Greece in the post-memoranda era: What next?

The 2019 SEESOX Annual Lecture was given by Nikolaos Karamouzis, President of Grant Thornton, Greece, Former Chairman of the Board of Eurobank, Emeritus Professor at the University of Piraeus, and Chair of the SEESOX Hellenic Advisory Board. The lecture offered timely insights into the future of the Greek economy as it resurfaces after many years of EU and IMF memoranda and programmes.

Mr Karamouzis first reviewed the Greek experience of the past few years. GDP fell from 250 billion euros in 2008 to only 185 billion now. The Greek crisis was of unprecedented depth, length and social cost, challenging social cohesion. Unemployment rose from 7% to 27%, private investment fell to one third of pre-crisis levels, and the population fell by half a million due to emigration and a decline in fertility rates. Poverty levels rose to above 30% on the EU’s measure.

Some of this could have been avoided. The competitiveness and fiscal crises were allowed to spill on to the financial side. Banks lost half their deposits—a bigger fall than in Argentina. There were three major capital increases, as capital of the banking system fell from 60 billion euros to zero. NPLs rose to 107 billion euros; even today they account for 45% of total portfolios. The Eurozone institutions stepped in twice, in 2012 and 2105, to keep the banking system working.

North Macedonia: The logic of the solution

On the 15^th of May, Nikos Kotzias, former Foreign Minister of Greece and Professor at the University of Piraeus, delivered a lecture entitled “North Macedonia: The logic of the solution” on the Macedonian name deal and how the two sides, the Greek and the then Former Yugoslav Republic of Macedonia, came to a successful conclusion. Having Nikos Kotzias, the main architect of the name deal from the Greek side as a speaker at SEESOX, was a rare opportunity to listen to his personal account of the opportunities, the challenges, the process, and the lessons learned that led to a final deal in one of the most intractable foreign policy issues of post-1989 Greece.

Kotzias began by dividing foreign policy approaches into “active” and “passive”, the former aiming at reaching conclusions to foreign policy problems, and the latter leaving matters open-ended. He then went on to argue that a foreign policy which tries to find solutions has to look for compromise, otherwise it ends up prolonging inactivity and becoming hostage to political cost. As Foreign Minister, Kotzias argued that he tried to pursue an active foreign policy on a number of lingering foreign policy matters including the Cyprus issue, Albanian historical bilateral disputes and the Macedonian name deal; it was in the last that he managed to achieve results and agree on a solution with the other side. According to Kotzias, the long-term inability to find a solution with Greece’s northern neighbour had led to a “lose-lose” situation between the two countries, allowing third parties to benefit from the situation at the expense of these two neighbours. Seen in this light, the Macedonian name dispute was becoming a matter of significant geopolitical weight, leading to Turkey’s intrusive role in the then FYROM, competition between the US and Russia over NATO membership, or the long-term fear of the dismemberment of the country.

South East Europe’s diaspora: The dark side

On 8 May SEESOX held a seminar examining the dark side of South East European diasporas. The speakers were Dr Liz David-Barrett of Sussex University, Edrin Gjoni (Community Engagement Officer for the Albanian community, Home Office) and John Howell of JH&Co. David Madden chaired.

Dr David-Barrett described corruption as an abuse of entrusted power. It could be ad hoc/transactional or organised/systemic. Systemic corruption was often associated with clientilist policies which in turn provided opportunities for organised crime groups (OCG). Police, border controls/customs, the judiciary and Ministers/civil service were all in a position to provide services to OCG. In return, OCG could provide services to politicians and public officials: protection/localised ‘security’, favourable media coverage, party/campaign donations, bloc votes etc. What were special about diasporas? She advanced three hypotheses. OCG relationships relied heavily on trust, and transnational diaspora networks helped create such trust: facilitated by shared ethnicity /culture/language and by trust reinforcement mechanisms eg threats to family “back home”. Secondly, OCG relied on access to markets and resources, and diasporas could provide economic opportunities and local knowledge; and were vulnerable to extortion. Third, loyalty and a “small town” mentality, which reduced the readiness to inform on compatriots.