The el­e­ment of po­lit­i­cal risk

Kathimerini English - - Front Page - BY ALEXIS PAPACHELAS

ic re­cov­ery will not en­tail an in­stant im­prove­ment in the un­em­ploy­ment rate. The sec­ond ob­ser­va­tion made by mar­ket ex­perts is that for­eign play­ers see some­thing in Greece that we do not. Th­ese are peo­ple with cash who be­lieve that Greece abounds with op­por­tu­ni­ties and are ready to in­vest. The lead, as usual, is taken by the op­por­tunists in the shape of var­i­ous funds will­ing to take greater risks. Th­ese are play­ers who have stud­ied Greece ex­ten­sively and who know its dis­ad­van­tages, such as the in­ef­fi­cient pub­lic ad­min­is­tra­tion and the re­ac­tions that in­vest­ments in­evitably stir. De­spite this, how­ever, they con­tinue to show a keen in­ter­est, maybe be­cause they be­lieve that the coun­try’s lenders will even­tu­ally make one last grand ges­ture on the debt is­sue. That, how­ever, is where the good news ends, be­cause we also have to fac­tor in the el­e­ment of po­lit­i­cal risk. On the one hand the gov­ern­ment has failed to lower ex­pec­ta­tions re­gard­ing its per­for­mance in the Euro­pean elec­tions and, on the other, the op­po­si­tion has turned the po­lit­i­cal arena into a bat­tle­ground. If we were talk­ing about a shift in power be­tween, say, Chris­tian democrats and so­cial democrats, there wouldn’t be an is­sue. In­stead, we are see­ing threats and heavy-handed rhetoric and can­not say with any cer­tainty what the po­lit­i­cal land­scape will look like af­ter May’s polls. A large sec­tion of the pub­lic has run out of pa­tience and is an­gry; it is al­most im­pos­si­ble to find a sin­gle per­son who is not fed up. And this is where the risk of self-ful­fill­ing prophecy lies: Just as the econ­omy starts to reach an equi­lib­rium, the po­lit­i­cal scene will be on shaky ground and the back­slide will con­tinue. As is usual in such cases, un­cer­tainty and fear over po­lit­i­cal de­vel­op­ments will freeze the mar­kets and there­fore in­ten­sify the po­lit­i­cal in­sta­bil­ity. How can we end this vi­cious cy­cle and make 2014 the year that Greece restarts? Well, that is the big ques­tion in­deed.

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