Let’s try out the accomplishments: first, in last Sunday’s run-off poll, Samaras, Venizelos & Kouvelis gained a satisfactory number of seats that will allow them to start talking about amending the constitution, second, spinning fear dilemmas on Greeks offered the new scheme a -previously non existent- grace period and third, they turned Alexis Tsipras’s SYRIZA into a major political power. These made things fall into place, since, despite its incoherent radicalism, Tsipras’ party is useful to Greek politics as useful wolves are to a flock of deer; they keep them alive and kicking.

Samaras and his associates, Venizelos and Kouvelis, have a good chance to prove that Tsipras’ angry and un-systemic approach is not really needed in Greek politics. Certainly, Greek citizens who did vote or were willing to support Alexis -for a variety of reasons- will remain angry and faithless towards a pro-MoU government that will have, eventually to collect a number of tax hikes and further suppress household wealth, or what’s left of it.

So, what should be done? Could Samaras avoid collecting revenues and stop the bleeding of Greek households? Probably not, since previous years’ phobias have left a series of bills unsettled; for instance real estate property taxes for the period 2009-2011 will start arriving en mass to households, plus last year’s tax bill that has already surged.

Despite the pre-election rhetoric, pressure on salaries and pensions will continue, perhaps not directly, but due to increases in utilities or through the new reduced tax-free threshold. What Samaras can do is to state emphatically that there will be no new taxes. This is the easy part. A tougher call would be to cancel pension cuts already announced and overdue, or order citizens to ignore Tax Bureau notes arriving by mail.

Policy directions agreed with our lenders cannot be avoided; troika people need results; they do not necessarily promote the ways to reach them. Therefore, the answer will not be found in the hype of “MoU renegotiation”; this will probably end up into merely prolonging the implementation of the country’s obligation timeline.

The real political challenge is to act radically and change things in three fronts: 1) quality of applied politics, 2) the citizens’ well-being and 3) creation of new GDP.

Referring to the quality of politics, Samaras government has an unexpected chance to act as the driving force for the restructuring of the Greek political system; the only -although the hardest- thing they have to do is to be innovative; escape political stiffness and rebrand Greek politics. The effort could excel if a twist is added through the adoption of some of Tsipras’ proposals, especially those that have to do with cutting down the salaries of ministers, ministry advisors and MPs.

Citizens’ well-being such as security, environment, health, implementation of the law and accountability of local government remain key policy areas that could offset cruel income cuts and household tax hikes. Improving public sentiment is possible through precise strategic planning and close monitoring of implementation. A great list of interventions could secure immediate and spectacular results with zero cost.

Finally, they need to create new GDP, not only through public works and privatisations, but also through the exploration of competitive advantages of Greece, such as agro-business, holistic tourism, transports, education and renewable energy sources. To manage that, you need to cut down red tape, integrate processes, embrace new ideas, advance innovative entrepreneurship and mobilise a huge amount of national product that remains unexploited.

Making these happen requires a new style in politics, out of the box thinking and new brainpower. Samaras and associates have to prove they are willing to foster all three of them.

BoG chief stressed that the economic situation, both at home and abroad, leaves no room for complacency. “To take advantage of the new opportunity, we must promptly implement what we have agreed to and make up for previous delays. There is no easy way out of the crisis. The adjustment must be pursued with determination”, he said.

According to Provopoulos, current pre-electoral period has temporarily sidelined planned reforms. “If, after the elections, there is any question about the will of the new government and society to implement the programme, today’s favourable prospects will be reversed; the country will then be at risk of finding itself very soon in a particularly adverse situation, which will impact negatively on citizens’ morale”, he said.

According to BoG Governor, what is at stake is the choice between: An orderly, albeit painstaking, effort to reconstruct the economy within the euro area, with the support of our partners; or a disorderly economic and social regression, taking the country several decades back, and eventually driving it out of the euro area and the European Union.

Bank of Greece noted the following:

- The recession that began in 2008 continues. In 2011, real GDP contracted by 6.9%. The situation worsened in the fourth quarter, reflecting, among other things, the fact that uncertainty remained high. The decline in GDP was driven by the fall in both consumption and investment, the latter dropping by more than 20%. A further reason for the deterioration in GDP in the fourth quarter of 2011 was the halt in the upward trend in real exports of goods, after four successive quarters of growth. Exports of goods increased on average in 2011, but more slowly than in 2010 (3.6% against 5.4%). The decline in exports in the fourth quarter can be attributed not only to the slowdown in economic activity in our trading partners, but also to financial constraints faced by exporting firms (in particular, limited access to bank and trade credit).

- On the supply side, output of the secondary sector fell sharply (almost twice as much as in 2010: -12%, compared with -6.1%). The decline in output of the tertiary sector intensified as well (-5.9%, against -3.1%). By contrast, agricultural output increased by 2.5%, but, because of the sector’s small size, this positive development had little effect on GDP as a whole. The decline in production was the main cause of the net loss of some 300,000 jobs and the surge in the number of the unemployed by approximately 250,000 people in 2011.

- Conditions in the financial sector deteriorated. The rate of credit expansion to the private sector, which has been steadily decelerating since 2008, turned negative in 2011. While this development can be partly attributed to reduced demand for credit on account of the recession, an important factor was also the liquidity squeeze experienced by banks, resulting from the loss of confidence brought about by the fiscal crisis. Today many sound businesses are suffering the consequences of that squeeze.

