Greek finance minister eyes 2014 recovery for economy

BY: Sebastian Syme

Greece's finance minister believes that the worst is over for his country.

"There is definitely a glimmer of hope; light at the end of the tunnel," Yannis Stournaras said.

As reforms were rushed through and a massive austerity package passed late last year, Greece secured a huge slice of bailout money from its international creditors.

"The probability of Greece leaving the euro - Grexit - is now very small", he told the BBC.

"We have managed to turn the economy around. From the markets, there's much more optimism. Deposits are coming back to banks, the government is paying its arrears to the private sector and there is a change in how Europe sees us. So all the leading indicators are positive. We are two-thirds of the way towards our target. So people can have hope."

But few here do. Unemployment is now Europe's highest at 26.8%. Homelessness and poverty have soared. And the recession, the worst of any country in modern history, is in its sixth straight year.

However, the finance minister said that he thinks the bad times are coming to an end.

"Towards the last quarter of 2013, we are going to have recovery," he said.

He is adamant that growth will come next year, even if the economy contracts in 2013 by an estimated 4.5%.

"I feel sure, 100% certain that this will be the last year of Greece's recession."

Debt write-off

Greece has the unenviable task of reducing its debt down to a sustainable level.

It currently stands at around 180% of GDP this year, the target is 124% of GDP by 2020, but the IMF has recently said Athens won't achieve it without another helping hand. So is Mr Stournaras, I asked, pushing for debt forgiveness from EU countries?

"I would welcome a reduction of the level of debt - but there are many ways to achieve that", he said, diplomatically, "but it should happen in a way that minimises the loss to other parties."

But while Greece is tired of austerity, northern Europe is tired of bailing out Greece.

German taxpayers feel they have shouldered the burden and so any further debt restructuring may be delayed by domestic European politics, at least until the Bundestag elections in September. But Mr Stournaras was confident that it will come.

And what of more crippling spending cuts?

"If we implement this year's reform programme, there will be no more austerity packages", the Finance Minister told me, "No more cuts to wages, benefits and pensions."

It's a promise Greeks have heard before, and many here don't believe it'll be kept.

As a stark reminder of how angry the Greek people have felt about austerity measures they have had forced upon them, there is a bullet hole in one of the minister's windows.

The gun was shot from the ground during one of the most violent anti-austerity protests in recent months. A clear target up to the hated Ministry of Finance.

Yannis Stournaras has decided to keep the glass in its half-shattered state, as a monument to what he hopes was the lowest point in Greece's financial crisis.

But the minister had critical words about the austerity-driven approach forced on his country.

"Greece was forced to cut too far, too fast", he explained. "In hindsight, we should have placed more emphasis on structural reform and privatisations at the start. But we can't go back. There's no point crying over spilt milk. The eurozone was not prepared for the crisis."

A criticism often levelled at the much-despised political class here is that it is utterly divorced from the pain caused by austerity but the minister said that he understands very well.

"From my friends, my mother, my family, people I talk to. But I'm convinced there was no other way. Without this bailout money, Greece would be outside the eurozone. And that would spell disaster."

Grexit to Brexit

Many began 2012 predicting "Grexit" and yet we are starting 2013 with talk of "Brexit" - Britain's potential departure from the European Union, following Prime Minister David Cameron's speech last week.

"It would be a grave mistake for Britain to leave the EU", said the minister.

"Britain belongs to Europe politically, financially and from a cultural point of view."

So would Greece accept Britain renegotiating the terms of its EU membership?

"No", he said, "that would open a Pandora's Box. Everybody would like to do the same. So that would spell the end of the European Union."

Six months after taking the job, Yannis Stournaras seemed relaxed and positive. Vast challenges remain, social unrest is flaring once again and there will be enormous resistance once the spending cuts start to bite.

But he's convinced this exhausted country will make it.

"Now that Greece has turned a corner, I'm actually enjoying the job" he smiled, looking out towards parliament through a bullet-scarred window.