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1. Using RRF resources to kick-start a job-rich recovery in Greece

Author:
Manos Matsaganis and Georgios Manalis
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
The Recovery and Resilience Facility (RRF) is a golden opportunity for those member states that were most badly hit first by the debt crisis then by the pandemic. Greece, one of the largest beneficiaries in per capita terms, is due to receive very significant resources that can help arrest the decline of the 2010s. Can these resources be spent wisely and efficiently enough to kickstart the process of inclusive and sustainable growth? This paper briefly reviews the Greek National Recovery and Resilience Plan (Greece 2.0), assessing its potential contribution to upgrading the economy’s growth model, enhancing skills, and boosting employment. In 2007-19, total investment in Greece shrank by a stunning 70% in real terms. Over the same period, public investment fell by 62%, business investment by 44%, and household investment (on housing, mostly) by 89%. Under-investment constrains growth and undermines the future prospects of the Greek economy. The Recovery and Resilience Facility offers Greece a unique opportunity to bridge the investment gap, giving a boost to the sustainable recovery of the Greek economy. Technically, Greece 2.0, the country’s National Recovery and Resilience Plan is competently drafted, as its favourable reception by the European Commission indicates. Still, critical issues abound. In this sense, Greece 2.0 embodies the contradictions of the current juncture. On the one hand, there is a consensus that the Greek economy should rebalance, by pursuing a growth strategy that relies much more on exports than in the recent past, and much less on domestic consumer demand fuelled by debt. On the other hand, the legacy of the past weighs heavily on social and political actors, limiting their room for manoeuvre. The list is daunting. It remains to be seen how the above will play out over the next few years.
Topic:
Debt, Economy, Crisis Management, Resilience, and Economic Recovery
Political Geography:
Europe and Greece

2. Household Wealth Inequalities in the wake of the Greek Debt Crisis

Author:
Apostolos Fasianos
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
Despite the renowned interest in wealth disparities, the distribution of wealth in Greece is largely understudied. This study maps the levels, dynamics, and composition of household wealth using data from the three waves of the Household Finance and Consumption Survey for Greece for the period after the debt crisis of 2009-10 till 2017. The evidence suggests that the richest 1% of the population holds roughly as much wealth as the poorest 50%, while the richest 10% holds about four times the wealth of the poorest 50%. Most inequality indicators employed indicate increasing trends in wealth disparities between 2009 and 2017. During this period, average and median wealth holdings decreased by about one third, and the share of financially fragile households increased by about 20%. Estimates from factor inequality decompositions suggest that, although relatively evenly distributed, housing asset holdings explain much of the increase in overall wealth inequality in Greece, followed by self-employment business equity; financial assets play a negligible role. Financial wealth inequality is much more pronounced than housing wealth inequality in Greece. The findings of the paper carry important implications for the design of appropriate policies aiming at reducing wealth inequalities and strengthening financial resilience.
Topic:
Debt, Income Inequality, Economic Crisis, and Wealth
Political Geography:
Europe and Greece

3. The Challenges of Redressing Violations of Economic and Social Rights in the Aftermath of the Eurozone Sovereign Debt Crisis

Author:
Giulia Ciliberto
Publication Date:
06-2021
Content Type:
Journal Article
Journal:
The Goettingen Journal of International Law
Institution:
The Goettingen Journal of International Law
Abstract:
The Eurozone sovereign debt crisis represented an occasion to assess whether the international, European Union, and national systems provide adequate remedies for violation of socio-economic rights caused by austerity measures. Victims of these violations tried to obtain a remedy by lodging complaints before national judicial organs, the Court of Justice of the European Union, international human rights bodies (such the UN Committee on Economic, Social and Cultural Rights, the ILO Committee on Freedom of Association and the European Committee on Social Rights), and the European Court of Human Rights. This article addresses whether one (or more) of these venues indicted adequate remedies of violations of socio-economic rights and whether these mechanisms could have adopted a different (and more human rights- oriented) adjudicative approach with the view of enhancing the effectiveness of socio-economic rights enshrined in international treaties. The paper assumes that the adequacy of the relief depends on two elements. The first is the collective nature of socio-economic rights, which requires structural or systemic remedies rather than individual ones. The second is the need to preserve States’ economic soundness in order to allow Countries to satisfy their international obligations, namely securing a minimum essential level of socio- economic rights and their progressive realization. Against these assumptions, remedies should benefit the victimized class as a whole, alongside avoiding major distributional or unintended consequences to the detriment of public finances. The investigation focuses on the case law and pronouncements concerning Greece, Portugal, and Spain. The paper reaches the conclusion that constitutional review of austerity measures is the most adequate and effective venue to address such sensitive matters. This is especially true where constitutional courts rely on international conventions protecting socio-economic rights as per se parameters of constitutionality or through consistent interpretation – viz. by construing the national bill of rights in line with treaty-based socio-economic rights.
Topic:
Debt, European Union, Economic Cooperation, Socioeconomics, and Economic Rights
Political Geography:
Greece, Spain, and Portugal

