Greece faces new troubles at residence and overseas

Welcome again. It appears a superb time to concentrate on Greece, the place some converging geopolitical, financial and home political challenges are catching the world’s consideration.

However first, the outcomes of final week’s ballot, which requested if German coverage has modified for the higher since Russia’s full-scale invasion of Ukraine. Some 67 per cent of you stated sure, 18 per cent stated no and 15 per cent had been on the fence. Danke schön! I’m at tony.barber@ft.com.

August and September this yr mark the one hundredth anniversary of the Asia Minor Catastrophe — normally recognized to Greeks as “the Disaster”. It’s maybe essentially the most painfully remembered episode of contemporary Greek historical past. Turkish forces drove an invading Greek military out of Anatolia, the nice coastal metropolis of Smyrna (now İzmir in Turkey) was set ablaze and there adopted mass killings and deportations of Greek and Armenian civilians.

Turkish president Recep Tayyip Erdoğan selected this anniversary to make some fierce remarks accusing Greece of occupying demilitarised islands within the Aegean. “Don’t forget İzmir,” he stated.

The EU condemned Erdoğan’s language, calling it a part of a steady sample of verbal hostility towards Greece. A Deutsche Welle article appears at how maritime frontiers, vitality exploration and the divided island of Cyprus are continual sources of pressure between the 2 nations, that are, nominally not less than, Nato allies.

How ought to Greece, the EU and Nato interpret Erdoğan’s muscle-flexing? With extra calm than alarm, maybe. It appears just like the behaviour of an imperious chief who knows he has leverage over his allies due to Turkey’s significance to the west within the Russian struggle on Ukraine.

Then again, Turkey’s overseas coverage has develop into more and more militarised prior to now decade, as set out in Dimitar Bechev’s recently published book Turkey underneath Erdoğan.

The repercussions for Greece are weighty. Even at moments of financial emergency, such because the sovereign debt disaster a decade in the past, Greece has felt a have to maintain defence expenditure above the Nato goal of two per cent a yr of financial output. Many Nato nations are beneath that focus on — however Greece, with Turkey as a neighbour, sees it as crucial to remain on its guard.

The Greek financial system is in a significantly better place than, say, in 2012 or 2015, when the debt disaster virtually pushed it out of the eurozone. Final month, the EU announced the end of its “enhanced surveillance” of the nation’s financial and financial insurance policies, marking the closure of a 12-year interval when Greece was successfully underneath orders from its EU and IMF collectors to swallow their medication in return for multibillion-euro bailouts.

Greece has made such good progress that it repaid all its IMF credit in April, two years forward of schedule. Its public debt, although astronomically excessive at 199 per cent of gross home product on the finish of 2021, has been on a downward path. Main Greek banks have diminished their non-performing loans.

However there are warning indicators. Russia’s struggle in Ukraine, the vitality crunch, Europe’s financial downturn and rising eurozone rates of interest are piling stress on Greece.

Buried deep within the IMF’s latest full-length report on Greece, revealed in June, is that this remark:

Regardless of the federal government’s giant money buffer and lively legal responsibility administration, Greece’s means to service its debt underneath a extreme shock is determined by continued regional help.

The ten-year Greek authorities bond yield has risen since late August to more than 4 per cent — not dangerously excessive, however a growth that wants watching.

Furthermore, the social scars of the debt disaster stay seen. Greek unemployment, although far beneath its peak of 27.8 per cent of the workforce in 2013, continues to be 12.1 per cent, roughly double the EU common.

Regardless of these difficulties, the conservative authorities of Prime Minister Kyriakos Mitsotakis has earned applause from Greece’s allies for its pro-western stance on the Ukraine struggle, competent dealing with of the pandemic and reforms such because the digitalisation of the as soon as stupendously inefficient forms.

But this isn’t the entire story. The federal government is on the defensive after the disclosure that Greece’s secret service tapped the phone of Nikos Androulakis, chief of the opposition Pasok occasion.

Mitsotakis denies ordering the surveillance and even realizing about it — which, even when true (and I’m inclined to present him the advantage of the doubt), is a bit embarrassing, on condition that he put the intelligence service underneath his direct management after turning into prime minister in 2019.

The revelations have prompted a few the world’s highest-profile information organisations to publish assaults on the standard of Greek democracy. An opinion column within the New York Occasions spoke of “the rot on the coronary heart of Greece”.

Der Spiegel, the German information journal, talked about “Greece’s slide in direction of authoritarianism”, focusing not solely on the key service scandal however on Greece’s pushback of refugees arriving at its borders.

In a scathing rebuttal worthy of the traditional Greek historian Polybius, Apostolos Doxiadis wrote that, in fact, the domestic spying was wrong however Greece is hardly lurching into dictatorship.

I might make one final level. Through the debt disaster, some overseas commentators raised the alarm about the Greek far right and the chance of a democratic collapse. However it by no means occurred. Proper now, the tensions with Turkey and Greece’s mounting financial troubles are, in my opinion, extra severe issues.

Extra on this matter

It’s time to fret about Greece once more — Hugo Dixon assesses the risks for Reuters Breaking Views

Notable, quotable

I wouldn’t wish to say that issues can change for the more severe, as a result of it’s exhausting to think about something worse. However sadly, this can’t be dominated out — Kremlin spokesman Dmitry Peskov comments on Liz Truss succeeding Boris Johnson as UK prime minister

Tony’s picks of the week

• With Italy holding elections on September 25, the hard-right politician Giorgia Meloni is on the cusp of energy. The FT’s Amy Kazmin and Giuliana Ricozzi in Rome hint the profession of the Brothers of Italy chief who may develop into the nation’s first feminine prime minister

• Younger Poles lengthen an enthusiastic welcome to Ukrainians fleeing struggle however help pushbacks of the largely Muslim refugees who’ve arrived on the border with Belarus, Félix Krawatzek and Piotr Goldstein write for the Berlin-based Centre for East European and Worldwide Research