- The general government deficit as a percentage of GDP was reduced by 1.2 percentage point in 2011, according to figures released yesterday, while the primary deficit was reduced by 2.5% of GDP. Furthermore, in the first quarter of 2012, the central government deficit, on a cash basis, decreased markedly year-on-year, while a primary surplus in the order of 0.5% of GDP was recorded, compared with a primary deficit of 0.5% of GDP over the corresponding period in 2011. Primary expenditure fell, albeit less than targeted, due to increased subsidies to social security funds. Attaining the full-year targets will obviously require persistent efforts.

The Bank of Greece forecasts an average annual rate of decline in GDP of close to 5%; implying that the recession will be less pronounced than in 2011; this forecast assumes that the necessary structural reforms will be implemented without delay. The average unemployment rate is projected to increase this year and exceed 19%, up from 17.7% last year. Finally, the downward trend in inflation will also continue in 2012, with average annual inflation expected to be around 1.2%. In 2013 inflation is projected to fall further, possibly to below 0.5%.

Competitiveness gains are not yet evident on an economy-wide basis, and the current account deficit has remained close to 10 percent of GDP. Productivity growth turned positive only at the end of 2011 as labor market adjustment gathered speed. However, this has come at the cost of rapidly rising unemployment. The slow adjustment despite deep recession owes much to wage and price rigidities in labor and product markets and a small tradables sector.

The fiscal deficit has improved considerably by about 6 ½ percentage points of GDP between 2009 and 2011 despite the steep recession. Still, the primary deficit achieved in 2011 of 2 ½ percent of GDP remains well below the long-run debt stabilizing level of a 1 ½ percent of GDP primary surplus. The recession and losses from government debt exposures have taken a deep toll on the banking system, leaving banks undercapitalized and necessitating a higher level of public support.

According to an IMF report, the Greek authorities’ economic program aims, over time, at restoring competitiveness and growth, attaining fiscal sustainability and financial stability. While building on progress made under the 3-year Stand-By Arrangement (SBA), the authorities recalibrated their program strategy to place additional emphasis on the implementation of structural reforms to accelerate economic growth and employment.

Strengthening competitiveness: The program aims to make the labor market more dynamic to improve competitiveness, strengthen growth and reduce unemployment. Enhanced measures to reduce rigidities in the product and service markets will be implemented to increase competition and decrease prices. Through ambitious privatization and steep reductions in bureaucratic barriers to investment, the government aims to restore investment and growth.

Improving the fiscal position: The program provides room for structural reform impacts in 2012, targeting a primary deficit of 1 percent of GDP. The bulk of fiscal adjustment, however, will take place in 2013-14 to bring the primary balance to the new target of 4½ percent of GDP. To improve the fiscal position, the government will focus on improving tax collection, but even with an ambitious effort in this area some 5½ percent of GDP in additional spending cuts will be needed. These will focus on reducing the size of government and more efficiently targeting social transfers. The core safety net will be strengthened to protect the most vulnerable in society.

Restoring financial sector stability: Significant resources will be set channeled to help banks cope with the impact of the recession and the restructuring of government debt. Government support will be structured so as to provide incentives to maintain private ownership where feasible. The framework for bank resolution and recapitalization and for financial sector oversight will also be strengthened, to ensure effective stewardship of bank recapitalization funds, and effective oversight of the system.

Reducing debt levels: A combination of private and official sector involvement is expected to deliver enough debt relief to place debt on a trajectory to fall below 120 percent of GDP by 2020 under the program baseline.

Finally, growth in 2012 is expected to be in the range of -4½ to -5 percent, given the dominant influence of fiscal adjustment and labor market reforms. The recovery is expected to begin, quarter-over-quarter, in 2013, and benefit from moderate cyclical developments in 2014-2016.

Source: IMF

In the last two years, dailyGreece.net is delivering the truth to its Members and it will continue to do so in a passionate way. This constitute a very specific task most Greek journalists mix with obligations to “other truths”, dictated by their close relationship with political parties or advocated by various centres of power that mix extreme nationalism with financial post-bankruptcy benefits. Delivering the truth requires cleaning information flow from the occasional nonsense produced by political short-termism as well as intentional propaganda.

In our view, there are three steps to put Greece on track; simple steps that derive from common sense most politicians have come to despise, mainly because it turns their arguments into gibberish. First, tell the truth to ourselves and our EU partners, second, clean our house fast track, third, explore our (many) competitive advantages. We do not need to describe these into detail. Everybody is aware about the problems and all these three actions are self-evident. What we need is to act on them, implement the plan, and deliver the results.

So, in our opinion, we should not rush into rebranding strategies, at least not until we put things in order.

Even in its worst, Greece is branding itself across the globe quite effectively. Indeed, investors will continue to curse us for as long as we remain an uncertainty factor, CDS holders will carry on predicting destruction for obvious reasons. On the other hand, people around Europe are picketing for our country, the French dance syrtaki an masse and tourists will return this season, despite the hard time we give them each time they set foot on Greek soil.

Beyond the symbolism, the connotations and the necessary promotional material deriving from specialists who wish to position themselves in the national restart, the real effort will come from Greeks themselves. They have to regroup, fight with their unproductive stereotypes and look forward. They have to reinvent themselves, especially in terms of their ability to create new GDP, a skill that was put asleep many years ago, when civil service became the absolute employment dream.

Therefore, rebranding Greece should begin as an inner soul-searching process that could raise the spirit of Greece’s inhabitants and lead to actual results and justify the repositioning of the country at an international level. Premature reputation management efforts could even undermine the problem solving process, since we have flirted with our very own Hell’s kitchen but we haven’t found our way out yet.