliation by Bismarck in 1870, the Americans never got over the 1929 crash and the Germans never got over the second world war. Things like this leave a permanent imprint.”	“I don’t think we will ever get over this crisis: people never get over moments that change collective attitudes,” he says. “The Greeks never got over the 1922 Asia Minor disaster, the French never got over their humiliation by Bismarck in 1870, the Americans never got over the 1929 crash and the Germans never got over the second world war. Things like this leave a permanent imprint.”
The next few years may wreak economic havoc, but they have saved Greece from the spectre of civil strife and worse. At some point, normality will return to the city that lies beneath the Acropolis.	The next few years may wreak economic havoc, but they have saved Greece from the spectre of civil strife and worse. At some point, normality will return to the city that lies beneath the Acropolis.