Greece: Time for Syriza to lay its cards on the table

Much to the expectation of eurozone pundits, Riga’s April 24 gathering of euro finance ministers made little progress in terms of reaching an agreement for Greece’s comprehensive list of reforms, a prime condition for the country receiving €7.2 billion in bailout cash to enable it to pay its debts to the IMF in the coming months. While some ministers left feeling that communication with Greece has been entirely lost, and even took brutal swings at Greek academic-turned-finance minister, calling him “a time waster, gambler and an amateur,” Yanis Varoufakis insisted that there had been convergence between the two sides.

But with Greece’s public debt amounting to a colossal 170 percent of GDP, unemployment hovering at 28 percent (and 50 percent for the young), and record deposit outflows of €25 billion between December and February, the country will need much more than mere “convergence” with the Eurogroup if it is to survive. Rather than trying to bargain with its international lenders in the hope that they will fold their high hand, Varoufakis needs to face the facts of his weaker position and look beyond the debt talks to come up with a long term strategy for growth and job creation.

Thus far, Syriza’s position on welcoming foreign investors and creating a friendly business environment has been ambiguous to say the least. While FDI increased five-fold from 2010–13, the political uncertainty associated with the new Syriza government and its current lack of direction and vision have left many potential investors jittery about investing. John Paulson, a U.S. billionaire and founder of hedge fund Paulson & Co, announced that, “we are prepared to invest more in Greece [but] the political uncertainty has caused the stock market to fall and new investments to be postponed.”

In addition, rather than making bold statements about the wide array of opportunities for investment in the country, comments by Greece’s officials have largely contributed to the feeling of political instability. For example ministers have opposed a Canadian company’s gold mining plan in the North of Greece, which would have brought $1 billion of investment over five years and would have created 4,000 jobs.

Similarly, Syriza’s deputies have resisted the expansion of a container for a Chinese shipping company in the port terminal of Piraeus. COSCO, which manages two of the main container terminals in Piraeus, was one of the foreign bidders for a tender to gain control of a 67 percent share of the state-owned port. Upon Syriza’s arrival to the forefront of the political scene, however, the privatization of the strategic port, one of Europe’s busiest, was put on hold despite the mutually recognized long-term benefits of a future China-Greece partnership for the country.

Indeed, foreign investors can largely act as the stimulus that Greece’s economy needs and can bring the required liquidity to revamp some of the country’s key strategic sectors. Greece’s shipping industry, once a beacon of the country’s growth, employment, and national pride, has suffered significant blows since the crisis. Greece accounts for 16.25 percent of the worldwide fleet and 46.7 percent of the EU fleet in terms of deadweight tonnage, and from the period of 2000-2013 3.7 percent of Greece’s GDP came from net receipts from sea transports.

Today, the situation looks bleak. At Hellenic Shipyards in Skaramagas, the largest in the east Mediterranean, some one thousand workers haven’t received their paychecks in over two years, and those who still haven’t quit, fear what awaits them on the job market. Austerity measures and severe budget cuts mean that the government cannot bail out the industry on its own and must let in foreign investors long term to revive the sector, a lifeline of the Greek economy and a major driver of employment.

Polls indicate that a vast majority of Greeks would prefer to stay in the eurozone, with the Kappa Research survey published in the To Vima weekly underlining that 71.9 percent of respondents would prefer the government to strike a deal with international creditors rather than default, and it has become increasingly clear that Syriza needs to move quickly to come up with a strategy ahead of Wednesday’s ECB meeting. The weekly gathering will determine how much “emergency liquidity” should be granted to Greek banks and on what terms, at a time when Greece is struggling to make ends meet.

With 35 percent of Greeks at risk of living in poverty, the Greek government needs to look to its core sectors to encourage growth and employment. By loosening its grip and relaxing financing constraints, Syriza can reduce political uncertainty and strengthen the economy by attracting FDI to prop up both large businesses and smaller companies struggling to get off the ground and obtain financing.

The eurogroup meeting certainly produced one clear conclusion: Time is running out, and if Greece isn’t able to move quickly to put together a reform package under the conditions of its international lenders, it will be forced to default on its debt, leading to the country’s swift exit from the eurozone. Only by looking inwards and undertaking structural adjustments to its key industries can the Greek government hope not only to secure the trust of international markets, but also to instill confidence among its own population that the government is capable of sticking to its obligations and avoiding an economic meltdown.