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Greece is a European success story
  • 26 Apr 2023
  • Politics


"Greece is a European success story. But the prime minister may not get credit for it in the upcoming elections," writes the Economist in one of its articles on Greece.

The Economist's article analyzes the course of Greece in recent years, the Mitsotakis administration and also attempts an analysis of what will happen in the elections.

The Economist article

Kyriakos Mitsotakis, 55 years old but looking much younger, is full of energy and satisfaction as he takes stock of the four years he spent in the Office of the Greek Prime Minister, with a stormy list of achievements and successes. It is hard to imagine, as he lists the optimistic statistics, that he might be about to lose his majority and even his job. However, this is what the polls predict.

Mr. Mitsotakis, an impeccable technocrat, is one of the most beloved figures in Brussels. After the pandemonium of his predecessor's rule, when with the radical left-wing SYRIZA party in power Greece came close to being kicked out of the euro, the last four years have been a huge relief.

Mr Mitsotakis has steadily eased tensions with neighboring Turkey: the rush of aid to victims of the February earthquake there was smart, but also humanitarian.

He has revolutionized the way citizens interact with the state, thanks to an impressive digitization program. He has cut corporate taxes, raised the minimum wage and pensions and, despite all this, managed to reduce Greece's already high debt-to-GDP ratio, although this was mainly due to the effects of inflation, which increased nominal income faster than nominal expenses.

During his days, last year Greece grew almost twice as fast as the eurozone average, and it is predicted to outperform this year as well.

A steady flow of foreign investment, including from well-known companies such as Microsoft and Pfizer, shows that Greece is no longer considered one of the weaker countries in Europe.

A year ago, in fact, Greece produced its first "unicorn" startup, an exclusively digital bank called Viva Wallet.

All this means that last August Greece's creditors allowed it to abandon the surveillance mechanisms it had imposed for the previous 12 years, after the country was forced to beg for a series of massive bailouts, which are being repaid early.

Greece can now borrow from the markets in the normal way, paying a spread of less than two basis points over Germany, roughly the same as Italy's. The Greek spread peaked in 2015 at approximately ten times its current level. "We did a very good job in very difficult times," says Mr. Mitsotakis - without modesty perhaps, but accurately.

"Bell" for the double elections

So why are the dark clouds hovering around the prime minister? Greece goes to the polls on May 21 and, with today's numbers, his party, New Democracy, still wins the most seats, but only about a dozen more than Alexis Tsipras' SYRIZA. This will deprive him of a majority and he has no obvious partners for a coalition government. A bonus system, unique in Greece and San Marino within Europe, gave 50 seats to the largest party to make it easier to achieve majorities, but this system has now been abolished.

Mr. Mitsotakis was affected by two major problems. The first is a dark scandal that revolves around the phone surveillance of dozens of politicians, journalists, businessmen, etc. by the National Intelligence Service. Among those targeted (albeit unsuccessfully) was Nikos Androulakis, the leader of PASOK-KINAL, the third largest party. Mr. Mitsotakis has admitted that there were abuses, but denies that he knew anything about them. However, they happened in his day. Many Greeks find it extremely suspicious that, as the scandal broke last summer, his own nephew, who had been his chief of staff, resigned from the government.

A fatal accident

An even bigger problem was the terrible train accident that occurred on February 28 in Northern Greece, in which 57 people, many of them in their 20s, were killed. Greece was rocked not only by mourning but also by outrage as details emerged of the incredibly lax procedures and antiquated equipment that led to the disaster. Although Greece's railways had been neglected for decades, the accident seemed to many to belie Mr Mitsotakis' claims of modernization. "They gave us a lot of new applications, but in the end nothing has changed at all," says a businesswoman. "The public services in this country are still as unacceptable as they have always been," he adds.

The Public Administration and, even more characteristically, the Judiciary remain antiquated and creaky, and Mr. Mitsotakis has done nothing to reverse all this. "He dealt with the surface, not the deep state," says one senior banker.

One of Greece's richest businessmen is more blunt. "All this modernization is bullshit," he says. "It's not like that."

The prime minister rejects this criticism, pointing out the progress that has been made, for example in the Public Electricity Company, which he has privatized, or that this year, for the first time, recruitment in the Public Administration was done by tender. He admits, however, that he needs a second term to complete his work. The train crash signals his obligation to do more, he points out.

"Almost certain that no one forms a government in the first elections"

He may not get the chance. What is almost certain today is that no one will be able to form a majority after the next elections and that the President of the Republic will appoint a caretaker prime minister (probably a senior judge) until new elections are held, probably in July, when the real battle. At that point a revised but less generous version of the seat bonus system will be reintroduced.

According to this, Mr. Mitsotakis would still need about 38% of the votes. Most polls show he will only get 34%-35%. So what will happen? He will try to form a coalition with an angry Mr Androulakis of PASOK, who currently says the price of his support would be another leader to lead Mr Mitsotakis' New Democracy. PASOK may instead try to ally with SYRIZA, but they will need support from a "surf" of other left-wing parties. "It would be a madhouse," says the businessman.

So a third election may be needed this year: A prospect that fills everyone with sadness. Everyone, that is, except the markets, which remain calm. And this is a remarkable testament to the progress made in the second half of Mr. Tsipras' term - and by Mr. Mitsotakis himself.


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