Greeks want a government, and hope to shake off capital controls
Greek elections Sunday may cause little change to its broad economic policy, dictated by the terms of its latest international bailout. But for thousands of businesses, a return to political stability and cash liquidity would be enough to start with. Not only has Greece held five elections in six years but the economy is still feeling the effects of capital controls imposed in late June, when the leftist government of Alexis Tsipras clashed with EU-IMF creditors over reform proposals.
When Tsipras announced a referendum on austerity, a run on deposits followed and the government had to shut down the banks.
For weeks, Greeks could only withdraw 60 euros ($68) a day from cash dispensers, a limit later relaxed to 420 euros a week and still in effect.
But as long lines snaked outside bank ATMs in the summer heat, the country’s traders faced even greater difficulty. A similar block on bank transfers between Greece and the rest of the world meant that businesses had to apply to a state committee for permission to pay foreign suppliers and staff stationed abroad.
“All enterprises that could, like ourselves, open foreign bank accounts to facilitate their transactions,” says Christos Papadimitriou, whose family business exports balsamic vinegar to around 30 countries. The procedure was later made easier after banks were allowed to handle the requests directly, but the average wait for permission is still 18 days.
“I know of companies that have received no response for over a month,” says Papadimitriou.
To get around the problem, the Kalamata-based businessman notes, he asked clients who owed him money to pay his suppliers directly.
Retail trade turnover in Greece fell by nearly 13 percent in June, July and August, a drop attributed by the union of traders mainly to the capital controls. Imports in July also sank by 32 percent compared to last year.
The manufacturing sector index likewise saw record drops of 30.2 percent in July and 39.1 percent in August. In was a major shock for an economy that had just emerged from a long recession and with a quarter of the workforce officially out of a job.
Vangelis Meimarakis, leader of the conservative New Democracy party that could win Sunday’s election, ridiculed Tsipras’ claim during the campaign that the left-wing Syriza party stands for change.
“The only novelty brought by Syriza was capital controls,” Meimarakis told a supporters’ rally in Athens on Thursday.
But there was one breakthrough.
No longer able to draw and stockpile cash under mattresses as they had often done in the past, or take their money abroad, Greeks increasingly turned to credit cards.
The traders’ union said the use of plastic had increased by 44 percent, with over a million new cards issued between the end of June to early August.
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