A man carry bags of donated food as he leaves with a meal for the homeless organized by the municipality of Athens on Wednesday Jan. 1, 2014. Homelessness has increased dramatically during the financial crisis in Greece, which has depended on international rescue loans for more than three years. (AP Photo/Petros Giannakouris)
ATHENS, Greece (AP) — Greece assumes the presidency of the European Union Wednesday, starting 2014 with a promise by the government to pull the country out of a six-year recession, keep a balanced budget, and effectively end a financial crisis that rattled the euro.
“In 2014, Greece will return to the markets and start to become a normal country again,” Prime Minister Antonis Samaras said in a televised New Year’s address. “After six unending, painful years, 2014 will herald the prospect of growth … What’s important is that we’ve avoided the worst.”
But have they?
With most of the 240 billion euros ($330 billion) in bailout loans already paid out, Greece still has an unsustainably high national debt, faces the threat of renewed political instability, and has more than one-in-four jobless and steadily sliding into poverty.
Greeks greeted the New Year after many spent hours lining up in tax offices to pay austerity levies on time. And heavy smog has returned to the country’s capital after decades this winter as households left with no heating throw scrap wood and garbage onto the fireplace to try to keep warm.
Here’s a look at some of Greece’s most pressing problems:
NO JOB, NO INSURANCE
Greece’s financial tailspin wiped out nearly a quarter of its economy and roughly a million jobs. From 7.2 percent before the recession in 2008, unemployment exploded, reaching 27 percent in the third quarter of 2013, giving Greece the worst job rating among the 34 advanced economies in the Paris-based Organization for Economic Cooperation and Development.
More than 70 percent of the unemployed have been out of work for more than a year, leaving most to rely on charity after losing monthly benefit payments and health insurance.
“It’s inconceivable that someone with the misfortune of having no work cannot have proper access to state health care,” said George Patoulis, head of the Athens Medical Association.
Worst affected, he said, are those with chronic illnesses, unemployed parents seeking vaccinations for their newborn children, and patients in need of expensive drugs including cancer treatment.
“We estimate that about 2 million people are without health insurance, out of a total of nearly 8 million who require insurance … and the problem looks set to continue in 2014,” Patoulis said. “It’s like planting dynamite under a country’s public health.”
Pro-bailout governments have tried to stimulate employment by slashing the minimum wage and axing long-standing labor rights and market protection rules — liberalizing everything from truck licenses to permits for neighborhood bakeries.
But unemployment numbers continued to get worse, and critics argue the system remains bogged down in excessive bureaucracy.
Unemployed barber Spyros Priftis has been trying to open his own hair salon for nearly three years at a holiday resort on his native island of Corfu, with rules still unclear on the status of his hairdressing diploma obtained from a private college.
“It takes you five years to open up a barber shop in Greece: Two years for a diploma, two years for an apprenticeship, and one year to get your papers sorted out,” the 37-year-old said.
“Five years! What am I, a heart surgeon? I just want to open a barber shop.”
In desperation, Priftis began writing dozens of letters of complaint and faxing them to Greek authorities, as well as European Union finance commissioner Olli Rehn and International Monetary Fund managing director Christine Largarde.
Some of his letters got an answer. And the usually stern EU-IMF negotiators even promised to take up his case with the government during their inspections in Athens. He’s still waiting for news.
Greece is being run by its third pro-bailout government in two years, as unpopular austerity measures wear out public support for the parties backing them. Conservative Prime Minister Samaras heads the current coalition government and has seen his support in the 300-seat parliament dwindle in the past 18 months from 179 lawmakers to 153.
Samaras recently fell behind in the polls to the left-wing Syriza party that wants to radically renegotiate or even tear up bailout deals, arguing they have failed to deliver recovery and are socially catastrophic.
Syriza has vowed to try to topple the government at twin elections in May for local government and the European Parliament.
“In (2014) we will leave behind the decadent political establishment that left the country bankrupt, an establishment of graft and corruption,” said Syriza leader Alexis Tsipras, who turns 40 this year. Surveys strongly suggest the two main parties both lack the support to govern outright.
Public sympathy for the far-right Golden Dawn party, meanwhile, remains strong — polling at around 9 percent — despite the jailing of its leadership on charges of criminal activity and recently emerged videotape showing senior party officials greeting newly sworn in members with Nazi salutes.
Despite all the bad news, few people doubt that Greece’s fiscal situation is slowly improving, with overspending under control and size of the once-massive public sector reduced.
There’s more good news: The country’s credit rating has begun a long climb out of junk territory. Shares on the Athens Stock Exchange closed at 1,162.68 on the year’s last day of trading Tuesday, still well short of pre-recession prices but up an impressive 28 percent on the year. And borrowing rates continued to ease from sky-high crisis levels, the yield on 10-year bonds ending 2013 at 8.42 percent, from nearly 13 percent in late March.
Still, the weakened economy is set to be burdened by a national debt of 176 percent of gross domestic product this year, leaving Athens in vital need of additional debt relief from its emergency creditors. Samaras wants to avoid seeking additional loan money to cover an expected budget shortfall in 2014 and instead hopes to return to bond markets after a four-year absence.
“A critical factor is the whether there can be at least a modest bond issue on the international markets. That would mark the end of the bailout program and could have a significant political effect,” said Theodore Krintas, managing director at Attica Wealth Management.
“So I think 2014 will be a year with no middle-ground scenario. Things will either go well, or they will go badly. Either they will develop much more positively than 2013, or it’ll be a year of great turbulence. It won’t be business as usual, that’s for sure.”