One of the important tasks of any government is to manage public opinion. Some governments see this process as a necessary, ongoing, systematic explanation of their strategy to the citizens of the country, in order to make it understandable and remove any inevitable obstacles to its realisation, Ekathimerini reports.
This is what former Socialist Prime Minister Costas Simitis did, for example, to achieve Greece’s integration into the eurozone in 2001 – when New Democracy, as the main opposition at the time, tried to postpone it indefinitely, allegedly as “mission impossible”.
Other governments substitute an explanation of their strategy (either because they don’t have one or because they don’t want to recognise it) with cheap propaganda in order to stay in power and share the spoils, i.e. the state. This is what the then New Democracy government did after 2004, for example, by discreetly changing the way military deficit spending was calculated in order to discredit Greece’s integration into the Eurozone and the tall tales of a “protected economy” made up with falsified fiscal data. Presumably, some lessons have been learnt, however, not always and not completely.
An example of this can be seen in the commentary surrounding Moody’s recent decision to leave Greece’s rating unchanged, as well as its outlook. The rating agency said in its report that important reforms had been delayed, the economy was vulnerable to recession in Europe, it was fragile due to heavy reliance on tourism and shipping, and despite improvements, the capital quality of banks was lagging behind. What does the government say it has learnt from this report? That Moody’s welcomes the progress made and expects further positive developments in the economy, according to Ekathimerini.
Positive change is not certain and, given today’s conditions, it is not the most likely. What will we do if Europe slips into recession? It is important to note two things: in 2021, Eurostat forecast that Greece’s long-term average annual GDP growth to 2070 would be 1.2 per cent. Last year it lowered that forecast to 1.1 per cent. It has now downgraded its forecast even further to take into account the new fiscal regime that will come into force from January 2025. Eurostat predicts that average annual Greek GDP growth between 2026 and 2035 will be 0.8 per cent, roughly in line with the International Monetary Fund’s forecast. What does this mean? We may have 2-3 more years of euphoria ahead of us (due to the abundance of capital from European funds and income inflation), but if we continue like this without looking ahead, we are in for stagnation.
Secondly, no matter what it says to manage public opinion, the government is largely aware of how stalemated this situation is. That’s why they’ve started thinking about how to immediately shore up bank capital. The idea is to partially or completely replace the (accounting) tax deferred capital (just under 14 billion euros) with bonds that the Greek state will issue, so that if/when we face a recession in the coming years, the Greek banking system will not be exposed to serious risks.
This idea makes a certain amount of sense whether you agree with it or not. What makes absolutely no sense is the claim that the Greek economy is the envy of many and is – once again – “shielded”.
