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For one year in power SYRIZA has totally collapsed the economy

25 January 2016 / 20:01:17  GRReporter
1750 reads

Anastasia Balezdrova

Just a year ago the radical left SYRIZA won the parliamentary elections in Greece with a convincing victory over its main opponent New Democracy. The party came to power with promises that it would cancel the memoranda signed with creditors, eliminate the property tax, reinstate to work all dismissed civil servants, restore the state television ERT to its form before the closure in June 2013 and above all that it would break "the spiral of austerity in Greece" by successfully concluding the negotiations on debt reduction.

Alexis Tsipras’ preference to choose as a coalition partner Panos Kammenos and his populist party Independent Greeks, which is often defined as far right, fairly quickly cast a gloom on the initial euphoria of the majority of SYRIZA’s traditional supporters regarding the materialization of their fundamental dream, namely for the left wing to govern Greece. Lengthy negotiations with creditors followed, which ended with the signing of the third bailout programme under far more adverse conditions for Greece. Meanwhile, capital controls were imposed in the country, which stood as a barrier in front of the economy that was suffocating anyway.

Despite the apparently unsuccessful outcome of the negotiations and the metamorphosis of the government that pledged to fulfil the commitments against which it fought while in opposition. SYRIZA again won the second parliamentary elections in September 2015.

Four months later, negotiations with creditors on the first monitoring of the programme implementation are still questionable, the social reactions against the decisions of the cabinet are intensifying, the economy is gasping, local companies are withdrawing and foreign companies are showing almost zero investor interest.

The reasons for the deepening crisis in Greece over the past year were the topic of the conversation that GRReporter held with Greek journalist and economic commentator Kostas Stoupas.

Mr. Stoupas, how has the one-year rule of SYRIZA and Independent Greeks affected the Greek economy?

The consequences are already measurable. One of them is the withdrawal of deposits of around 40 billion euro from banks. Apart from this, banks lost tens of billions of euro thus the need to be recapitalised under very negative conditions for their previous shareholders. This happened at bank share prices very close to zero.

A bad climate has been created in the real economy resulting in the withdrawal of thousands of companies abroad as well as of tens of thousands of Greeks, mainly their senior employees. For me the "escape" of talented and productive Greeks is the worst long-term consequence. This also applies to companies because they provide jobs, generate income and wealth in every society and could potentially take a country out of a crisis. The longer the withdrawal of companies continues, the more the Greek crisis will deepen.

Many companies have already left the country. It is not yet apparent but I think the picture will clarify even more in the coming months, especially after the increase of taxes and social contributions.

One year after the left government came to power in the country we see the collapse of everything that it had claimed prior to that. The government itself is not doing most of the things that it has promised but almost the opposite to them. This fact marks the end of this concept and the end of the confrontation regarding the pros and cons of memoranda (the bailout programmes – author’s note) that has monopolized political life in Greece in recent years.

Do you think that something changed in the economic policy of the government after the Minister of Finance was replaced?

No. During the first six months while the government was in power, there was no economic policy at all. And I think that the advantage that secured SYRIZA’s victory in the second parliamentary elections in September was the suspension of the collection of taxes on the part of the state. The option of deferred payments of tax liabilities, in 100 contributions, allowed the collection of the income tax to start after October. Households felt a relief from the heavy tax policy applied by the previous government. This was regarded as a positive development and a feeling of mild euphoria was created, which secured the second victory of SYRIZA.

Since October, however, the state has begun to reach the pockets of households and this has changed the general atmosphere. The change is evident both in the results of public opinion polls and in the discontent that is rife in society. It will become even more distinct very soon, when taxes will increase even more and citizens will have to pay them, although they will be excessive for most of them.

The exacerbation between Greece and its creditors is obvious. To what extent is it due to the government and to what to the creditors?

I think that creditors have held a constantly firm stance towards Greece in recent years. They are not ready to yield. In the case of Greece, they have found themselves in a mess of contradictory and mutually rejecting policies showing that they lead to a deadlock. In fact, this is partly associated with the creditors, since they did not have a productive action plan to apply to Greece. But the main problem is that no Greek government implemented any plan that was drawn up for the country. The only thing that was applied was horizontal cuts in salaries and pensions as a result of which the economy is increasingly sinking.

Tags: PoliticsSYRIZAOne year in powerEconomyCrisisEconomic analystKostas Stupas
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