Editor’s note: Greece’s European creditors have agreed to a €86 billion ($93.6 billion) package designed to stem the struggling economy’s debt woes and keep the country in the euro zone.
Some call it a needed triumph for European unity; others view it warily, saying it commands too much austerity without doing enough to spur growth and hasn’t ruled out the prospect of a “Grexit,” a Greek exit from the euro. Even after the deal, the IMF warned that Greece will require more debt relief and restructuring over the long haul.
The controversial Prime Minister Alexis Tsipras of the Syriza party, who steered the country on the recent collision course with Germany and its other creditors, now finds himself pitching this bitter pill as the best medicine available at the moment.
Global Atlanta caught up with Greece’s new consul in Atlanta, Giorgos Panagiotidis, to make sense of his country’s trajectory under the deal, which is still being debated in Greece’s parliament.
In the following Q&A, we explore the tension between austerity and growth, Greece’s enduring appeal for tourists, the essence of its geopolitical role in Europe, its untapped opportunities, the role of its diaspora in the Southeast and the kinds of questions he’s had to answer since coming to Atlanta.
Global Atlanta: Prime Minister Tsipras says he doesn’t like the conditions of the deal but is taking it to stay in the euro. What do observers (and the Greek public) fail to understand about the potential consequences of leaving the euro?
Mr. Panagiotidis: Thank you for giving me the opportunity to discuss the current situation in Greece with you today. The fact is that according to recent opinion polls, 80 percent of the Greek people want to stay in the euro zone. This has been consistent throughout the crisis. Even after the recent agreement, which includes even more austerity, 70 percent of Greeks support the implementation of this tough program. This shows that the vast majority of the Greek public understands what is at stake.
When Mr. Tsipras took power in January of this year, after five years of austerity, the GDP had shrunk by nearly 30 percent, unemployment had risen from 12 percent to 27 percent, while youth unemployment was running at 55 percent. These recessionary figures represent the highest that any country in the Western world has had to endure in recent times of peace.
Based on these facts, the new prime minister went to Brussels to negotiate an agreement which would ease the terms of austerity and include growth measures to stimulate the economy. Unfortunately, more austerity measures were the only option available to him in order to stay in the euro zone. He strongly believes Greece’s place is in the euro zone, so he accepted this agreement.
Global Atlanta: What are the geopolitical implications of Greece’s staying in the euro, given what’s going on in Ukraine and in trade talks with the EU and the United States?
Mr. Panagiotidis: It is very crucial for Greece to remain politically and economically stable, in the heart of the EU, given its geographical position in a volatile area with several ongoing crises, like the Ukrainian crisis and the situation in the Middle East and Northern Africa. As you know, Greece is a full member of NATO and, of all the member states, spends one of the highest percentages of GDP on defense.
Global Atlanta: How this deal is different from others reached in the past five years, and how is a replay of this harrowing situation going to be avoided in the future?
Mr. Panagiotidis: For the first time, this deal includes funds for growth. This is also the first deal that includes a commitment from all the parties that the restructuring of the debt (i.e., lower interest rates and longer period of repayment) will be discussed. This was one of the new government’s main goals, and one that was strongly supported by the U.S. government and the IMF. Here, I would like to underscore the importance of the role of the U.S. in the negotiation process.
Now that we have a deal, the Greek government will implement all the structural reforms needed to attract foreign investments and fight corruption and tax evasion. At the same time, we hope that the effect of some of the austerity measures of the deal will be counterbalanced by the increase in revenues from growth and tax collecting.
Global Atlanta: Some have called this a disastrous deal for Greece, taking the tack that more austerity will simply feed the economic problems at the root of the crisis without fixing the fundamentals. But is there a sense, at least among those in favor, that this will enact reforms (like the privatization of energy markets) that are essential to putting Greek back on a growth path anyway? What is that path?
