Is VAT all you’ve got?

Grabbing a coffee for 20 cents less doesn’t really sound like the start of an economic recovery but who knows, maybe after this week’s decision to cut value added tax at restaurants and cafes, Greece will soon be measuring out its success with coffee spoons.

Naturally, the government has made the most of the skeptical troika finally giving in on a longstanding Greek demand for VAT in the food service sector to be reduced from 23 to 13 percent. Even so, Prime Minister Antonis Samaras announcing the temporary measure in a televised address was a touch excessive given he only informed the nation that a nightclub drink would soon be about 50 cents cheaper. For the government, though, the symbolism of the reduction is perhaps more important than its economic impact.

Samaras presented it as a personal triumph of persistence. Deputy Prime Minister Evangelos Venizelos said it was a sign that the troika had begun listening to Greece. Indeed, the VAT reduction represents something of a milestone in the Greek bailout program as tax hikes have been the norm and a regular source of much anger over the last three years. It was billed as the first tax cut since the program began, which is not quite accurate. Technically, it was the second as a 15 percent reduction in the emergency property tax introduced in 2011 had been agreed a couple of months earlier. This came after pressure from Democratic Left, which was still part of the coalition at the time. There was no televised address, though.

For SYRIZA and Tsipras, youth is not enough to unseat Greece’s ‘aged powers’

Illustration by Manos Symeonakis

Alexis Tsipras told delegates at SYRIZA’s founding congress on Wednesday that it is time for the leftists to rid Greece of its “aged powers,” namely New Democracy and PASOK. But to do so, SYRIZA can’t rely just on being younger than them.

SYRIZA was founded as the Coalition of the Radical Left in 2004 thanks to a cooperation between several leftist parties, most notably Synaspismos. As is to be expected of youth, SYRIZA spent its formative years not really knowing what it wanted to be – a sounding board for leftist intellectuals, a springboard for political activists or a launch pad for the left to come to power. SYRIZA members had this existential question answered for them last summer thanks to the party’s impressive showing in the June elections, when it garnered almost 27 percent of the vote and won 72 seats in Parliament.

Since then Tsipras, just 38, has been on a mission to mould SYRIZA into a party of government rather than a collection of leftist factions happy with life on the opposition benches. The conference is due to end with almost all the factions voting themselves into oblivion and SYRIZA becoming a single unit. Over the last year, though, Tsipras’s has been far from a steady hand at the helm. He was veered from an anti-austerity platform last summer to the attempt at reconciliation with Greece’s lenders and center ground voters earlier this year. He toned down his rhetoric after the elections, then ramped it up as Cyprus was being bailed out, before settling for a holding pattern ahead of this week’s congress.

Coalition unwound

Illustration by Manos Symeonakis for Cartoon Movement http://www.cartoonmovement.com/p/6035

Prime Minister Antonis Samaras marked one year in the job on Friday by becoming the leader of what was effectively Greece’s fifth government in four years after Democratic Left’s decision to drop out of the coalition left his New Democracy party and PASOK as the two that remained from a previous partnership of three. The dire economic situation, the pressure of its lenders and the historical absence of consensus politics in Greece meant it was always going to be a challenging job. Samaras enters the second year of his premiership on an equally shaky footing.

Democratic Left’s departure had been in the making for some time. The three parties that formed the coalition in June 2012 did so knowing that Greece had been balancing on the precipice but their intention of moving the country to safer ground soon lost its potential to drive this three-wheeled vehicle on. Beyond securing Greece’s place in the euro and rebuilding trust with the skeptical troika, there was no grand, or even less pronounced, vision to spur the coalition’s efforts. As the drachma risk faded and lenders were placated, so the three-party government’s raison d’etre dissolved. It was replaced by friction fuelled by each party’s desire to stake its claim to any positive development and distance itself from anything negative. As the stardust was blown away, the political and ideological splits were revealed.

Happy anniversary. How about a reform?

Illustration by Manos Symeonakis http://www.cartoonmovement.com/p/6035

It is one year to the day since Greece held its second general election in two months and third in three years. What better way to celebrate the occasion than trying to relive the uncertainty and tension we experienced during the summer of 2012? The leaders of Greece’s three coalition parties go into a meeting this evening with the future of their government less secure than it has been at any point during the 12 months. The cause of their dispute suggests that even if this crisis is overcome, deeper problems lie ahead.

The spark that threatens to burn the house down is the closure of public broadcaster ERT. Prime Minister Antonis Samaras, who ordered the shutdown, suggested over the weekend that the bigger picture in this standoff is that he is a reformer and the others, both in his government and in opposition, are not. But what does he really mean by reform?

His justification for closing ERT was that it was overstaffed, too expensive and a source of corruption. Greece needs a more modern broadcaster, along the lines of the BBC, it has been suggested. All of these things may be true to a greater or lesser extent but there has been no attempt by the government to back this up with any substance, just the standard smattering of platitudes.

Greece: A reality check

Petros Giannakouris/Associated Press

And like that… poof, the crisis is gone. More bailout loans approved by the Eurogroup, a sovereign rating upgrade from Fitch, economic sentiment at the highest it’s been for the last 40 months, the Athens Stock Exchange becoming the best-performing stock market in the European Union and Greek bond yields dropping below 9 percent for the first time since 2010 have helped give the impression Greece has overcome the worst of its problems and that recovery is within touching distance.

This is certainly the story that the government will, understandably, run with. The three parties in the coalition have taken on considerable political cost in sticking with the EU-IMF fiscal adjustment program and their only hope of survival is to convince a large enough section of the Greek population that the chosen path leads from economic catastrophe to stability and then prosperity.

In Athens, there is also a belief, which seems to be shared by decision makers in Brussels, Berlin and elsewhere, that a change in mood alone will make a significant contribution toward overcoming the crisis. This rising tide to lift Greece’s boat will not only make the program more acceptable to the public, it will also make investors more buoyant, the thinking goes.