Europe is re­cov­er­ing, but is Greece?

Jean-Claude Juncker be­lieves Europe is start­ing to re­cover at last. But the pic­ture from the union’s most al­li­ble econ­omy is very mixed, writes He­lena Smith in Athens

The Observer - - IN FOCUS -

Is the eu­ro­zone on the mend? Jean-Claude Juncker cer­tainly thinks so. The EU pres­i­dent was up­beat in Brus­sels last week as he gave his an­nual sta­teof-the-union ad­dress, pro­claim­ing that “the wind is back in Europe’s sails”.

Juncker’s op­ti­mism ap­peared to match the view from Greece, the currency bloc’s prob­lem child. In Athens only the pre­vi­ous week, the visit­ing French pres­i­dent, Em­manuel Macron, had been even more en­thu­si­as­tic, declar­ing against the back­drop of the Acrop­o­lis that Greece’s pro­longed cri­sis was over, and that there­fore Europe’s was too.

Macron’s fi­nance min­is­ter, Bruno Le Maire, went fur­ther, call­ing the Greek prime min­is­ter, Alexis Tsipras, “a real leader [who] works for the com­mon good … a prime min­is­ter who works with great courage”. But if progress on Greece’s pri­vati­sa­tion pro­gramme is any­thing to go by, the econ­omy is still in the foothills of re­cov­ery. De­spite signs of resur­gence – at 0.7%, Greece recorded two con­sec­u­tive quar­ters of growth this year for the first time since 2006, and made a suc­cess­ful test re­turn to the mar­kets – for­eign sell-offs have been plagued by red tape and po­lit­i­cal re­sis­tance.

To the de­light of many, nonethe­less, Tsipras, the man who set Europe ablaze with Marx­ist ide­ol­ogy and anti-aus­ter­ity rage back in Jan­uary 2015, is be­com­ing more prag­matic by the day. The 42-yearold’s em­brace of the free-mar­ket poli­cies he once ab­horred was ce­mented last Sun­day, when he an­nounced that he would per­son­ally over­see the for­eign in­vest­ment drive now viewed as key to cur­ing the curse of Greece’s un­em­ploy­ment rate. More than a fifth of the coun­try’s work­ing-age adults are out of work.

Dur­ing his an­nual eco­nomic pol­icy speech, be­fore an au­di­ence of mostly Chi­nese in­vestors, the for­mer fire­brand promised to cre­ate a task­force with the sole pur­pose of re­solv­ing the bureaucratic hur­dles that are of­ten the great­est im­ped­i­ment to busi­ness in Greece.

“It is ob­vi­ous. Our poli­cies have changed rad­i­cally, ” says Ster­gios Pit­sior­las, the deputy econ­omy and de­vel­op­ment min­is­ter, whose airy of­fice is vis­ited daily by bankers, hedge-fund man­agers and in­dus­tri­al­ists jock­ey­ing for bar­gains. “Be­ing left­wing doesn’t mean you are also a fool. It doesn’t mean, in the words of Lenin, that we are use­ful idiots. Let’s speak se­ri­ously. Those who com­plain that Greece is be­ing sold off, that Greece will lose out, don’t know what they are talk­ing about.”

Tall, bearded and be­spec­ta­cled, Pit­sior­las is the point man in Athens’s at­tempt to raise €60bn (£53bn) through pri­vati­sa­tions. In what has been called the most am­bi­tious sell- off in mod­ern Euro­pean his­tory, as­sets rang­ing from pub­lic util­i­ties and trans­port com­pa­nies to mari­nas and ho­tels are up for grabs.

But amid grow­ing tensions be­tween in­vestors and of­fi­cials – and be­tween Euro­pean in­vestors and the Chi­nese – Pit­sior­las also is an ex­cep­tion to the hos­til­ity that other min­is­ters in Tsipras’s Syriza-led gov­ern­ment are ex­hibit­ing to sales many con­sider to be a crime.

On Mon­day, as prob­lems mounted, the Canadian min­ing com­pany El­do­rado Gold threat­ened to end its €3bn in­vest­ment in Greece, cit­ing de­lays in per­mits from the de­vel­op­ment min­istry. In a move aimed at elic­it­ing max­i­mum em­bar­rass­ment from the gov­ern­ment, it is­sued the threat less than 48 hours af­ter Tsipras de­clared that “Grin­vest­ment” had re­placed fears of “Grexit” and was now the mot du jour. Vi­o­lent protests erupted as em­ploy­ees demon­strated out­side the min­istry in Athens. El­do­rado is the coun­try’s big­gest for­eign in­vestor, and its mines will pro­vide 2,000 jobs.

