How will Greece and the EU move forward?
Speakers:
Manuel Sarrazin, Bundestag Member, Spokesman on the Affairs of the European Union, Alliance 90/The Greens
Nick Malkoutzis, Editor, MacroPolis; Columnist, Ekathimerini English Edition
Yiannis Mouzakis, Economics Editor, MacroPolis
Nick Malkoutzis, editor of the independent analysis service MacroPolis and columnist for the English edition of the Greek newspaper Ekathimerini, provided a comprehensive analysis of the political situation in light of the recent agreement between Athens, European donors, and the International Monetary Fund to disburse the next bailout tranche of Greece’s third rescue package. He pointed out that the agreement would bring at least some breathing space and relative stability for the Greek government in the upcoming months. However, he highlighted that the far-reaching reforms demanded by European creditors – namely pension cuts and healthcare reform – have taken their toll; Prime Minister Tsipras and his government have lost significantly in public support. On the impact of the refugee crisis, Malkoutzis explained that even though the inflow of refugees arriving in Greece has been significantly reduced due to the EU-Turkey deal, the numbers of refugees in the country remain extremely high. Malkoutzis concluded that the deterioration in EU-Turkey relations is causing worry in Athens that the agreement might break down.
Yiannis Mouzakis, economics editor of MacroPolis, focused on the current economic and financial situation in Greece. He explained that even though the agreement to disburse urgently needed loans to Greece will secure a period of relative peace over the next few months, the crucial question of debt relief has only been postponed until 2018. Noting that the outcomes of the French presidential elections and German federal elections in 2017 are still uncertain, Mouzakis suggested that Prime Minister Tsipras might well have missed his best opportunity to negotiate debt relief. This is even more so because Tsipras has meanwhile been obliged to implement a highly recessionary program full of direct and indirect taxation. Turning his attention to the potential impact of “Brexit” on Greece, Mouzakis argued that his country is currently gravely exposed to any kind of economic any political shock. “The IMF predicts the spillover effect from a Brexit on the Greek economy to be around 0.5 percent of GDP – enough to derail attempts to meet the fiscal target in the country’s adjustment program. This would trigger the contingent mechanism which forces the Greek government to seek new cuts or structural measures in order to achieve the targets of the program.”
Manuel Sarrazin, Bundestag member and spokesman on the Affairs of the European Union for Alliance 90/The Greens, provided insight into debate on the Greek debt crisis within Germany. He argued that the politicization of the negotiations by the Greek government and European lenders has been detrimental to the Greek recovery. Sarrazin highlighted that at this stage, it is in the vital interest of the German government to present developments in Greece as a success story to the German public; this would prove that German insistence on strict conditionality in the course of the Greek debt crisis was the right prescription. In Sarrazin’s view – in order to prevent the Greek crisis from popping up on the political agenda quickly and hoping that the 2017 federal elections will provide a more favorable political climate – the German government agreed to disburse the next tranche of the third bailout agreement but to postpone a discussion of debt relief to 2018. On the prospects for Greece’s economic recovery, Sarrazin said, “if we want Greece to return to a sustainable growth path, the Grexit debate must never come back again. This is the only way, investor trust will return.”
The event was organized by the DGAP’s Alfred von Oppenheim Center for European Policy Studies. Program officer Julian Rappold chaired the discussion. The event was held in English.
