On April 9, the Global Business & Economics Program hosted a conference call with Kostas Bakoyannis and Alexis Papahelas to discuss the Greek political system and daily life under the country’s heavy austerity measures.

Bakoyannis is the mayor of Karpenisi, Greece, and Papahelas is the managing editor of the Athens-based newspaper Kathimerini. Their unique, first-hand perspectives provided the following insights on Greece’s political and social troubles. Alexei Monsarrat, director of the Global Business & Economics Program, moderated the discussion.

Political – not economic – uncertainty is Greece’s largest problem, and the country’s short-term outlook looks troubled as May elections draw nearer. The debt crisis has caused Greece to change more politically in the last 18 months than it did in the 30 years leading up to the recession. New fringe political movements on both the left and the right are putting Greece’s long history of European integration at risk. With May elections only a few short weeks away, 50 percent of the Greek electorate remains undecided. While the two major parties – the Panhellenic Socialist Movement on the left and center-right New Democracy party – have sensible, pro-European voices, there is tremendous popular anger and resentment at both Europe and the Greek government. This dynamic is compressing the moderate center, drowning out more sensible solutions. Fringe, anti-European groups are not offering the Greek people a realistic path out of their deep economic troubles, and any success they might have in May is troublesome for Greece heading forward.

Political uncertainty also takes an economic toll – it is discouraging foreign investment in Greece. Privatization programs have had some initial success, but investors are afraid to commit more funds with Greece’s future (and their money) hanging in the balance of May’s elections. And if the Greek Parliament continues to call early elections based on no-confidence votes in the government, investors will increasingly fear that economic reforms will never come.

Emerging ideas and deep ties to Europe are cause for medium-term optimism. Business leaders, academics, and educated young voters are beginning to verbalize very creative, pro-reform ideas with a cohesive political voice. These ideas are just beginning to emerge, but are a welcome change from solutions put forward by unpopular, marginalized politicians. It is also hard to imagine that Greece will turn away from the European project given its deep cultural, social, economic, and political ties to the continent. This helps put the recent rise in political extremism in context – even though fringe groups are gaining popularity in this dark political climate, responsible pro-European solutions are what the Greek people ultimately want.

Despite extraordinarily difficult times, Greece still has fundamental strengths that make it a valuable member of Europe. Efforts to privatize parts of the Greek economy have been successful thus far, and offer even more promise if political stability replaces political dysfunction. Historically strong sectors like tourism need new, and renewed, sources of investment. Greece also needs a more export-oriented economy. Its agricultural sector could benefit from new approaches to traditional products. For example,  instead of selling its olive oil wholesale to Italy and Spain, Greece could begin marketing it to better directly to foreign buyers through, which would lead to increased revenues. Private universities, which currently do not exist in Greece, could make the country an educational destination for students across the Middle East and Balkans.

Greeks themselves have proven to be the main source of strength throughout the crisis.  After five long years of deep recession, massive job losses, and painful spending cuts, the Greek people continue to show remarkable tolerance and resilience. And even though many young well-educated Greeks are disillusioned by their difficult circumstances and political dysfunction, their human capital is one of the Greek economy’s strongest assets going forward.

Greece needs solidarity from the rest of Europe to ultimately succeed in reforming and restoring its economy. Currency risk is also causing uncertainty in Greece. As long as investors worry that Greece could one day leave the Eurozone, they will shy away from investing in its economy. Talk from neighboring states about Greece exiting the Eurozone (and EU) is counterproductive and can ultimately become a self-fulfilling prophecy. The majority of Greeks want the country to be a thriving member of the European Union, but painful austerity measures and structural reforms will only be successful if they know that they are wanted and respected by their European neighbors. Too much of Greece’s future has been tied to the domestic political cycles in northern creditor countries, which has led to resentment between the Greek people and the citizens of its creditors. This is bad for Greece and bad for Europe. Solidarity is key if Greece is to successfully implement reforms and ultimately make its way out of the recession.

This speaker series is hosted in partnership with Deutsche Bank.