4. How ‘demos’ met ‘cracy’: debt, inequality, money

Author:
Andreas Antoniades and Ugo Panizza
Publication Date:
03-2020
Content Type:
Working Paper
Institution:
Centre for Global Political Economy, University of Sussex
Abstract:
The recurrence of ever more destructive economic crises and patterns of pervasive indebtedness and inequality threaten the social fabric of our societies. Our main responses to these trends have been partial, focusing on symptoms rather than causes, often exacerbating rather than improving the underlying socio-economic dynamics. To reflect on these conditions and on ‘what needs to be done’ this paper turns to a similar socio-economic malaise faced by the city-state of Athens in the 6th century BC. Most historical studies dealing with this crisis focus on the comprehensive debt relief policy (seisachteia) implemented by Solon. We argue that this debt relief, although necessary, was the least important of Solon’s reforms. Solon read the problem of debt as a problem of money so he went on to reform the monetary and exchange system. But he did not think that these reforms alone could restore socioeconomic sustainability. For this, a redefinition of what was counted as valuable economic activity and as income had also to take place. And for all these to work, citizens had to be involved more in the commons. Far from only achieving socioeconomic sustainability, these reforms gave rise gradually to the demos that we meet in the golden age of Democracy. It is indeed interesting that Democracy, in its ideal type of the 5th century BC, finds its origin in the way in which a society responded to a major socioeconomic crisis, characterised by pervasive indebtedness and destabilising inequalities. Such a broader historical horizon may help us grasp better the problems, stakes and challenges of our times.
Topic:
Debt, Political Economy, History, Democracy, and Global Political Economy
Political Geography:
Greece and Global Focus

5. The Greek Crisis and Its Repercussions on the Balkan Neighbourhood: The End of the Myth

Author:
Marilena Koppa
Publication Date:
10-2018
Content Type:
Journal Article
Journal:
Uluslararasi Iliskiler
Institution:
International Relations Council of Turkey (UİK-IRCT)
Abstract:
This article explores the role of Greece in the Balkans since the end of Communism and the impact of the sovereign debt crisis that followed. Since the beginning of the 1990s, while Greece failed to accomplish its vocation at the political level, at the level of the economy the country acted as an important regional actor. The article examines the dynamics of the Greek crisis on the Balkan economies and analyses the major challenges for Greece in this new reality. At the same times, it tries to identify the triple crisis faced currently by Greece: at the level of credibility and status, at the level of mediation between the region and the EU and, finally, at the level of the gradual peripherisation of the country.
Topic:
Debt, Economics, Migration, European Union, and Crisis Management
Political Geography:
Europe, Greece, and Balkans

6. When the Greek Political System Clashed with Europe: Why the Greek Sovereign-Debt Crisis is Taking so Long to End

Author:
Constantine A. Papadopoulos
Publication Date:
10-2018
Content Type:
Journal Article
Journal:
Uluslararasi Iliskiler
Institution:
International Relations Council of Turkey (UİK-IRCT)
Abstract:
The central argument of this essay is that, in order to understand the reasons behind the Greek economy’s inability to recover sooner from its 8-year recession, analysis must focus on the institutional, political and cultural traits of the country rather than take a primarily “economistic” approach and simply blame “excessive austerity” and/or the euro. In fact, it will be argued that Greece’s positive performance under the euro (until government actions derailed the economy) is generally underappreciated, suggesting that if the country’s institutional weaknesses are addressed, the economy will grow. If they are not, the country’s long-term economic potential will almost certainly remain unfulfilled.
Topic:
Debt, Economics, Financial Crisis, Reform, Global Financial Crisis, and Austerity
Political Geography:
Europe and Greece

7. Three Myths Behind the Case for Grexit: A Destructive Analysis

Author:
Photis Lysandrou
Publication Date:
06-2015
Content Type:
Working Paper
Institution:
City Political Economy Research Centre (CITYPERC), University of London
Abstract:
Greece faces a stark choice: either to compromise on the terms laid down by its international creditors and thereby remain in the eurozone or reject any compromise on the terms and exit the eurozone. The Syriza government was elected in January, 2015, on the double promise that it would tear up the deeply unpopular memorandum imposed by the Troika while at the same keeping the euro. It was a promise that it could not keep. After several months of tough negotiations it has become clear that Greece's creditors, led by the German government, have no intention of accepting a renegotiated deal that substantively lightens Greece's debt burden and thus the need for the type of harsh austerity measures contained in the memorandum.
Topic:
Debt, Economics, Government, and Financial Crisis
Political Geography:
Europe and Greece

