Athens, Greece – When Iphigenia Zachou opened her café and bakery in the Greek capital, she went through bureaucratic difficulties.
Renting a property and spending nearly $40,000 of his own and his parents’ money on cooking ovens was just the first step. She then had to upgrade the power line to handle the load.
“It took a lot of paperwork and a month to get an appointment,” she told Al Jazeera ahead of the scheduled date. Parliamentary elections in Greece on Sunday. “Then an engineer told me the whole sidewalk had to be dug up because the wiring was all wrong.”
It was the engineer who made a mistake, but the back and forth cost two months.
More time was sacrificed to deal with the Ministry of Culture, which must grant licenses to all businesses within a certain radius of the Acropolis in central Athens.
“Why should the Ministry of Culture take six months for me to open a café here? It’s a 1960s apartment building. It’s not like they’re going to find antiques,” Zachou said.
Another two months were spent demanding a tax cut, she added, “because someone went on vacation.”
In total, his brushes with utilities cost him seven months and increased his startup costs by $7,000.
“You get to the point where you’re trying to start a business, you’re giving people work, you’re part of the tourism industry and the (public sector) treats you like a criminal. They look at you like you’re trying to cheat,” Zachou said. “There is no support that I hear from friends abroad for starting a business. The best case scenario is indifference.
Baptized in fire
Zachou, 33, came of age during the Great Greek Recession.
Faced with the threat of bankruptcy, Greece was forced to borrow 256 billion euros from the International Monetary Fund and its eurozone partners in exchange for balancing its budget.
Greece achieved this feat in just four years, but the recessionary effect of sudden austerity cost it more than a quarter of its gross domestic product (GDP), the largest post-war decline in an economy developed. State revenues remained constant, with taxes constantly adjusted to punish the shrinking population that could pay them.
Greece lost a quarter of a million small businesses to bankruptcy and half a million workers to foreign labor markets. Even giants like Viohalko, the country’s largest industrial group, moved their headquarters abroad to reduce borrowing costs as markets viewed their exposure to Greek taxes as a risk.
Prime Minister Kyriakos Mitsotakis, of the New Democracy party, came to power in 2019 pledging to bring back Greece’s lost children and boost entrepreneurship. Zachou’s experience proves that conservatives still have a way to go to tame a bureaucratic and highly politicized state, where incompetence and absentee workers seem tolerated.
Sometimes political parties suffer the consequences. When a passenger train collided with a freight train on February 28, killing 57 people, most of them young people, Néa Dimokratía was forced to admit that the unfortunate station master who had put her on the wrong track was its own expedited rental, done outside of the usual appraisal process. – essentially a party favor.
Most people find it hard to imagine that the damage done to the economy over decades of partisan behavior by conservatives, socialists, and leftists can be undone in a single government term.
But New Democracy believes it has at least tried. He delivered on his promise to cut taxes levied during the years of austerity. The business tax went from 29 percent to 22 percent. Personal income tax fell from 22 percent to 9 percent. A “solidarity tax,” which added between two and five percentage points to income tax, was phased out as employment increased. Social security contributions fell by three points and pensions increased for the first time in 12 years, by 8 percent. The minimum wage increased from 580 euros ($627) to 780 euros ($844).
The government says this was all made possible by good fiscal management that allowed it to borrow when interest rates were low. Despite spending 66 billion euros ($71.38 billion) on pandemic and energy subsidies, the country managed to rebalance its budget last year and enjoys a surplus of three billion euros ($3.2 billion) in the first four months of 2023. Last year, Greece’s growth was 5.5%. , well above the EU average of 3.5 percent, and it is expected to outperform the bloc this year and next. This growth means that Greece’s heavy debt has fallen as a percentage of GDP, from a peak of 212 percent three years ago to 169 percent last year.
This fiscal prudence earned Greece a rapid recovery in its credit rating. It hopes to return to AAA Investment Grade status this year.
But there is a feeling of déjà vu. During the recession, Greeks often said: “The numbers are prospering, but the people are poor.”
Philippos Sachinidis, former finance minister and member of the general secretariat of the socialist party PASOK, believes that New Democracy’s recovery is fueled by second home buyers and tourists, not by entrepreneurs building new productive economies.
“Most of the growth came from real estate. We have been trying since 2010 to grow equally (in agriculture, manufacturing and services) and create sustainable jobs – with good wages and good working conditions,” he told Al Jazeera.
“When most of the money coming in goes to buying hotels and real estate, it doesn’t increase productivity. If we are looking for a more resilient and dynamic economy, we have not achieved any of these goals.”
Syriza of former Prime Minister Alexis Tsipras, who fell from power in 2019, also accuses New Democracy of practicing a trickle-down economy – only promoting growth, but without managing the distribution of wealth.
His pitch to voters includes immediate pay increases for the public sector and minimum wage workers, an increase in pensions, the abolition of the sales tax on food products and a tax on corporate profits.
But Syriza was also criticized for failing to deliver on promises to end austerity when it came to power in 2015, with most opinion polls in the run-up to the election showing it was behind by several percentage points over New Democracy.
The fight to come
Those who chose to stay in Greece are betting on the continuation of economic and state reforms.
“We think things are improving and we hope things will continue to improve, whoever is in power,” said Lambros Bisalas, CEO of Sunlight, Europe’s leading manufacturer of industrial batteries, used in forklifts, factory vehicles, golf carts and pleasure boats. “This should be the model of economics: no matter who is in power, we must have a path to success,” he told Al Jazeera.
The company says it plans to invest $1.6 billion in Greece to recycle lithium, a cutting-edge technology.
“Our shareholders want to leave a legacy behind because they believe this place deserves a better future,” Bisalas said.
Gastrade is another big company banking on Greece. It is currently building the country’s second liquefied natural gas import terminal off the northeastern city of Alexandroupolis, intended to re-export non-Russian gas to Southeast Europe and eventually l ‘Ukraine.
Gastrade CEO Kostis Sifnaios told Al Jazeera he believed the region’s gas deficit after the war in Ukraine would be around 50 to 55 billion cubic meters per year.
Large companies like Sunlight and Gastrade have the time to wait for politicians to make changes and have the opportunity to influence them.
But 90 percent of Greek jobs come from small businesses and self-employed workers.
The government offered tax breaks to encourage mergers and agricultural cooperatives, but energy inflation has eaten up the profits.
Agriculture is a high-risk business, subject to market shocks as well as weather conditions.
In Alexandroupolis, Al Jazeera came across farmer Christos Getzelis driving his tractor across a field he had already sown with cotton, breaking up the tough topsoil caused by unusual rains that prevented its seeds from germinating.
“He has to plow again, sow again and fertilize again,” Nikos Grigoriadis, who heads the Alexandroupolis agricultural cooperative, told Al Jazeera. “It’s double the cost of everything.”
Grigoriadis says he had to close the cooperative’s creamery because energy costs tripled in three years. He is revamping the cooperative’s cotton gin to run on solar panels and burned waste to avoid having to close it as well. Farmers received little help through these tribulations, he said.
For farmers like Getzelis and small business owners like Zachou, it’s hard to wait for government to become an accelerator rather than a hindrance.
“No one respects you in this country,” Zachou said. “The state is still against us, but we could change that through many individual efforts. »
