Making waves: Dimitris Daskalopoulos, Chairman of the Hellenic Federation of Enterprises (SEV), made a controversial speech at SEV’s annual meeting on May 11 in Athens, attacking political parties for their inability to tackle corruption and bureaucracy.

Just a few weeks after Prime Minister George Papandreou had asked for the activation of the EU/IMF aid mechanism and told his fellow Greeks in a televised speech from the remote eastern Aegean island of Kastelorizo that "the journey to Ithaca" had begun, the true nature of how difficult this make-or-break journey is going to be was just starting to emerge.

"Greece is on the brink of the abyss and it is our collective responsibility that we don't step over the edge." These were the shocking words uttered by President Karolos Papoulias on May 5 after the tragic deaths of three innocent Marfin Egnatia bank employees, all in their thirties, including a pregnant woman. The deaths shocked the nation, while news of the tragedy, accompanied by television pictures of riots in Athens, was broadcast around the world by international news networks. This further tarnished the country's already battered image and harmed Greece's key tourism sector, which accounts for nearly 17 per cent of gross domestic product and one in five jobs. In the week after the violent riots, there were more than 20,000 cancellations at nearly 70 hotels across the Attica region, while a number of conferences also suffered cancellations. Hotel bookings for the summer period are also set to plunge, with stays expected to be down by about 10 per cent and revenues predicted to be some 15 per cent lower, as Business File went to press. Not a good omen, especially after the forced resignation on May 17 of Angela Gerekou, the Deputy Culture and Tourism Minister, following revelations that her famous singer husband Tolis Voskopoulos had evaded the tax authorities since 1993 to the tune of about 5.5 million euros, including fines. However, it is the threat of more strikes, growing social unrest and the violent actions of a minority of extremists that are reaching worrying proportions, and fears are growing that things will get worse before they get better, with unpredictable consequences.

Greece is facing its worst recession for decades, with the debt-laden economy set to shrink by at least 4 per cent this year and 2.6 per cent next year. Even worse, the recession is expected to deepen and last longer than predicted, as a series of harsh austerity measures take their toll and further delay recovery. Also, essential pension reforms which are needed to ensure the viability of the system, but will see Greeks work longer and get reduced pensions when they do eventually retire, are facing mounting opposition. All this amid rising unemployment, which topped 12 per cent in February, while youth unemployment (those aged 15 to 24) surged above 32 per cent, prompting further fears of more social unrest in the future.

Brain drain

The gloomy economic outlook combined with rising unemployment has triggered another worrying phenomenon, the so-called "brain drain" whereby many of Greece's brightest young minds and professionals leave the country and seek a better future overseas. And these are precisely the kind of predominantly young Greeks that the country needs to keep here, to help fuel recovery and bolster competitiveness. As President Papoulias said, it's time for everyone to take collective responsibility and stop the rot, before it is too late. And things have to start from the top down. It is time for politicians of all political parties to act responsibly, take their collective blame and make some real and lasting changes for the good of the country and the people who have voted for them.

George Papandreou carries the burden of leadership and he must tackle the country's many problems head-on. Bureaucracy, corruption and tax evasion, along with a lack of meritocracy, transparency and competitiveness, can no longer be synonymous with modern Greece. And Papandreou must tackle these toxic problems from the top downwards, regardless of the political cost; otherwise it will be too late for Greece and its people. Most ordinary Greeks who are struggling to make ends meet are sick of seeing corrupt politicians and the haves get away scot-free, while the have-nots foot the bill. It is time for Greece's outdated political immunity laws and the statute of limitations to be modified so that corrupt politicians of all political parties can be investigated, prosecuted and punished if found guilty of crimes present and past.

Reforms are only option

A nasty cocktail is brewing and it could be called Molotov unless drastic action is urgently taken by the government. The need is more pressing than ever since the restoration of democracy in 1974 to address a series of long-standing economic and social ills. Measures are desperately needed to boost virtually non-existent investment, enable growth, improve competitiveness and create new jobs, helping to alleviate growing poverty and dampen mounting public anger. The price of further inaction will be even dearer in the future. Greece faces the danger of growing social unrest and a prolonged slump that could last a decade, according to some more pessimistic economists.

Furthermore, Greece is by no way out of the woods yet as far as the prospect of a potential default, debt restructuring or refinancing are concerned. Athens has vowed to meet the ambitious fiscal targets that have been promised to the EU and IMF in exchange for the 110 billion euro bailout package and has said it will do whatever is needed to do so, even if more austerity measures are required down the line. After all, the EU/IMF loans, which have bought Athens some time to make essential reforms, are conditional on meeting these targets. Default, along with all the scary real consequences that such a move would bring, is not an option. Nor is leaving the eurozone and re-adopting the drachma, as some have foolishly suggested, as this would immediately bring with it a massive devaluation in the order of 40 per cent or more. Don't even think about it. Greece faces a tough uphill one-way street. The prescribed nasty medicine will be very unpleasant for most ordinary Greeks, but there is hope at the end of the long dark tunnel, in the form of a more competitive, transparent modern European country where meritocracy exists for all.

Business leaders enter the fray

The head of the Hellenic Federation of Enterprises (SEV) Dimitris Daskalopoulos caused controversy when he lashed out against the inability by the political powers that govern to stop the country from sliding into economic crisis, and blamed Greece's problems on politicians. "There is political unwillingness among politicians to saw off the branch they are sitting on," he said at SEV's annual meeting on May 11. He got a furious response from politicians across the spectrum, with some accusing businessmen of profiting from past political favours and laxness in enforcing laws. Daskalopoulos is not the only business leader to criticize politicians. Marfin Investment Group's Andreas Vgenopoulos has also been critical on more than one occasion. This has led some to speculate that certain business leaders may be thinking of entering politics as potential saviors from corrupt and ineffective politicians, though Vgenopoulos, at least, has strenuously denied any such ambitions.

It's not all doom and gloom

But there are rays of hope. Shipping, where Greece is a world leader, has shown signs of recovery (see pages 18-36). Another possible plus for Greece is the so-called China factor (see pages 38-42). As Business File went to press, Cosco's President and CEO Captain Wei Jiafu was due in Athens for a high-profile four-day visit that was expected to clarify the possibility of further Chinese investments in the Port of Piraeus as well as other areas. These were said to include shipbuilding, ship repair and logistics, and there was even talk that Cosco was thinking about having its European headquarters in Greece. Time will tell.

Another potential ray of hope for Greece came from the so-called "historic" visit to Athens on May 14 by Turkish Prime Minister Recep Tayyip Erdogan, accompanied by 10 ministers and nearly 100 businessmen. A string of 21 second-tier agreements were signed that could bring greater investment in areas including tourism, transport and energy. Again, time will tell.

Tough journey is no joke

As I wrote in this column last December, Finance Minister George Papaconstantinou is not in a dissimilar position to Odysseus facing the sirens. And he, guided by the Prime Minister, must keep to a steady and difficult course if they are to avoid steering the battered Greek economy onto the rocks. Let's hope that the joke that was doing the rounds in Athens circles shortly after George Papandreou announced the country's now famous journey to Ithaca doesn't come true. For those who didn't hear it, the gibe said that the journey of Odysseus to Ithaca took ten years, and when he finally arrived he had lost all of his crew and was naked!

It's always good to maintain a sense of humour in these difficult times.