CC COVER STORY
“The test of keeping errant members within the euro family while towing the line set for the group has been passed.” Finance Minister Edward Scicluna
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ince the election of former Prime Minister Alexis Tsipras and his Coalition of the Radical Left (SYRIZA) in January, the situation in Greece has escalated into a showdown with Europe, leaving the Greek economy in tatters. Speaking of whether it is possible for the Greek brand to weather the storm, Finance Minister Edward Scicluna asserts that any country’s reputation can be quickly lost and takes years to repair, yet believes that the damage may not be irreparable. Following the approval of the new bailout deal, it may yet be possible for Greece to turn things around. Having come face to face with a default and Grexit, Minister Scicluna believes that, tasting the “terrible possibilities” which would ensue, both the people and the members of the eurozone learnt a valuable lesson. “Greece learnt that, no matter how bitter the medicine attached to the bailout might be, it does not come near the catastrophe associated with a default, while the eurozone learnt that the conditions which everyone now refers to as an austerity programme need to be modified and softened. This is needed for the sake of much needed growth,” he asserts. According to Shadow Finance Minister Mario de Marco, despite being a strong, Western nation steeply anchored in the very European democratic values it had itself founded, Greece’s current situation boils down to “unscrupulous politicians, who for years, promised heaven on Earth and spent way beyond their nation’s means, solely as a means to hang on to power.” The result, he maintains, is “a bankrupt nation, with the ordinary citizen having to pay the price.” Having said this, he too feels that the country’s reputation and economy may yet be salvageable, due largely to its association with the EU. “If Greece were an isolated economy, the risk of irreparable damage, further economic collapse and anarchy would be real. But despite the turbulent relationship, the fact that the country is anchored into the European Union provides a reason for us to be cautiously optimistic that Greece will rise again to be a fruitful partner to the European community,” he maintains. Drawing on the country’s vibrant tourism 10
industry, strong maritime tradition and potential for growth in the services industry, Dr de Marco believes that the foundations for economic survival and eventual financial growth are there, yet warns that its “bloated public sector and outdated regulatory practices” will need a radical overhaul. “It is now for the Greeks to execute the reforms they badly need to implement for their own survival,” he affirms. Leading economist Gordon Cordina explains that fiscal unsustainability is a big deterrent to investment, and the Greek
economy specifically contains little by way of significant international activity outside tourism and agricultural production, which are both strongly dependent on inherent territorial characteristics, and is thus relatively shielded though still affected by the economic confidence issue. “The imperative is for reforms leading to labour and other costs in Greece to fall in relative terms, productivity to increase and investment to recover in traditional and new areas as macroeconomic stability is slowly restored,” he states, though significantly adds, “this SEPTEMBER 2015