Analysis DECEMBER 16, 2015 | 18:38 GMT
STRATFOR
Editor's
Note: Greece
is a country in crisis. Facing financial, political and social uncertainty, Greece's ruling
Syriza party has cut a deal with the European Union that should keep the Greek
economy afloat at least for the time being. However, further measures to
appease Athens' creditors could create political
discord, if not violence, in Greece.
The situation is precarious, and it is very possible that the agreement will
collapse. Stratfor is logging the latest developments in this crisis update.
Late Dec.
15, the Greek Parliament approved a package of measures that will allow the
country to receive 1 billion euros (about $1.1 billion) in bailout funds. The
measures include legislation authorizing the sale of bad business loans from
local banks to foreign investors and a new pay scale for civil servants. It was
another bitter victory for the government of Prime Minister Alexis Tsipras,
probably the last in a year in which the ruling Syriza party had to approve a
series of controversial policies to secure funding from the country's
creditors.
Tsipras did
manage to preserve his thin majority, as the 153 lawmakers from the ruling
party and its junior coalition partner voted in favor of the package. In
addition, the reforms were not particularly controversial, and the Eurogroup
will probably decide in the coming hours that Greece deserves to receive the next
tranche of the bailout. But unfortunately for the Greek leader, his government
will have to pass even more controversial measures in January.
The most
important aspect of the Dec. 15 package is what was not included. Plans to
partially privatize the national power grid operator, the Independent Power
Transmission Operator, were postponed until 2016. A controversial plan to
eliminate subsidies for farmers has also been repeatedly postponed since Greece first
signed a bailout agreement with the Eurogroup in July, both out of fear of
massive protests from a particularly noisy sector of the population and because
many representatives in the legislature hail from agricultural regions.
More
important, in January the Greek Parliament will have to vote on a plan to
overhaul the country's pension system to cut spending by almost 2 billion euros
next year. Because pensions are one of the last safety nets remaining in Greece, this is
far from a minor issue. In a country where unemployment affects at least a
quarter of the active population (the figures are twice as high among the youth),
entire families depend on pensions from their parents or grandparents. In
November, the Greek Parliament passed legislation making it easier for banks to
evict families that are behind on mortgage payments. The new regulations still
protect a significant number of households and will probably not be fully
enforced, but they represent even further erosion of Greece's already weak safety nets.
Finally, Greece is
facing an increasingly complex migration crisis. There was a significant spike
in the arrival of asylum seekers from the Middle East in 2015, which forced Athens to spend extra
funds to provide food and shelter for some of the migrants. For most of the
year, Athens benefited from the fact that these
men and women wanted to move on to Northern Europe rather than stay in Greece. The
situation began to change in recent weeks, when several countries along the
Balkan route started building fences and bolstering border controls to reduce
the influx of immigrants. Making matters worse, Brussels
forced Athens to accept a Frontex (the European
Union's border agency) operation on Greece's northern border.
The
European Union recently signed a deal with Turkey
to prevent people from entering Greece,
but the impact of the agreement has yet to be seen. Greece's main fear in the coming
weeks is that people will still try to enter the country but will have a harder
time leaving. This would not only increase Athens' financial burden but, more important,
increase the likelihood of anti-immigrant violence in the country.
In
principle, a Grexit will be less likely in 2016 than it was in 2015 because Athens is already in a
bailout program and does not face a particularly pressing calendar of debt
maturities. Capital controls are already in place, and parliaments in the
eurozone do not have to hold any votes related to Greece. However, Greece's ruling
Syriza party controls a tenuous majority of only three seats in the Parliament,
meaning that even a small rebellion among the lawmakers could topple the
government. In addition, because the recession, high unemployment and the
immigration crisis are far from over, street protests and episodes of violence
— which have been relatively rare since Syriza won the election in January —
will become more frequent.
