It’s going to be a nerve-racking weekend for Greeks.
Greece’s national soccer team plays Russia on Saturday to keep its hopes alive in the European Championships and, the next day, the Greek people go to the polls once again to try to elect a new government.
While Greece can count itself among the top half of Europe’s national soccer teams, its economy has been relegated to also-ran status.
In the world’s third largest Greek city, Melbourne, the mood is pensive.
The Greek-Australian businesspeople that SmartCompany spoke to say they are hoping the June 17 elections in Greece will bring stability to the financially-stricken country and lay the groundwork for an economic recovery.
Even though the volume of Australia’s direct trade with Greece is marginal, the influence Australians of Greek heritage have had on business in Australia has been substantial. Seven Greek-Australians can be found on this year’s BRW Rich 200 list, and the likes of businessman Mark Bouris and chef-entrepreneur George Calombaris are household names.
Melbourne businessman Peter Economou, director of food importers Delta Sales, says the Greek suppliers and businesspeople he regularly speaks to are nervous about the outcome of the elections.
“People are very apprehensive; very worried. They don’t want a repeat of what happened in the previous election. The hope is that one of the major parties will be able to form a government and then bring a little stability back to the situation,” says Economou, who has been in business since 1967. Delta Sales imports foodstuffs such as olives and cheese and has an annual turnover of about $5 million.
The election held on May 6 resulted in none of the three major parties getting the numbers to form government. The conservative New Democracy party and the left-wing Syriza party are being tipped this time to go head-to-head in a fight to form a government. Both parties have said they want to keep Greece in the eurozone, but New Democracy has shown itself more favourable to EU directed reforms and austerity measures.
Economou says austerity measures have bitten hard in Greece. But the depressed Greek economy has yet to affect his business. One of the few differences he has noticed so far in his dealings has been the desire of his suppliers to maintain cashflow by being promptly paid.
“We have had no major issues, save for the fact a lot of our suppliers are asking for prompt payment or payment in advance.”
He says while he understands the need for structural reforms, some of the EU-imposed austerity measures threaten to dampen economic activity to the point of stifling a recovery: “You can’t drown a nation.”
Nicholas Mylonas, president of the Hellenic Australian Chamber of Commerce and Industry, says the elections at the weekend will set the agenda for Greece’s future – whether that’s in or out of the eurozone.
“Whoever forms government in the next two weeks must negotiate an equitable, achievable and implementable agreement with the EU and the IMF,” Mylonas says.
“Yes, this is an EU crisis, but Greece’s system of governance must also take responsibility, face the facts with the confidence and co-operation of the people, and set its own austerity agenda for reform in order to restore prosperity.”
Mylonas says the financial crisis has its seeds in fiscal policies recklessly employed for decades by successive Greek governments and the EU alike.
“The Greek government ran significant budget deficits by spending more than it received from taxes and other receipts. When Greece had control of their own currency, they would simply print drachmas to make up for deficits.
“When Greece entered the EU [in 1981], the Greek government continued to spend more than it could afford and given that monetary policy is now out of their control, the ability to simply print more drachmas to make up for budget deficits is not an option.
“There were no economic policy reforms or austerity measures enforced by the EU, so the Greek government began to borrow euros from European lenders and foreign investors who were happy to lend to Greece, at a high interest rate.