Reflections of the Economic Forum

There is a need to take a critical and comprehensive look at the Greek economy, in order to know what is currently really at stake. For this reason the Economic Forum was most useful. It made possible to learn a lot more about current thoughts about the economy by Ministers in the present government headed by Samaras since 2012, as well as by professors and entrepreneurs. Verification of what was said in Greek was made possible by everything said being translated into English.

All the speeches are based on notes written down thanks to these translations. They may not reflect at all times the original thoughts which take on often a different meaning once expressed in the Greek language, but still it can be assumed that a general and precise meaning was conveyed. Thus these notes aim to facilitate a better understanding of the Greek situation especially for those who hear about crisis but cannot really image what it means in real life.

To further an understanding of what was said, there have been added own comments. This effort was made to come to terms with what is afoot in Greece and in Europe towards the end of 2014. Things are at times very difficult to comprehend since instead of sound knowledge there circulate many more rumours while the truth itself turns out to be at best highly elusive. For instance, Eurostat discovered at the beginning of the crisis 2009-2010 that the Greek statistical records were not at all reliable, and the deficit became ever larger, the more one started to dig. No wonder. In a land which has still not completed the set up of the land registary, it has to be understood that 'inefficiency' is a system linked not just singularly to corruption, but to a wish not to become a victim of simple facts. A part of the Greek mentality dates still back to Odyssey who would talk himself out of all kinds of troubles, so that over and beyond facts, there is this constant level of negotiations. It includes setting the terms right, i.e. readjust them, so fit the case or what is needed at the moment.

Once things seem to be most elusive and facts hard to come by, then everyone needs to base own judgement on really hard to come by truths. That does make the Greek mind at times highly illuminating, at other times filled with prenotions and prejudgements. Capable of living in an own reality, that space is like the word 'cosmos' a relationship covering both people and universe. In this double sense, it is both vague but also a freedom to think of practical relationships in a varied ways.

Thus to say in Greece economic reality is highly evasive, then not only due to the lack of public truth, but also what everyone knows as being a difference between official or formal matters, and things which matter much more in an informal sense. The latter is reflected in the dominance of the black market and many other grey or 'in-between' formal and informal areas. They provide ample room for this ongoing negotiation but also give way to another kind of not knowing. Due to a lack of commitment and consistency, there is no method in place which allows the working through of ideas on how even the reform of the public administration would be desirable out of a perspective of the general public. There is uncertainty as to who should be the leading subject in public matters, and as long as this uncertainty prevails, that void will be filled by foundations, the church, local communities etc. rather than a civil society which could uphold public discourse.

Almost all prevailing attitudes ascertain the same thing, namely that the full truth of any matter seems nearly impossible. Where all the money has gone, is perhaps the most prevalent question, but even four years later, that is in 2014, only scattered scandals make the headlines, while the squandering of huge amounts of money has still to be clarified. Of interest is here the remembrance by a few that all of this over spending and over consuming was already the practice when Thessaloniki was Eurpean Capital of Culture in 1997 with huge amounts of money being spend on performances as if prestige was to be gained by a big spending spree. Spyros Mercouris would explain it as being the trait of the gambler who can waste huge amounts of money, but once he has no more money, walk simply away from the table and pretend as if nothing has happened. In the end, the money simply vanishes without leaving so much as a trace by which some accountability could be numerated in clear and honest terms. Euro-Stat discovered how difficult it is to verify statistical data in Greece, never mind how the real debt is to be identified.

Thus these notes may not be perfect and do depend upon the translators bringing across the right meaning. Still I trust that both the speeches and comments will have made for some interesting reading as one has rarely the chance to hear the various thoughts and political ideas of ministers, professors and entrepreneurs.

Altogether they painted a rather dismal picture despite an all out effort to claim progress in reform has been made, and Greece is on the way out of the crisis. Practically it means not to have resolved an unsustainable debt, but rather a psychological effect hoped by the political elite. By declaring it will be possible for Greece to exit the control mechanisms of Troika and thereby raise money on the market, that this amounts to standing once again on own feet.

This intention has received already a first dose of reality, since the market has raised already Greek bond yields to a higher interest rate of 7% or even higher. As pointed out by the Conservative newspaper Kathimerini, this urge to exist does not make sense when compared to the 4% the government would have to pay, if it would still depend on a bail-out programme of the IMF. Kathimerini believes that the coalition government does it in the hope to counter the growing popularity of Syriza. (see Costas Iordanidis (2014) „Coalition shooting itself in the foot“. Kathimerini http://www.ekathimerini.com/4dcgi/_w_articles_wsite3_1_16/10/2014_543760)

So right now the ruling coalition is trying to stay in power and off-set the growing power of Syriza by claiming at least a psychological victory insofar as Greece would leave behind the need of signing still another Memorandum of Understanding with the Troika. Of interest was how some voices at the Economic Forum expressed the opinion that in the major parties were agreeing in core issues, so why not create a unity government for the benefit of the country? This naive way of putting rescue of the country above upholding democratic values may also indicate what is to come in near future. By Nov. 2014 the conservative newspaper Kathimerini reports already about possible initial talks to sound out a possible coalition government made up of Nea Democratia and right now the main opposition party Syriza. („ND, SYRIZA play down possibility of PM and opposition chief meeting“ Kathimerini, 19 November 2014. http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_19/11/2014_544750)

Some further things need to be underlined after having listened to the speeches given at the Economic Forum, since there are things which are never really talked about in public or else the imagination of the collective mind has been brought into a kind of silent agreement that this might be the only way out of the crisis. No matter what it means in terms of future development in the country, the frantic search for some kind of economic independency means a search for foreign investors and a way to make the Greek economy competitive in at least some areas which really count.

