At press time, Greece and its creditors, the European Central Bank (ECB), the European Commission (EC), and the International Monetary Fund (IMF), had not yet reached an agreement to unlock the last tranche of the bailout loan Greece needs to make a €1.6 billion payment to the IMF on June 30, the same day the current bailout program is set to expire. Without an agreement, Greece risks a default, the failure of its banks, capital controls, and a potential Grexit–an exit from the Eurozone and return to its own currency.
European and IMF officials have been engaged in intensive talks and emergency meetings with Greek leaders since last week, and on Monday many expressed hope of an agreement based on Greek proposals to phase out early retirements, raise taxes on well-off corporations and individuals, and increase employers’ pension contributions.
Stock markets reacted favorably. But then on Tuesday the IMF criticized the Greek proposals as likely to inhibit economic growth. On Wednesday, the creditors presented their own new proposals for changes to public pensions and sales taxes, as well as budget cuts, which Greek leaders rejected as too hard on working people and pensioners. On Thursday, Greece and its creditors continued intense meetings, but they were unable to agree on a unified proposal and plan to continue talks on Saturday.posals have been diverging.
Since the Greek gross domestic product (GDP) decreased by a quarter during the past five years, while unemployment soared above 25 percent (twice that for young people), many pensions are supporting large families with no other income source. According to The Guardian, approximately 8,500 small and medium-sized businesses have closed so far this year; that’s on top of thousands more closed earlier. Taxes have already increased dramatically, along with suicide rates. With its debt now at 180 percent of its GDP, Greece insists that debt restructuring should be part of any agreement.
The current Greek coalition government (the radical leftist SYRIZA party and the right-wing nationalist ANEL party) was elected in January on an anti-austerity platform. Since taking office, Greek Prime Minister Alexis Tsipras has claimed that the previous agreement with creditors included extreme austerity measures that led to great suffering in Greece. Given these claims, which have been supported by many prominent economists, Tsipras has been resisting lenders’ demands for additional austerity measures. This week, he finally agreed to compromise, but creditors were not satisfied, nor were most Greeks.
Over €4 billion were withdrawn from Greek banks since last week in a panic over the possibility of Greece leaving the Eurozone and replacing the euro with a much-devalued drachma. The European Central Bank repeatedly approved additional funding to prop up struggling Greek banks, although the rate of withdrawals decreased Tuesday and Wednesday when there was more hope of an agreement between Greece and its creditors, and the ECB has not increased funding during the last two days. According to the Greek daily Kathemerini, “Greeks have withdrawn about 20 percent of deposits held by the nation’s lenders this year as concern of an exit from the euro intensified.”
European Union leaders, the U. S., and NATO are concerned about a strong Greek friendship with Russia. Greek Prime Minister Alexis Tsipras visited Moscow to emphasize Greek-Russian connections last week as Greece and its creditors struggled for a deal that would keep the small but strategically placed country in the Eurozone and the European Union.
One consolation during this crisis, especially here on the island of Crete, is that Greece’s location and climate are also ideal for farming and olive growing. While the International Olive Council (IOC) reports that the producer price of extra virgin olive oil for the first half of this year’s olive season (2014-15) is lower in Greece than in Italy, Spain, and even Tunisia, at €3.09 per kilogram, many argue that better marketing, promotion, and planning, and more bottling and branding in Greece, could change this, offering hope for the struggling country.
For example, David Neuman, the CEO of Gaea North America, suggested in a recent Gourmet News article that if Greek farmers picked olives earlier they could produce oils with more intense, fruitier flavors and a better shelf life, bottle and brand this higher quality oil in Greece, and increase exports to the U. S. The Greek olive oil market, according to Neuman, has not suffered the fate of the rest of the Greek economy, and many Greek olive groves can produce a very high-quality product. Given concerns about fraud in the American olive oil market and about problems with olive oil in other parts of the Mediterranean, coupled with knowledgeable buyers’ interest in verifiable sources of high-quality oil, this could be a good time for Koroneiki olive oils from Crete to take the place of the similar Italian Coratina olive oil.
The New York Times points out that some foreign investors in Greece are concerned about the unpredictable state of the economy here, as well as the indebtedness of many companies. However, there are also flourishing, well-managed olive oil export companies here whose customers continue to count on them.
More generally, olive oil may convey a sense of security to Greeks who have it. Some who lived through World War II believed that those who had olive oil survived that time of starvation. The daughter of one survivor told the Olive Oil Times she decided to stock up on oil during the present climate of uncertainty as well. In places like Crete and Halkidiki in northern Greece, where olives and olive oil are crucial to the economy and central to daily life, possession of it can provide an advantage, especially during difficult times like these.
Agronews reports that Greek olive oil producers currently seem to prefer to hold on to their limited remaining stocks, hoping for price increases as well as a settling of the political and economic situation. Given the great demand for Greek oil abroad this year in the face of reduced production in Italy and Spain and plenty of very good Greek oil, relatively little oil is left. Prices average around €3.50 per kilogram for extra virgin oil in the Kalamata-Messinia area and €3.20 per kilogram in Crete—well above last year’s €2.40-2.60 per kilogram.
Of course, olive oil is always an important asset that farmers can sell when they can get a good price or need money for a major expenditure, and these days many see properly stored olive oil as a safer investment than a bank account in Greece.
Some Greeks protest creditors’ demands for more austerity measures, while others demonstrate in Athens in favor of compromises that would enable Greece to stay in the Eurozone. The world awaits the outcome of emergency meetings of European leaders. Meanwhile, Greek farmers tend their crops, ready to offer both Greeks and the world high-quality products. Here in Crete, life goes on pretty much as usual for the moment.