Greece’s international reputation took a battering during the European debt crisis that dominated the first half of the last decade. The country was widely perceived as irresponsible, corrupt and inefficient. The country’s financial situation was sound when it entered the EU in the early 1980s, but it deteriorated substantially over the following next thirty years. While the economy boomed from 2001 to 2008, high spending and mounting debt loads accompanied the growth. The end of 2009 and 2010 marked the beginning of Greece deep financial crisis following the Prime Minister's revelation of the real amounts of the public debt and deficit of the Greek state. Consequently, the Greek government announced and imposed capital control systems where bank withdrawals, overseas transfers and foreign exchange transactions were restricted as part of austerity measures.
On the migratory front, Greece’s immigrant population, including aliens and co-ethnic returnees such as Pontic Greeks and ethnic Greek Albanians, reaches just over one million people. This represents about 9% of the total resident population, a strikingly high percentage for a country that until only twenty years ago was a migration sender rather than host.
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In the last decades of the 20th century, Greece was transformed from a traditional migrant-sending country to a migrant-receiving country. At the same time, inflows of unauthorized migrants continued, despite deterioration of the Greek labor market, with countries of Asia and Africa emerging as important source countries. While unauthorized inflows were of course not a new phenomenon for Greece, due to high unemployment levels a large proportion of these inflows could not be incorporated into wage labor in the informal sector of the economy, as was the case previously during Greece’s ‘boom’ years.
At the short of liquidity, the Greek state found itself obliged to request financial assistance from the European Commission (EC). This is how the euro area officials were drawn up, jointly with the International Monetary Fund (IMF) and European Central Bank (ECB), the MoU agreements which include all the economic conditionalities to the granting of financial loans. The objective of these structural adjustment programs, developed between 2010 and 2015, was to impose deep reforms of Greek public policies in order to reach the budgetary standards in force not only in the European field but also vis-à-vis lending markets. However, the public debt has steadily increased since then, and the overall Greek socio-economic situation has deteriorated considerably. Yet the Troika has continued to deepen the prescribed measures, arguing that only these reform plans could lift Greece out of its critical economic situation, provided that Greek society assumes the necessary efforts.
On reading the Memoranda, it appears that these efforts are mainly structural measures to liberalize the economy, privatize goods public spending, reduction of public spending and 'wage and non-wage production costs' or even more flexible labor market. The cumulative circle fundamental to process of high-interest repayment of loans and public debt, which does not that generate new loan needs, as does the failure of measures to generate new economic growth, lead to question the formal explanations on which creditors rely to justify their policy choices economy destined for Greece. As a result, numerous of economic impacts negatively in Greece such; the drastic rise in the employment rate and rapid labor deterioration as shown by the increase of precarious and uninsured work, insecurity, degrading payments, weakening of labor rights, and deregulation of labor agreements. Hence, the migration of younger, highly educated people has risen ‘brain drain’, while those studying and living abroad are discouraged to return to Greece, and those who previously would have stayed, are now leaving. According to the World Bank’s statistics in 2014 Greece unemployment rate was 17.24%, a 2.05% decline from 2018 and the index for ‘anchored’ poverty rose more dramatically than the index for relative poverty.
Besides, the austerity measures contributed significantly to an increase in suicide cases in Greece which increased by 25 percent from 2009 to 2010 and by an additional by over 35 percent from 2010 to 2011. Furthermore, a dire deterioration of public health evidenced by reduced access to health care services exacerbated socio-economic crisis. There was also a decline in the health expenditures by up to 41%. Resultantly, drug prevention centers and psychiatric clinics closed down due to these budget cuts.
The industrial deterioration is also one of the main sectors that have been negatively impacted during this crisis. However, Greece is currently forced to follow other eurozone bond markets and eurozone financial institutions. Debt crisis in one-member country of the eurozone might trigger a more general crisis involving other eurozone countries perceived to be ‘fragile’ and have similar budgetary problems (like Spain, Ireland, Portugal). It is important to underline the aggression of Greece, Cyprus, and Turkey conflict over rights to drill for natural gas and how the EU could play a constructive role by helping the three parties declare a moratorium on exploration and switch their focus to renewable energies.
Despite the universality and naturalness of values and norms the socio-economic systems integrated into national and international systems, particularly within the European project, thus we faced with a real political project, operating through the strategies maintaining the conditions of social consensus under which a system socially constructed, politically integrated and intellectually supported global hegemonic the ability to become the new common sense, universally legitimized and consensual accepted, using a transnational historical bloc - made up of political elites, institutional, financial, economic and intellectual institutions, and sharing the same system of distinguishes his interest in the perpetuation of such an order. As such, the process of one market regulation has been accomplished by condemning the Greek state to long-term financial instability, the financial system disqualified from the outset a political alternative or an economic deviation from its demands, while serving the interests of the hegemonic class.