Mr. Panagiotidis: During the past five years Greece achieved many important fiscal adjustments, such as transforming a budget deficit of 13 percent in 2009 into a primary surplus of approximately 1 percent in 2014 (the biggest cumulative change in the primary fiscal balance in the euro area ever and the biggest worldwide in recent years; namely, 15 percent of GDP in five years). It also reduced the public sector by 267,095 employees between the years 2009-2013 (which is €8.7 billion less in the state budget) and reduced pensions by 38 percent. However, after five years of austerity, the ratio of the Greek debt to GDP has risen from 120 percent in 2009 to 180 percent in 2014. This shows us that just austerity does not work. It needs to be accompanied by growth, by the creation of jobs and wealth etc.
But, as I mentioned earlier, the benefits of implementing all the reforms needed – reforms that, as the government has pointed out, are measures that would need to be taken even if we were not in a crisis – will counterbalance the recessionary tendencies of the steep cost-cutting measures and tax increases.
Global Atlanta: What do you think this deal, despite the conflict, says specifically about Greece’s place in Europe? In other words, given the opposition to the deal at home and among the public in places like Germany, is this a fundamental shift or a temporary band-aid?
Mr. Panagiotidis: Greece’s place in the heart of Europe is not negotiable, and this is broadly accepted. It was the 10th member to join the then-European Economic Community, and it is a fact that all the democratic parties in Greece agree that Europe is where Greece belongs. After all, it is often said that, “Europe without Greece is like a baby without a birth certificate.”
Global Atlanta: How has tourism been affected, and what role do foreign visitors — specifically from the Southeast U.S. — play in your economic revival? Also, how important is creating business ties with your vast diaspora?
Mr. Panagiotidis: The reaction of the Greeks abroad on the situation in Greece is very supportive. Many of them are asking me how they could support Greeks in this time of need through charitable organizations. Some have even gone as far as opening up small businesses in Greece to encourage growth and to provide jobs.
It is well known that tourism is one of the main pillars of the Greek economy.
Tourism in Greece has not been significantly affected by the current events including the bank holiday, which has now ended. In fact, according to the most recent figures, tourism has increased by 7 percent in the first six months of the year. Visitors currently in Greece, as well as people planning to visit, will not be affected by any developments in the Greek banking system and will continue to enjoy their holidays in Greece without any problems whatsoever. The Greek authorities do not anticipate any disruptions in visitors’ everyday holiday experiences, whether on the islands or on mainland Greece, as there are ample fuel supplies, products and services. The capital controls introduced by the Greek government do not apply to those wishing to withdraw money from an ATM or carry out any type of transactions using credit cards or debit cards issued abroad.
As our minister of tourism has said, Greece is a big brand in tourism, one of the biggest worldwide. I can assure you that no economic crisis will ever affect the beauty of Greece, its sun and the famous Greek hospitality.
Global Atlanta: What kinds of questions have you been getting in Atlanta since your arrival about the crisis? Are there silver linings that we aren’t seeing by focusing on the debt deal? What else would you like to communicate about your country and its current opportunities beyond the negative aspects we’re hearing in the news day to day?
Mr. Panagiotidis: Unfortunately, most of the questions I’ve been getting relate to the Greek crisis and the stereotypes that have been created in people’s minds during the past five years. I’ve heard that the problem with Greeks is that they don’t want to stop retiring at 55. The truth is that, with a few exceptions where Greeks retire earlier (e.g., people who do jobs with hazardous working conditions and mothers of underage children or children with disabilities), Greeks retire at 67, just as in most of the European countries. Furthermore, the average retirement age for Greeks is 62.3 years, which is above the EU average (62.07 years).
Besides that, according to an OECD survey about its member states for 2014, Greeks are ranked third in average working hours per year. So, these are some of the misunderstandings about Greece I have to deal with when I talk to people abroad about the situation in Greece.
Although Greece has been in a relatively difficult situation for more than five years, and despite the negative publicity, it remains a country with high standards of infrastructure, while the vast majority of Greeks speak at least one foreign language. All this, combined with the country’s strategic location – where three continents (Europe, Africa and Asia) meet – makes Greece a very attractive location for foreign investment.
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