Unfavorable climate in the EU
Government officials are very pleased because they no longer feel the tight grip of the fiscal straitjacket imposed on them by Greece’s creditors. They can comfortably spend, appoint civil servants and revoke painful reforms. They are fully focused on the next general elections. The goal is to reduce the gap with the main opposition as much as possible and to retain a hard core of 25 percent of voters.
Europeans have long grown tired of Greece and are now only discussing Italy. Most of the officials who handled the Greek affair will soon either retire or move to another bureaucratic position. They are not at all concerned about what will happen in 2019 or 2020.
The problem is that the next Greek prime minister will have to face a very different Europe. I leave aside the fact that most analysts predict that growth rates in the European Union will fall. German Chancellor Angela Merkel will not be in the picture. During her time leading Germany and Europe, she has made her moves in the most careful and balancing way. Sometimes she has waited for results in local elections, at others she has considered the internal balances in her party. The political elite has, in the meantime, taken the view that the cost of handling the Greek crisis has been high for her.
It will be very difficult for a Greek leader to convince Berlin to back a new deal that would ditch the current primary surplus targets in favor of a strong growth-oriented package which would reduce taxes and give the economy some room to grow.
French President Emmanuel Macron will turn his attention to the domestic front, where things seem dangerously dark. European Commission President Jean-Claude Juncker, who took some risks in relation to Greece, will leave in the autumn. Europe will find itself in the midst of a major political crisis after the European elections, while the Italy and Brexit dramas will continue to unfold.
In one respect, one might claim that we are lucky because we have left the difficult times behind us. We have survived a phase of extreme populism and the tribulations of 2015, the economy might have bottomed out, and a government with an agenda for growth could succeed in changing things. But for us to move forward, we need a positive economic climate in the rest of Europe and a new deal that will free the economy of some of the weights it is carrying. It will not be easy to govern the country under these circumstances. And of course I do not want to think about what will happen if we use up the cash buffer in the pre-election period (and to shore up the banks). Because if by any chance we need to ask Europe for more money, I do not think they will even open the door.