First of all, the government seems to be betting on mega projects, the most outstanding one being the envisioned transport hub to be created around Piraeus port and which involves Cosco. There are plans to build railway links to Northern Greece with Hewlett Packard joining in to make this into a meta material distribution hub for everything the cyber industry needs. With it goes the likelihood that Pireaus shall be favoured as the next European Capital of Culture when it is the turn of Greece to select one city bearing the title in 2021. It would give a cultural legitimacy or rather mask all the development projects planned along the coast line from Pireaus to Salamina. Already it is said that reources of the Structural Fund have been earmarked for this purpose. Naturally mega projects transcend any local social and economic structure, with the incomes gained as a result going into dubious pockets to say the least. Kathimerini just discovered 10 Billion went uncontrolled from a bank to a private account abroad. It is this which upends any attempt at consistency in reform for that depends on honesty and working through just solutions for everyone, and not only for the few.

As this development will have further implications as to what role the cultural sector will play in future, it should be mentioned that at the Economic Forum reference to culture was made only in functional terms. Meant by this is that culture and the creative sector ought to function as a factor and source of attraction for foreign investors and tourists. Investments in culture shall be skipped as there are enough entertainers in the international field who are ready to fill the void or cultural demand at low prizes with some super stars strewn in between to ensure the crowd attraction. It amounts to a cynical operation, to say the least. The drive behind such a mega project can be reflected what happened, for instance, in Marseille when the city was European Capital of Culture in 2013. For the mega scale is a development in which ordinary citizens have no voice. They will serve only as cultural 'foot soldiers' when mega cultural events are organized in public spaces with entrance being free. In reality, it amounts to a mass demonstration in absurdity, but it takes just a few tricks to make any space become attractive e.g. the mirrors installed in Marseille at the port.

Mirror ceiling in port of Marseille 2013 @hf 2013

There is a second even more worrying trend. It is the willingness of the current government to give more money to the military. At the Forum the Minister for Development and Competitiveness, Nikos Dendias, said the government has taken on board a consulting company from Israel. This consultancy has enabled Israel to transform its original Kibbutz based economic system of socialist ideals, and which hit an economic crisis, into a modern high tech economy run by the military due to all the security issues involved.

Again it means a tabu topic not really touched upon in public discussions, and yet it absorbs not a lot of money, but indicates a second pillar of power which upholds the established society in Greece. The first and other pillar is the Greek Ortodox church which has a huge influence upon influencing the public agena, including the one related to educational policy. It seems nearly impossible to counter this injustice with these two sectors going nearly unharmed through the crisis although both are civil servants of the state, while only the rest of the administration is scrutinized for signs of inefficiency. It is furthermore known that a lot of money ends up in all kinds of dubious research and defence contracts but these scandals flare up only briefly and then are quickly forgotten. Yet if it is a priority set by the current government to upgrade the military so that it will play an ever greater role in society and economy, then this links up with political forces which seek to uphold a society within a society, and a rule not by law, but by semi dictatorship or at the very least by a national unity government using emergency rule to govern. By wishing to merge high tech with the military, it suggests that a strategy of development has been adopted which is not at all in correspondence with what ordinary Greeks think when contemplating the future of their country.

The Economic Forum replicted the dismal situation marked by a lack of public discussion. Whenever the chairman asked if there are any questions from the audience, no one posed a question. I left the Forum with one key question in mind since there was a lot of talk about the need to create a positive image of entrepreneurship. I would have wanted to ask if any Greek entrepreneur ever left the business world to become a writer like Herrmann Broch, the author of such famous books as 'The Death of Virgil'. If creativity is really grasped, it would have to take on such a meaning as well. It would indicate that business men and politicians become more aware that society is not driven solely by the economic value alone.

Speaking about entrepreneurship, I just read an interesting paper on this subject. It is written by the playwright Mike van Graan who is Executive Director of the African Arts Institute as well. In this capacity he outlined an exceptional positive approach to cultural and creative industries under the condition the quest of a true artist is not left out in the equation as set down by policy makers. *

Hatto Fischer

Athens 14.10.2014

* Mike van Graan, (2014) „Youth Empowerment through Creative and Cultural Industries“. EU conference on youth empowerment through the Creative Industries. http://www.afai.org.za/eu-conference-youth-empowerment-creative-industries/

Post-script:

Since the Economic Forum was held on Oct. 7th, 2014, there took place the confidence vote in Parliament. It prompted a critical comment in the newspaper Kathimerini published under the title, "the coalition shooting itself in the legs."

