Greek Business File, September-October 2020, No 127

Editor’s Log by A. D. Papagiannidis




Multi-layered uncertainty not for the faint-hearted

A summer like no other in recent memory leaves back a promise of increased uncertainty for the rest of the year. The multi-layered character of this uncertainty makes for a challenging rest of 2020

Under normal circumstances, in midsummer 2020 Greece, all eyes would be expected to be focused on the workings of the Task Force, on the prerequisites of the National Recovery and Development Plan to be submitted to Brussels authorities and so forth. Not to forget that a special Committee of two dozen significant Greek economists, led by LSE Professor and Nobel laureate Chris Pissarides, has been already working to that effect. It presented a first roadmap for the future development of (post-Covid-19) Greece aiming to enhance productivity and to make a more extrovert, export-oriented, tradable- goods-based economy possible.

The Pissarides Report, which also included important suggestions for deeper structural reforms in the educational field, to link Universities and Research Centers to production, or in the justice system, to accelerate procedures in cases of significant economic interest, was supposed to be at the center of a wide-ranging debate between social partners and political parties. All this, in time for a final version to be submitted to Brussels so as to obtain finance from the “Next Generation EU” recovery plan, agreed upon to provide a “European” answer to the Covid-19 epidemic economic ravages.

“Normal circumstances” is the least applicable description of the situation in Greece at this point in time. For one, the Covid-19 tally is steadily worsening: known cases in Athens, Thessaloniki and the Aegean islands tourist hotspots have surpassed the 200 a day; some restrictions reminiscent of the lockdown days are being reintroduced; wearing a mask is becoming increasingly mandatory; PM Kyriakos Mitsotakis has issued an emotional call for all those back from their summer vacations to keep some sort of self-imposed soft quarantine.

Then, the economic impact of the pandemic is becoming evident: the sharp drop in tourism receipts and tourismrelated incomes is here for all to see; the collapse in overall employment looming in fall and winter makes officials uneasy about social unrest (those fearing for their own jobs are far more fearful); business sentiment is gloomier that at the earlier peak of the pandemic; the loss in tax receipts is a cause for increasing concern, notwithstanding relaxed fiscal EU rules allowing for the deficit to deepen.

Last, but by no means least, on the geopolitical front, Turkish moves to initiate seismic exploration for natural gas in sea areas considered by Greece to fall within its own continental shelf in Eastern Mediterranean were momentarily put on hold following German mediation calling for “prudent dialogue” between the two neighbors; soon afterwards, an EEZdelimitation agreement entered into between Greece and Egypt was used by Ankara as a reason to distance itself from dialogue and resume action at sea. At times a flare-up looked imminent. Greek Foreign Minister Nikos Dendias stated in an interview that “the two sides unfortunately have not reached a point where we can start a dialogue”.

European mediation is now tried following a German-French mini-Summit in mid-August so as to defuse the situation in Eastern Mediterranean and the Aegean. The EU, called by Athens to adopt sanctions against Turkey, was rather reticent for the time being. Turkey has declared its willingness to engage in conflict-resolution talks with Greece – but the range of issues Ankara is trying to raise is far wider than those Greece could accept at a negotiation table.

The current situation has been described in diplomat-speak as “contacts to initiate talks so as to make possible a prudent dialogue that will hopefully lead to negotiations allowing for recourse to the ICJ (or other juridical or arbitral institutions)”: not for the fainthearted!