‘I believe this will work. There is no other way’

Greek prime minister Antonis Samaras, below, knows how close his country is to economic destruction and anarchy, writes Europe correspondent Ann Cahill

OVER the next 10 days, the fate of Greece will be sealed, according to embattled prime minister Antonis Samaras.

In that time, the IMF, ECB, and EU will decide whether to finally release the €31.5bn loan the country desperately needs just to keep going.

But for each day the funds are delayed, a healthy company shuts its doors, adding to the legions of unemployed, Mr Samaras warned.

The ordeal is taking its toll not just on the economy. As the great recession moves into its sixth year, fascists become more powerful supported by more than one in eight of the country’s 11m population.

The best Greeks can hope for is that their standard of living will be halved and not completely destroyed by the time they have worked their way through the austerity programme over the next two to four years.

Cutting the budget deficit by 8% has stripped the economy of a quarter of its wealth, and it will take more austerity to get the budget below the 3% deficit demanded by the troika.

“By the end of this programme, the deficit will be almost eliminated but Greece will have lost at least 40% of its pre-2009 standard of living,” said Mr Samaras, five months into his job as prime minister at the head of a three-party coalition.

The reality behind these figures is that more than 25% of the workforce is unemployed and close to 60% of young people have no work.

The country has already received €148bn in EU/IMF loans and now needs another €32.6bn. The troika’s latest report warned the risk of Greece defaulting “remains very large”.

Its debt is coming perilously close to 200% of GDP, increasing the pressure for more spending cuts and more tax increases — worth another 7% or €13.5bn — must be achieved over the next two years. Greece has failed to hit all previous targets as the recession has been deeper than predicted.

The EU has agreed to give Greece an extra two years to 2016 to cut its deficit to 4.5% of GDP and their debt to 120% by 2022 — but the IMF was anxious to stick to the original dates.

A relieved Mr Samaras told the Irish Examiner the IMF was now coming on board and would give his country the vital extra time.

But none of the experts can say all this hardship will work and that a Greek exit from the eurozone will not happen.

The troika describes the future as “uncertain”, saying it depends on the strength of the recovery they tentatively say should begin next year. There is talk of “debt forgiveness” but rows continue over who can afford to lose money.

Mr Samaras is haunted by another spectre. The country that lived under and fought fascism for decades is turning towards it. “In modern times I never met or knew fascists existed in Greece. Now they have 13% of public support. But they are not against Angela Merkel or anyone else. They are against the system that has allowed this crisis to happen — they are mostly young people, and it is being fed by unemployment.”

All the old hangovers from a clientelist state are being tackled, Mr Samaras, a Harvard-educated economist said. Greek ship owners have been tackled and will be paying into the exchequer for the first time ever. The state is finishing an agreement with Switzerland to tax the billions of euro Greek citizens have on deposit there.

But, he said, they face two big challenges. The first is liquidity, a shortage of money in circulation, which the troika funds should help resolve.

“Greece owes the private sector €8.9bn — and we ask them to pay their tax, which is less than the money we owe them. They say they cannot pay their tax until we pay their bills. I have no way to do this in a simple arithmetic way — I cannot subtract what they owe me because I have zero liquidity.”

The second challenge is psychological. “You can do nothing in Greece unless the psychology turns positive. We want to go straight, to deliver, to do what we said we would do and expect Europe to do what it has to during this ordeal, but you must have positive psychology. When you can give signs that things are changing, then everything can change — the invisible hand of the economy is always there but you need to have the right psychology to make it work.”

There are signs of change: He said the Chinese want to bring their imports in through the port of Piraeus, Greece has had a bid for its natural gas and oil companies, and bank deposits which had fallen from €240bn to €135bn are up to €160bn, all because the psychology is changing.

“I really believe this will work. There is no other way — if it does not work we are embarked on a catastrophe. This has to work, it will work. This is the most important 10, maybe 15 days in Greece, when we get the disbursement, and then change the page of our story and embark on a new path — the path of recovery.

“I know we have the means. We are going to maximise our efforts to maximise our advantages. We will do it. We will turn it into a European success story.”

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