They don’t have a clue

A seasoned Greek economist frequently says that the Greek economy is very shallow and with one or two good investments it could recover. 

I remembered this as I read about the country’s largest investment – on the site of the former Athens airport at Elliniko – and the fact that construction work could begin next Easter, even though the project had been signed and approved back in 2014 by the Samaras-Venizelos government. In other words, bulldozers will get to work – if and when local SYRIZA offices allow it – with a delay of 4.5 years. 

So in a country which has lost a quarter of its gross domestic product in a decade and is struggling to attract investments, those in power are snubbing a mammoth project.

According to the Foundation for Economic and Industrial Research (IOBE), the investment would create 90,000 new jobs, increase national income by at least 2.5 percentage points by its completion, and raise 1.4 billion euros in annual revenues over the next 25 years.

The lack of urgency would of course be understandable if citizens were living well. However, unemployment in Greece remains the highest in Europe – around 20 percent – and workers’ incomes remain depressed.

A recent study by the General Confederation of Greek Labor (GSEE) indicated that seven in 10 workers take home less than 1,000 euros a month and just 10 percent earn more than 1,300 euros. Further, for every 1,000 euros that a company pays a worker, it pays almost as much again in taxes and contributions to the wasteful Greek state.

But if big projects start with a five-year delay, people’s incomes are barely enough to sustain very moderate living standards and companies pay huge taxes to the state, how will we be able to make the leap needed for the country to escape the current anemic growth?

And when Greece will be unable to tap into the markets for the next 2-2.5 years to raise capital – as Finance Minister Euclid Tsakalotos recently admitted – and therefore unable to return to normalcy, how can we expect foreign investors to ignore the risks and bring their precious millions here?

Prime Minister Alexis Tsipras said on Tuesday that “the Greek economy is now on the path of dynamic recovery with a fiscal performance that not only makes pension cuts unnecessary, but also allows for tax relief and measures of social support.” Unfortunately, he doesn’t have a clue.