Just as credit ratings improved and ordinary Greeks could foresee an end to their financial hardship, state actors in Greece are now jeopardizing the situation once more. Despite the fact that a lot of good faith was shown to Greece, the country continues to play games with the EU, spooking investors. Last night, the Dutch ambassador in Athens commented politely that Greece should “continue to adhere to the primary budget surplus targets that have been set by European creditors.” This comes as Greece effectively stalled the implementation of reforms it promised to enact. The problem is that this involves privatization of state assets where Greece went back on it’s word.
With a cash buffer that now exceeds EUR 24 billion, with a bit of integrity towards creditors, the country can still turn things around. Yet a cocktail of events are now causing investors to think twice before trusting Greece: most notably it’s behavior towards creditors – and towards foreigners who trusted the country by investing in the property market.
Attempting to stop the fire sale in its tracks:
Property investors in Greece are essentially looking at a fire sale, where assets are bought at auctions. But they are rightly spooked by the lack of seriousness from the government – and the fact that the local population seems to go along with the game plan.
Recently, the notary association in the Ionian islands obstructed both the EU and Athens by blocking the sale of distressed property. Locals support the association thinking that they are not “traitors to the Greek people”, whereas in fact this will only further isolate Greece and leave it at the mercy of China – as Europeans lose interest and patience with Greece. These latest developments don’t come as a surprise.
Besides the notary association, there are also other corrupt structures, such as the archeological groups who collaborate with civil engineers to act as racketeers, hitting foreign investors with extortionate charges. In one case, local engineers colluded on price, charging foreigners as much as 2500 Euros for a simple permit to allow energy insulation for existing exterior walls, something that typically costs 700 Euros across across the country. Foreigners are told that the fee of 2500 Euros is to ensure that the archeological society “approves” their application.
A history of playing games with the EU, nothing new:
- In the early days of the financial crisis, Greece played a crafty angle with the Europeans. It requested loan money, agreed to certain terms – yet immediately after receiving a loan, it invented several reasons to justify a default, including to claim that the loan money should be offset against funds Germany owes to Greece for war reparations. However none of this was mentioned when the loan money was procured. European tax payers outside of Germany, felt scorned by Greece’s behavior.
- The country also signed up to health and environmental laws at an EU level, which was held in total contempt by government ministers and the police who are responsible for enforcement. Years after Greece failed to implement a smoking ban, the health minister appeared at an important cancer conference, smoking a cigarette in public space. It is unclear whether large-scale corruption enable restaurants to openly defy EU regulations – yet it is a concern that the EU does not take action on this serious issue.
- After receiving generous bailouts from Europe, Greece started to use it’s veto to let China get its way. There are even cases where American products are being taxed when sent to Greece, but a blind eye is turned when the same Chinese products are imported: again Greece’s way of rewarding another ally.
- On Corfu island, where historically tropical disease almost wiped out the entire population, they still did not learn. The local government in Kerkyra collects tourist taxes and ENFIA from properties, but refuse to clear garbage away for weeks at a time. This has been ongoing for years, without intervention from Athens – which eventually led to EU fines being levied against Greece. European visitors and property owners have been let down by Greece – with no end in sight to consistent breaches of public health.
Whether or not Greece feels emboldened by a new American partnership, as the US will move more troops to Greece is not known. America, however, is unlikely to support Greece in is misadventure of consistently failing to deliver what it promised. It may be that Greece feels emboldened by China on the other hand, as it has become a prime destination for Golden visas, where Chinese citizens buy their way into Europe via Greece. Whereas America may just help Greece to lower the perceived threat posed by Turkey, this is likely where the line will be drawn. As far as China goes: if we look at Argentina, South Africa and other nations, is there one example of an ally that became successful thanks to China? clearly not, which begs the question: why would Greece be the first?
Greece has a short time to get it’s house in order. With a declining population, a Europe that feels burnt after acting in good faith – and China’s record of NOT helping countries to become economic success stories, the EU might be it’s only savior.