8. From Populist Destabilization to Reform and Possible Debt Relief in Greece

Author:
William R. Cline
Publication Date:
08-2015
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Using his European Debt Simulation Model (EDSM), Cline examines whether and to what extent additional debt relief is needed in Greece under the new circumstances. Greece's debt burden is significantly lower than implied by the ratio of its gross debt to GDP, because of concessional interest rates on debt owed predominantly to the euro area official sector. The IMF's call for debt relief recognizes the lower interest burden but argues that the gross financing requirement is on track to exceed a sustainable range of 15 to 20 percent. But in the Fund's June Debt Sustainability Analysis that threshold would not be exceeded until after 2030. A sustainability diagnosis based on such a distant future date would seem at best illustrative rather than definitive. The euro area creditors might, nonetheless, be well advised to provide two types of interest relief: an earmarked portion of interest otherwise due to finance a public works employment program; and additional interest relief to compensate for budget shortfalls caused by growth below plan levels. The sovereign debt situation should be alleviated by carrying out the bank recapitalization directly from the European Stability Mechanism to the banks, rather than through the sovereign as the intermediary. The large increase in the ratio of gross debt to GDP imposed by bank recapitalization is mostly an optical illusion because there would be a corresponding rise in state assets, but this increase could, nonetheless, further erode perceptions of sustainability.
Topic:
Debt, Economics, International Monetary Fund, Financial Crisis, and Budget
Political Geography:
Greece

9. Laid Low: The IMF, The Eurozone and the First Rescue of Greece

Author:
Paul Blustein
Publication Date:
04-2015
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
As Greece descended into a financial maelstrom in the spring of 2010, a small group of staffers at the International Monetary Fund (IMF) held top-secret talks with officials from the German and French finance ministries to discuss the idea of restructuring Greece’s debt. Many independent analysts believed a restructuring was inevitable because the country’s debt burden appeared unsustainable. But instead, the “Troika” — the tripartite group of lenders that included the IMF, the European Commission and European Central Bank — attempted to resolve the crisis by giving Athens bailout loans of unprecedented magnitude, piling debt atop debt. The idea considered in those secret talks would come to fruition only much later, in March 2012, when Greece received the largest debt relief in history. In the meantime, the rescue effort would go terribly awry, with consequences that continue to reverberate today as the euro area struggles with weak growth and a rekindled crisis in Greece. This paper tells the story of the first Greek rescue, focusing on the role played by the IMF. A detailed look back at this drama elucidates significant concerns about the Fund’s governance and its management of future crises. The Fund has come under attack for yielding to the clout of European policy makers and lending its credibility to a rescue that some of its senior staffers viewed with grave misgivings. The result, critics lament, tarnished the Fund’s reputation for technocratic judgment, rendering it less effective at promoting international stability. The 2010 rescue enabled Greece to avoid default at that point, which might well have sparked a global conflagration akin to the 2008 bankruptcy of Lehman Brothers. European banks holding Greek bonds continued receiving payments of interest and principal for quite a long time thereafter, from the money lent by the Troika. But the interests of the Greek people were arguably sacrificed, and among economists there is widespread agreement that the country’s debt should have been restructured much sooner. In addition to shedding new light on what happened, this chronicle of events highlights the importance of the IMF’s acceptance, as a condition of its participation in the rescue, of a “junior partner” role in the Troika. This step is judged in the concluding section as being particularly ill-boding for the IMF’s ability to manage future crises, and policy recommendations are offered for alleviating the harm.
Topic:
Debt, Diplomacy, Regional Cooperation, Fiscal Policy, Eurozone, and IMF
Political Geography:
Europe and Greece

10. 'Broken and Can't Be Fixed': The Impact of the Economic Crisis on the Greek Party System

Author:
Susannah Verney
Publication Date:
03-2014
Content Type:
Journal Article
Journal:
The International Spectator
Institution:
Istituto Affari Internazionali
Abstract:
The Greek election of May 2012 failed to produce a government, resulting in repeat elections six weeks later. This shock outcome was a symptom of a broader delegitimation of the national political system. Over the past decade Eurobarometer data show a much more extensive loss of confidence in political institutions in Greece than in the European Union as a whole. In a first phase, rising political discontent was managed within the traditional political framework through alternation in power between the two major parties. In contrast, the second phase, following the outbreak of the Greek sovereign debt crisis, led to the dramatic fragmentation of the party system and changed the mode of government formation. This process is not reversible and entails serious democratic dangers.
Topic:
Debt, Economics, and Government
Political Geography:
Europe and Greece