Contrary to the remarks by the Ministers made at the Economic Forum that Greece was about to exit the crisis, trouble emerged due to a general atmosphere of uncertainty. At the stock market in Athens loss in share prices may reflect as well a general trend that all stock markets, including the one on Wall Street in New York, experienced during a turbulent week ending Friday, Oct. 17th. However, Greek bond yields shot up as well, so that the European Commission had to step in to reassure markets that the European Union will continue to support Greece even after the country has left the International Monetary Fund.

Without further understanding as to what can and does affect market behaviour, and it can include investors just getting nervous, no sound prognosis about further developments can be made. There is something highly random about the entire thing. However, it seems that the Lehmann Brother scandal in 2008 has but indicated for far worse things to come. So far only patch work has been done to fix the problem. It has to do with the lack of regulation and oversight of banks but far more telling is one remark by Jens Weidman, member of the GoverningCouncil at the ECB in Frankfurt. He opposes the asset-purchase plan since it would increase the risk for tax payers. That alone says something about on whose back all these speculative deals, and trade offs between short term gains and long term expectancies of future profits, are made. It is fraudulant business at best, destructive economic competition in almost all normal cases.

All this might be due to the overall negative impact of the global economy makes itself felt. It was asked at the Forum, if the Greek economy can be protected against these global risks? An answer to that is not simple, given the interdependence e.g. common curreny of the EURO

Moreover the prognosis about the entire European economy, or just of those economies which share the EURO, is not very positive. It seems as if the recession in Europe has not been put behind, and even the German economy is starting to slip down for the first time.

Critics say all of this is due to the negative impact of a policy imposing only austerity measures. Still, how to return to economic growth if that concept is itself highly doubtful.

Greek economy and 'Black economy'

It is publically acknowledged that the shadow economy hinders business development for two main reasons: one, the productivity of “gray” companies is strangled because they do not have easy access to loans, an two, non-productive companies, meanwhile, pay low wages.

Public discussion about economic policy:

Naturally in a world which talks about derivates, spread of not risks but rates, it can be a highly confusing one with few people able to make sense of what would be responsible governmental policy in such a case.

The role of the state

After the speech by Tsipras, some speakers that followed made some critical side remarks at the notion of having again a strong state as if this would mean heading towards a central state of the Soviet Union type. Naturally many critics of current bailout programmes have come to the conclusion that the state must regulate and control especially the banks. Still, in a step further, who will control the strong state, if the citizens are not empowered by their own doing insofar as they engage themselves in public debates. This was partially the case when enraged citizens gathered on Syntagma Square. They were shocked by the size of the deficit and wished to find out where all the money went. They practiced then for the first time in Greek history a bottom-up drive to exercise in democracy. Each person was allowed to speak only two to four minutes. There were over 2000 listening. They created committees to examine particular questions and which had to report back to the assembly. It was a way of taking public truth into their own hands.

Yet it was clear that the established parties, but also Syriza and the trade unions did not like that people were beginning to emancipate themselves from parties and their way to play out connections between business and state. Unfortunately that 'politics of the squares' ended in 2011 when violent demonstrations erupted and gave the police an excuse to smash into the tent village which has been constructed on Syntagma. Here is also of interest that Kamenis as mayor of Athens used hygenic arguments to justify the sweeping clean of the square, for the dirt, noise and health risk was something which visitors to Athens would not like to see.

In this combination of aesthetical and health related arguments became visible what Jean Pierre Faye had already identified as the setting in of reactionary politics in the Commune of Paris after the French revolution, insofar everything was transformed after a health police was created. It should also make one wonder what future selection shall be in store when there is constantly talk about healthy activities and entrepreneurs as opposed to unhealthy ones which should not receive any loans from the banks.

Exit strategy

By the end of November 2014, it becomes clear that Samaras will not get his way. Some EU member states wish the IMF to stay on board. The negotiations with the Troika remain almost dead locked. There are predictions of forth coming general elections if the current coalition government does not secure sufficient votes in the Greek Parliament to elect the next President of the Republic. That shall be known by the end of February. Already some fear mongering of a political kind fill the air e.g. reference to Syriza as the 'radical Left' with predictions being political instability lies ahead. Unter these circumstances it is hardly surprising that pressure is mounting on the current Greek government to stick with a bail-out plan that foresees some coverage of the risk in case money cannot be raised on the free market.

The deadlock with the Troika is linked to certain demands which the Greek government thinks would ensure their loss of power at the next general election. Some of the demands by the Troika reflect long standing grievances such as very early retirement, that is before having reached the minium age of 62. Another point of contention is the 100 installments to pay back a loan. That includes in particular those which are 'bad performing' loans, a technical term for loans in doubt whether they shall be paid back at all. The dire situation in Greece is often created by postponing things for the future, and this very often out of sheer convenience rather than dealing with issues head on.

See for instance the report by Bloomberg on Sunday, 30. November 2014 as to what such a news agency notes as being important to observe.

Bloomberg

Greece Said to Weigh IMF Role in Credit Line in Samaras Reversal

Bloomberg

With talks deadlocked, Greece is on a very tight deadline to submit concrete proposals to bridge the gap with the troika of the European Commission

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