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Greece in 2016 - unpredictable politics and deteriorating economy

11 January 2016 / 22:01:38  GRReporter
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The bitter irony that I am talking about is that of the four creditor institutions, the International Monetary Fund is Greece’s most conscientious ally regarding debt relief. At the same time, it has the most stringent requirements for the implementation of structural reforms. It offers the most painful among them too. This is precisely the dilemma which is facing SYRIZA and which is making difficult negotiations with creditors as a whole.

The three obstacles that I previously mentioned are precisely the painful structural reforms imposed largely by the International Monetary Fund. If the government overcomes them within 3-4 months, it can begin negotiations on debt restructuring.

Simultaneously, the official position of the government is that it does not want the International Monetary Fund to participate in the creditor quartet. That is, on the one hand, it wants negotiations on the debt, in which the International Monetary Fund would be its most reliable ally, but on the other, to launch these negotiations, it has to implement all painful structural reforms that are offered mainly by the International Monetary Fund. This huge contradiction to the so-called "strategy" of Tsipras and SYRIZA, which is no strategy at all, is aggravating negotiations and making them so confused.

What does Kyriakos Mitsotakis’ victory in the fight for New Democracy leadership mean for the party?

I believe that it is very positive news for New Democracy itself, at least because the party is quite outdated, not so much in terms of the age of its voters, but mostly as a supply of ideas. New Democracy needs ideological renewal. Let us hope that Mitsotakis will achieve it.

He is an interesting political personality himself. He is relatively young, at the age of 47 years, yet he has already gained life, professional and political experience. He has a good mix of qualities.

Kyriakos Mitsotakis also has a lot of challenges ahead of him, at least as a party leader. I think that inside his party he will inevitably face the momentum and the outdated ideas in the party apparatus. Interestingly, he is already accelerating the procedures, announcing an extraordinary congress in February. Obviously, he wants to clear the political physiognomy of New Democracy as quickly as possible, which really needs it.

In my opinion, as it is quite outdated, the party needs a new dose of radicalism. Of course, there is a great deal of radicalism in SYRIZA and its positions, but it is harmful and destructive. I believe that New Democracy needs a beneficial and constructive radicalism to shake both society and the economy in a good way. And it should merge into the new party ideology at this extraordinary congress.

Another major challenge faced by Kyriakos Mitsotakis as New Democracy leader is the need to mobilize the dynamic segments of Greek society. To some extent, he achieved it during the internal party election and was therefore elected. People outside New Democracy participated in this process and in the end, they were the critical mass that chose him. Therefore, his personal goal and that of the party should be to mobilize far greater segments of Greek society that are mostly young people with a relatively good education. People that are apparently oppressed by the crisis in the country and want to fulfil themselves in social and professional terms, not just to keep their privileges, as was the position of the majority of New Democracy voters until recently.

Moreover, he must convince the public and the creditors that he represents a real alternative to SYRIZA as a government. This will not be easy because creditors themselves may prefer SYRIZA in power at this stage, not in opposition. It is not difficult to remember how SYRIZA fuelled protests and clashes in the streets until recently and it would once again be an unproductive opposition, saying "no" to everything.

What does his victory mean for the government?

In all cases, Kyriakos Mitsotakis will more sharply oppose SYRIZA. Recently there have been a lot of rumours about a subversive and tacit understanding between the old party apparatus of New Democracy and SYRIZA. I hope that Mitsotakis will lead a more open policy and will have a clearer position. He himself said that he would be a fierce opposition. Let us see how constructive it will be, because there are very serious issues that need national consensus. Pension reform is an obvious example.

How will the Greek economy develop this year under these conditions?

Very badly. At this stage, I see no signs of improvement of the situation in the first half of the year, which we are discussing. The government is saying it will try to completely eliminate capital controls by mid-year but prominent economists are commenting that this is not possible. Their argument is that people's distrust of government is so great that the moment this control is removed, they will withdraw en masse the few remaining bank deposits. This will cause a collapse of the banking system. I do not believe that the government will be able to inspire public confidence during this period, to the contrary. I expect that things will instead get worse.

If capital controls continue, which is the more likely scenario, the Greek economy will continue to suffocate and shrink. Estimates of global organizations expect negative economic growth in Greece in 2016, although the government is talking about economic rise and upsurge.

After six years of economic crisis and especially after an extremely difficult 2015, could we talk about a mature Greek society in terms of reforms?

Tags: PoliticsEconomicsGreeceForecast for 2016Plamen TonchevStructural reformsPublic debtNegotiations with creditors
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