Government confronted by major economic, geopolitical challenges

The government finds itself labouring under a suffocating combination of national issues [FYROM], the course of the economy, and a continually worsening social reality. There is an ever increasing popular dissatisfaction, and a lack of trust in the political system.

Yesterday’s Eurogroup, during which the disbursal of the next loan tranche was postponed, weighed heavily in the PM’s office. The prime minister may have enjoyed a peaceful and refreshing holiday weekend, yet developments are moving extremely rapidly, and are unpredictable. As of today, the government is entering an exceptionally difficult period, during which crucial decisions must be taken.

The prime minister’s office is now preparing for tomorrow’s battle in the parliamentary “arena”, which will determine much on the level of communications. Yet, the 16 hours of fierce debate that are expected on whether to probe politicians in the Novartis affair can in no way divert attention from the burning issues that are already are on the table.

As regards national issues, there has been a respite on the Greek-Turkish front, even though one saw a spate of violations of Greek national airspace.

Yet, there is an effort underway to tone down the rhetoric and to avert an “accident”.

In another serious development, Turkish citizens, judicial functionaries and civil servants chased by the Erdogan regime, debarked on the Greek islets of Oinouses and requested political asylum. That will further burden Greek-Turkish relations, if one considers Ankara’s demands for the extradition of the Turkish officers who fled after the abortive coup against President Recep Tayyip Erdogan.

The government must now address Turkish threats of a military clash in the Aegean, and at the same time must fend off opposition charges of incompetence in handling national issues.

The FYROM front

On the FYROM naming front, many noted that FYROM’s PM, Zoran Zaev, said that Athens has not raised the issue of identity (nationality), and that there will be a settlement before the July Nato summit.

At the same time, Foreign Minister Nikos Kotzias is preparing to travel to Skopje to lay the groundwork for the final stages of negotiations, including a forthcoming vote in the Greek parliament on the settlement of the name issue.

It is an exceptionally difficult process, as a large segment of society rejects any use of the name Macedonia by FYROM, even with a geographic marker.

Economic challenges

Last but not least, the government faces serious developments on the economic front. One cannot view yesterday’s Eurogroup meeting as successful, given the fact that it did not approve disbursal of the next loan tranche, and Greece’s euro area partners piled on the pressure for the completion of outstanding commitments within two weeks.

The government must engage in a sprint, as the fourth and last bailout evaluation must take place in an environment that is not particularly favourable.

The verbal sparring yesterday between ECB chief Mario Draghi and Finance Minister Euclid Tsakalotos [over delays in auctions of seized properties] does not presage positive developments as regards Greece’s hopes for a “clean exit” from its bailout programme.

Draghi and Greece’s creditors may have a point in complaining about delays in holding auctions, yet domestically the move carries a high political cost.

At the same time, higher bond interest rates, resulting from both recent geopolitical dangers in the Aegean and recent turbulence in global markets, are endangering the government’s efforts to build a post-bailout fiscal cushion.

Vasilis S. Kanellis

in.gr