On Tues­day, the coun­try’s trans­port min­is­ter, Chris­tos Spirtzis, upped the ante, de­liv­er­ing a with­er­ing in­dict­ment of the op­er­a­tional skills of Fra­port, a Ger­man con­sor­tium man­ag­ing 14 re­gional air­ports, many on pop­u­lar tourist is­lands, un­der a 40-year con­ces­sion. The ac­cu­sa­tion drew a strong re­buke from Fra­port, which claimed mas­ter plans sub­mit­ted for in­fra­struc­ture up­grades had yet to be ap­proved.

On Wed­nes­day, as of­fi­cials rushed to start the process of pro­vid­ing El­do­rado with per­mits, uncer­tainty over the re­de­vel­op­ment of Athens’s for­mer Hellinikon air­port peaked when the Ar­chae­o­log­i­cal Coun­cil post­poned a long-awaited de­ci­sion over whether the site should be re­de­vel­oped at all. At €8bn, it would be Europe’s big­gest for­eign in­vest­ment.

“What all of these things do is send a ter­ri­ble mes­sage to in­vestors,” Athens’s mayor, Gior­gos Kami­nis, told the

Ob­server. “The left is usu­ally associated with be­ing pro­gres­sive, but in this case we are talk­ing about a left that is deeply con­ser­va­tive – state ide­o­logues that don’t re­ally want progress at all.”

Kami­nis will run for the lead­er­ship of a new, uni­fied cen­tre-left party that will bridge the space be­tween Syriza and its main op­po­si­tion, New Democracy. Pa­sok, Greece’s old so­cial demo­cratic party, is associated ex­clu­sively with the coun­try’s eco­nomic melt­down and was pul­verised when the debt cri­sis erupted.

With the ar­dently pro- Euro­pean, re­form-minded Kami­nis be­lieved to be a shoo-in, Tsipras is watch­ing ner­vously – and, in the process, also shift­ing ground.

Pri­vati­sa­tions are cen­tral to com­ple­tion of a new round of bailout ne­go­ti­a­tions with the EU and In­ter­na­tional Mon­e­tary Fund. Greece’s third, €86bn, res­cue pro­gramme is due to end next sum­mer and Tsipras has made a clean exit from it an over­ar­ch­ing goal. But hur­dles lie ahead. Of­fi­cials raised the prospect of fresh aus­ter­ity should Greece fail to hit the pri­mary sur­plus tar­get of 3.5% – a prospect made likely by a huge short­fall in tax rev­enues.

But in a week when the Ital­ians fi­nally took con­trol of Greece’s state- owned train net­work (for a pal­try €45m) Pit-sior­las is op­ti­mistic. He cites the takeover of Pi­raeus port by the Chi­nese ship­ping con­glom­er­ate Cosco as an ex­am­ple of what pri­vati­sa­tions can bring: “They will make it the big­gest port in Europe.”

In five years, he en­thuses, Greece will be a very dif­fer­ent place, cos­mopoli­tan and vi­brant. “A mir­a­cle will hap­pen. There will be huge change … but the state can’t do it alone, the pri­vate sec­tor has to be in­volved.”

Ever since Athens’s debt cri­sis ex­ploded, suc­ces­sive gov­ern­ments – hit by fury over pay cuts, pen­sion re­duc­tions and tax rises – have tried to claw back sup­port by re­sort­ing to a nar­ra­tive of re­cov­ery and suc­cess. Tsipras is no dif­fer­ent, em­pha­sis­ing the seven-point drop in un­em­ploy­ment since 2015, a

‘The wind is back in Europe’s sails. But we will go nowhere un­less we catch that wind’ Jean-Claude Juncker’s ad­dress to the Euro­pean par­lia­ment

7.5% jump in ex­ports and a bumper year for tourism. Prob­lem-plagued for­eign in­vest­ment ef­forts punc­ture the nar­ra­tive, with many be­liev­ing that re­cov­ery can be as­sured only when the Greek prime min­is­ter tack­les en­trenched re­sis­tance among his own hard- left cadre. Youth job­less­ness is still run­ning at 45%, while the coun­try’s €300bn debt bur­den is an un­sus­tain­able 180% of GDP.

But un­like his pre­de­ces­sors, Tsipras has re­ceived un­prece­dented sup­port from fel­low EU lead­ers. They are aware that only a left­ist could pass the gru­elling aus­ter­ity asked of Greeks, and are now des­per­ate to prove the point that, far from be­ing in in­ex­orable de­cline, Europe is bounc­ing back – with its weak­est mem­ber still on board.

Main pho­to­graphs by Alkis Kon­stan­tini­dis/Reuters, Rex

Em­manuel Macron, far left, made a con­grat­u­la­tory visit to Greece ear­lier this month that was greeted with protest, near left; above, Alexis Tsipras, who has been hailed by the EU for push­ing through re­forms; right, Hellinikon air­port, sched­uled for re­de­vel­op­ment but now in limbo.

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