No One’s Talking About the Key to Greece’s Recovery
As Europe struggles through an anaemic recovery, its structurally challenged South is trying to mend itself. It is a fascinating, and still undecided turnaround story, best illustrated by the Eurozone’s former bête noire: Greece. Exacerbating the problem, the media often do a poor job of helping explain both the current situation and its prospects, as a panel in London’s Southbank Centre will discuss on October 19.
On the economic front, the government is trying its best to play up Greece’s “success story”: its return to stability, the achievement of a primary surplus, and the increasing interest of global investors such as John Paulson. The opposition is pointing out the human suffering and roaring unemployment (over 60% for youth).
In this rather fruitless exchange of propaganda, some important structural transformations are overlooked. Among them is a growing culture of entrepreneurial development. Entrepreneurial meeting points, such as Open Coffee, which started with a handful of people, now fill auditoriums of over 2,000 people. Successful Greek ventures such as TaxiBeat have inspired budding entrepreneurs. Initiatives of expats wishing to support entrepreneurship, such as ReloadGreece or Greek efforts such as TEDxAcademy’s RisingStars, have been added to offshoots of international organizations like Endeavor. Funding support has also emerged: the Hellenic Initiative, based in New York, has pledged $100 million to support new ventures.
If Greece is to recover, these green shoots need to grow and flourish. To do so, they need to find a way of interacting with the Greek state, which is notorious for slowing down businesses, imposing a mountain of regulation and protecting incumbents by discouraging innovators. So Greece needs to help reform its own administration, to make it more effective and user friendly.
Alas, the EU Task Force has done a poor job so far, having neither the mandate nor the skill for the massive change management project required to allow the administration’s more progressive and capable civil servants to push aside the antiquated mentalities that still define Greek public service.
There are some glimmers of hope. The current Redesign Minister seems more determined to shake the status quo. He is supporting a bottom-up initiative, RedesignGreece, to help this change process by way of a set of prizes for Greek civil servants with innovative ideas on how to change the administration for the better. It will take more determination and consistent effort (and more effective reporting and media pressure) to ensure that the public sector helps Greece transform itself.
The second thing needed for the green shoots to grow is money. The contraction in the Greek banking system, brought about by the crisis, the restructuring of Greek banks, and the imposition of Basel III regulations, has been aggravated by a warrant scheme aimed to support investing in banks rather than the creation of aggregate credit.
Also, Greek banks, which had made generous loans to large Greek corporates, will, in today’s market environment, never be paid back at par. Yet they hesitate to restructure, hoping that rolling debt over will allow them to restrict their write-offs. They want to avoid the painful choices of dealing with the turnaround and the ousting of previous managers and owners who have led to this mess. So, potentially healthy parts of the Greek economy are turning into zombies, losing productivity, and locking up scarce banking funds in an exercise of blind hope.
For all the creation of schemes to support liquidity, improvement on the ground is limited. Precedents, such as Spain’s creation of corporate bonds tailored to SME’s, exist, and should be urgently prioritized. Yet they get little media (and government) attention.
Greece isn’t only suffering from the results of its past fiscal profligacy. It’s suffering as a result of its gradual loss of competitiveness, and of the structural inefficiencies built up both in the private and in the public sector. What Greece, and Southern Europe in general, need, is to find a way to help the healthy, export-driven and competitive part of the economy to grow and replace the declining, introvert side of the economy that is dwindling. It’s time for us all to think how we — business, the government, and the media — can identify and encourage the green shoots to take hold, and cut back the decaying, parasitic vegetation that is still choking them.
The Greek presidency of EU must be annulled, because the kleptocratic alliance of Pasok mafia and Nea Democratia mafia cannot be trusted. The freakish government of Greece stole my computer, my files, and my life in cold blood! Basil Venitis, venitis@gmail.com, http://themostsearched.blogspot.com
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