At this point, it is highly important to shed the light on the ideological part of the institutional discourse of the Troika in the management of the Greek crisis, as well as on the socio-political issues that govern this long lasting-crisis. Due to the absence of strategical constructive contingency plans and the sever corruption of Greek government and people in power to endure the debt crisis; multiple implications led to political discourse and many factors had also contributed to exacerbate the crisis and created a long-lasting social impacts and unrest starting from the division in the political and fiscal leadership that led for a massive demonstration to reform the national policies which rise of populist parties SYRIZA and the far-right Golden Dawn. For this, the new SYRIZA presented within their capacity as elected party on an ‘anti-austerity’ platform proposal for an alternative debt management regime to an emergency meeting of eurozone finance ministers in Brussels.
Strengthening the rule of law and ramping up efforts to fight corruption Greece suffers from high levels of perceived corruption. The ongoing fight against corruption and economic crimes is key to improving the business environment and the functioning of the public administration. In 2019, the National Transparency Authority (NTA) was formed to fight corruption. This initiative is yielding fruit and Greece’s scoring in the control of corruption has improved. Constitutional changes passed in late 2019 have streamlined immunity-waiver procedures for ministers and members of parliament.
Furthermore, the heavy migration wave put a further strain on the crisis. Due to the geographical location and the changes of Greece’s economy after joining EU, low-income job seeking immigrants trekked in. The unstable political situation in Eastern Europe, Middle East and African countries was the biggest pusher of the flow of immigrants to Greece. According to OCDE, Greece champions the EU in unemployment rates among migrants (around 25%). It’s important to note that Greece didn’t receive consistent support to manage this new wave of migrants. Unfortunately, it was accused of pushing back migrants and asylum-seekers. For this, in 2019, Kyriakos Mitsotakis, the prime minister of Greece, announced what he termed ‘strict but fair’ reforms to Greece’s migration policies. The Aegean Islands, facing a massive influx of asylum seekers, disrupted tourism and international trade. Moreover, the closing of neighboring countries borders encouraged refugees settled in Greece. On the other side, Turkey opened its borders for migrants intending to travel to certain EU countries through Greece as a pressuring tool or approach to get more support for a resettlement plan centered on northern Syria.
After the 2008 crisis, the Greek economy initiated its recovery in 2017, bouncing back in 2018 with a 1.9% growth rate that was estimated to reach up to 2.3% by 2019. Unemployment edged down from 27.5% in 2013 to around 17.3% in 2019. While Greece has contained the Covid-19 pandemic effectively, the negative impact on tourism, investment and public finances is a setback to Greece’s longer-term recovery. The impact of the Covid-19 pandemic on the tourism sector is unprecedented. Tourism has been hard hit, especially in places where the sector supports many jobs and businesses. OECD estimates on the Covid-19 impact point to a 60% decline in international tourism – if recovery starts in July in 2020. This could rise to 75% if recovery is delayed to September and up to 80% if recovery begins in December 2020. Domestic tourism will recoup more quickly but will not be able to fully compensate for the decline in international tourism.
At present, the Covid-19 pandemic isn't just a health problem. Its global impact on social, economic, academic, political and human welfare is unprecedented. The government-imposed confinement measures on all the accommodation facilities for asylum-seekers in Greece as measure of preventing the emergence and spread of Covid-19 cases. As in other countries, containment measures, travel restrictions, social distancing and high uncertainty have led to a temporary but extraordinary drop in production and large loss of tourism demand and employment. The government has responded with substantial packages to strengthen the health system, buttress incomes and liquidity, and support and restart sectors most affected by the shock, such as tourism.
By analyzing all the forementioned factors, the possibility of ‘Grexit’ becomes more real as there is no hope of Greece’s recovering from the recession impacting on overseas investment and tourism from other European countries. On the other hand, given the current situation and the conflict between Turkey and Greece it may not be the best time to withdraw itself from the EU since it’s the only entity protecting it from absolute tragedy. Yet despite governmental and community support, crisis fatigue has set in and Greek residents seek the return to normality and resumption of tourism that remains the islands’ economic lifeline. Moreover, Greece is still struggling to recover from its decade-long economic crisis, although some hopeful signs are appearing on the horizon. A new government elected in July 2019, the New Democracy party, has promised to usher in major economic, political, and social reforms that have been received favorably by the international community and foreign markets.
The Covid-19 crisis renews the urgency for Greece to undertake ambitious structural reforms to resume and reinvigorate the country’s recovery, raise economic growth and well-being, and ensure current and future generations enjoy a high-quality environment. The great financial crisis jolted Greece’s politics and changed its political economy and society in ways which, along with ongoing political stability, may help sustain the reform momentum. Successful reform implementation will depend on challenging vested interests and overcoming resistance to changes in the public administration.
A complicating and worrying factor is how much the country's biggest revenue engine tourism will suffer as far fewer people that hoped for came this summer after the borders were opened to many countries beginning in July, people still Covid-19 shy and afraid to travel. The tourist sector is seen shrinking 10.5% after many hotels didn't even try to open because of restrictive and expensive health protocols that would have been required and few to no bookings.
In conclusion, Greece continues to face the challenges of diversifying its economy and improving productivity as it did during the crisis. Emerging sectors, such as food processing, logistics, which include transportation and supply chain coordination, and investments in innovation clusters, are potential assets. But Greece needs to undertake institutional reforms, adapt the job market, finance digital infrastructure and adapt to the realities of heavy migration waves.
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