Worries again in Greece: energy prices, inflation - and an arms race with Erdogan

Created: 07/05/2022 09:21

Greece's Prime Minister Kyriakos Mitsotakis recently ordered 20 F-35 fighter jets.

© SAKIS MITROLIDIS/AFP

Greece is escaping EU surveillance and tough pressure to reform.

Problem solved, deficits under control?

Not at all.

The next wave of problems is rolling in.

Athens – Juicy apples, fleshy oranges, sweet grapes: Panagiotis Kostouros, 53, tall, strong hands, brings his fresh harvest week after week from his fields near Corinth to the market in the middle-class northern Athenian suburb of Vrilissia.

He has been doing this for thirty years, even on this sweltering hot Friday afternoon in July he is at his well-stocked stand.

50 cents a kilo of apples, 50 cents a kilo of oranges.

"How's business, Panagiotis?"

Today is the beginning of the month.

People still have some money in their pockets and they buy, as you can see.

But from the middle of the month they buy less and less, at the end of the month they stay away completely,” he says with a rather sour smile.

Greece in crisis mode: Corona and the Ukraine war

Experienced real economy, in crisis.

Like all Greeks, Panagiotis Kostouros has known the crisis mode only too well for more than a decade.

First, the de facto state bankruptcy of Greece in the spring of 2010. This was followed by a long, rigorous austerity course in Athens.

Hellas was allowed to keep the euro.

However, wages, salaries and pensions fell by up to 55 percent at the top.

The Greeks never recovered from that.

Today, twelve years after the near bankruptcy, the average salary for a full-time job is 1227.24 euros gross per month.

A third of workers in the private sector only work part-time: €451.20.

Pensioners are hardly better off: 746.02 euros.

The Hellenes had hardly been able to take a breather after the brutal crash landing when Corona broke out here too.

Now the third shock: The war in Ukraine is causing energy and fuel prices to skyrocket.

According to initial estimates, inflation reached twelve percent in June.

With their radically reduced income and high prices, the Greeks have purchasing power that is only higher than that of the Bulgarians in the EU.

Greece no longer “the black sheep of Europe”

A jubilant message ran across the ticker recently: Greece should “for the first time since the debt crisis no longer be monitored more closely by the EU Commission”.

Most of the requested reforms have been implemented.

His country is no longer "Europe's black sheep", Prime Minister Kyriakos Mitsotakis rejoiced.

The fact is: During the euro crisis, no country received more money from its public lenders, the EU, the ECB and the IMF, or for longer, in order to somehow keep its head above water.

An exorbitant 288.7 billion euros in loans flowed to Athens in tranches from 2010 onwards.

Of this, 32.1 billion euros were accounted for by IMF loans that were particularly expensive because they had high interest rates.

The economically much larger Spain, the “Celtic Tiger” Ireland, Portugal and Cyprus, which got into a tailspin for a moment, together received fewer aid loans than Greece.

Arms race with Turkey: Greece buys 20 F-35 fighter jets

No aid money has been flowing to Hellas since August 2018.

But the ECB still has to buy Greek government bonds on a large scale because the rating is bad.

The Greeks need more money again.

It wasn't planned that way.

Since 2020, Athens has again had mammoth primary government deficits.

7.2 percent in 2020. The inevitable consequence: Greece's mountain of debt continues to grow.

It is twice as high as the annual gross domestic product (GDP).

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Now there is a new tragedy.

Parallel to the Ukraine war, the Greeks are locked in an enormously expensive arms race with Turkey.

Mitsotakis, who was a declared supporter of austerity until he took office, bought 20 ultra-modern F-35 fighter jets from the US manufacturer Lockheed Martin last week: 3.6 billion euros.

Hellas' defense spending has already reached almost four percent of annual economic output.

Ironically, the economically weak Greece of all places is even ahead of the superpower USA.