International Information Centre for Balkan Studies

Greek-made submarines buoy PM as jobless remain adrift




When Antonis Samaras went to the Saronic Gulf this week to launch the first submarine made in Greece, he described the country’s shipyards as “weapons of growth.”

Standing in the Hellenic Shipyards in Skaramangas, 9 miles (14.5 kilometers) west of Athens, the prime minister said a period of “inertia and obsolescence is giving way to a new era.”

The nation has shed more than a million jobs since the start of its debt crisis after an economic slump that destroyed a quarter of its output. Greece’s jobless rate was at 27 percent in June (2014) and it probably stayed close to that level in July, economists said in a survey before data today. That compares with a euro-area average of 11.5 percent.

The unemployment toll is one reason why SYRIZA opposition leader Alexis Tsipras has been increasing his lead over Samaras in opinion polls. Pressure on Samaras’s coalition government last week prompted him to call a vote of confidence in parliament, which he’s expected to win.

Greek bonds remain the best-performing securities in the Bloomberg indexes this year, having earned 20 percent. The yield on 10-year debt increased four basis points to 6.72 percent Athens.

Benefiting from European Central Bank stimulus, the yield fell to 5.52 percent on Sept. 8, the lowest since early 2010. While it’s increased more than a percentage point since, the drop from its record high of 44 percent in 2012 is still low enough to encourage Samaras to push for an exit to the 240 billion-euro ($304 billion) bailout at the end of the year.

Samaras said in an interview that he was “fully comfortable” Greece can cover its financing needs in the coming years, and he’s prepared to negotiate an appropriate oversight role of its economy from the euro area and International Monetary Fund.

Fragile economy

“Even if Greece exits the bailout it will be under the close supervision of its creditors,” said Dimitris Sotiropoulos, an associate professor of political science at the University of Athens. “The Greek economy is recovering, but is still somewhat fragile.”

In its 2015 budget, the government forecast growth of 2.9 percent next year after a 0.6 percent expansion this year, driven by tourism. The plan also sees the country delivering an almost balanced budget for the first time in decades.

Tourism was one of the anchors of a growth strategy Samaras unveiled in May, when he pledged to create 770,000 jobs in key industries by 2020 to replace those lost during the slump. The plan includes boosting the number of marinas more than sixfold, which Samaras said could also help shipyards.

“There has to be a role for processing if we’re going to be serious in our efforts to create the new growth model based on exports,” said Ilias Lekkos, chief economist at Piraeus Bank SA in Athens. “For shipbuilding, we need to find a foreign investor to take on this part.”

While the shipyards are now part of Greece’s recovery drive, they also mark a link to the country’s past corruption.

Germany’s Howaldtswerke Deutsche Werft, a unit of ThyssenKrupp AG, and Ferrostaal GmbH acquired Hellenic Shipyards SA in a 2002 deal that included a contract to build submarines there. The deal eventually led to the jailing of a former defense minister in a money-laundering and bribery case. By completing the submarines, which will become part of Greece’s defense fleet, the country is trying to move on from the episode.

Electoral boon

In June, steel manufacturer Hellenic Halyvourgia SA shut its plant, shedding half of the remaining 74 jobs, according to the Athens News Agency. Two years earlier, one of the first actions of Samaras’s newly-elected coalition government was to dispatch riot police to end a nine-month strike at the plant, which once employed 450 people.

The losses in one of Greece’s depressed industrial heartlands proved an electoral boon for Tsipras’s SYRIZA party in May, when the Attica region delivered a regional governorship for his party for the first time.

“This was an important breakthrough,” said Sotiropoulos, of the University of Athens. It gives the party a platform to show it is capable of delivering on its promises, he said.

In a Sept. 13 speech outlining his economic program, Tsipras promised to set aside 2 billion euros for social programs, ensuring the poorest Greeks have food and electricity, and promised to boost the public investment budget by 4 billion euros to create jobs.

Source: Bloomberg




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