Greece is the oldest civilization on the European continent. However, the start of contemporary Greece’s political history is dated only to 1821 (Greece’s declared independence from Ottomans was internationally recognized in 1830). Hellenic Republic’s political life has been greatly influenced by its geographical position between European landmass and Minor Asia. Ancient Greek’s lands, placed on the tip of Balkan Peninsula, had long stayed under the control of neighboring countries from Persia and Imperial Rome to the Ottoman Empire and 3rd Reich. As a result, Greeks obtained very strong sense of national identity.
Greece’s proximity to the Mediterranean Sea — the most important transportation route in Europe — had helped Republic to develop its formidable sea fleet, fourth largest in the World, and, at the same time, made Greece closely linked to the European market. Another two important contributors to Greece’s GDP — agriculture and tourism — are also reliant on EU economy. That has made the Hellenic Republic’s political situation susceptible to EU’s economic booms and busts.
At the beginning of the 20th century, when cities’ and villages’ labor had constituted the majority of Greece’s population, Kommounistiko Komma Elladas — KKE (Communist Party of Greece, founded in 1918) became the leading political force in the country. KKE had been defeated in the Greek Civil War (1946–1949) by the Greek government’s army backed by USA and the pro-West dictatorship regime was then established.
Greece’s postwar prosperity, supported by the Marshall Plan’s loans, was abruptly reversed in 1970s by World’s economic crisis. It led to a series of regime changes in Greece, ended by the referendum of 1975 which adapted the new Constitution. It converted Greece to a parliamentary democracy where President’s role is nominal and Prime Minister (majority party’s leader) appoints members of the Cabinet. At that time Greece’s two major political behemoths had emerged — Panhellenic Socialist Movement or PASOK (left) and New Democracy(center)- which stayed on top of the Greece’s political food-chain until 2014.
World debt market’s calamities, which culminated in a 2008 economic avalanche, hit Greece the hardest. Social programs’ expenditures weighed heavily on Greek’s budget. Those costs were covered with large credits camouflaged by Greece financiers as spot contracts to bypass Maastricht Treaty’s restrictions. In result, Greece’s public debts rose to 130% making it the highest in EU. On top of that, post 2008 economic downfall negatively affected maritime shipments and tourists industry. Greece’s unemployment rate started to accelerate exceeding 25% in 2013.
Economic crisis was followed by political one. On May 2012 parliamentary elections both PASOK and New Democracy saw their popularity plummeted from 43% to 13% and from 33% to 18% respectively. They advocated pro-EU policies including cutting government social programs. Opposition party -SYRIZA (left) which promised to exit EU and to keep social welfares — with 16% became the second major party in Greece and it’s chief Alexis Tsipras took the post of Prime Minister. Then, in a dramatic 180 degree turn, Tsipras accepted EU’s harsh austerity measures. However, today, with more than two years already passed, the economic state of Hellenic Republic is hardly improved. GDP growth rate stays negative, unemployment registers at 24% and debt level has risen to 176% which is close to the World’s record.
Greece market’s downfall is followed by political turbulence and vice versa. It causes economy to slide deeper and deeper into recession. Trying to reverse that spiral Greece’s Government gets submerged into debts. At the same time, rising unemployment undermines people’s trust in political leaders and that makes Greece’s future very difficult to foresee.
Economic hardships of Greece is now widely known. This country, with more than 11 million population, suffers from chronic budget deficit, with almost quarter of people employed (including almost halve (!) of younger generation). Standards of living in Greece (with its per-capita around $18,000), which had traditionally been on the level of the most developed European nations, are now dropping dramatically with new austerities, anti-crisis measures in place.
All of those are not particularly good news for local startup founders regardless the existence of developed local startup ecosystem. This country, where Internet penetration rate stands at around 60, and costs of living are generally much lower than those in most other European countries, has a good potential to became EU next startups hot-spot. However, those prospects are seriously undermined not only by recent economic calamities but also by multiple bureaucratic barriers and progressive tax system.
Business Notes for Startups Founders:
- political climate: friendly;
- economic climate: not friendly;
- regions to focus: locally, Eastern Europe, EU;
- industries to focus: e-commerce, FinTech, transport, tourism;
- major limitations: economy in downfall, very high unemployment (although, it started to slowly fall in 2017), over-regulation, high taxes;
- opportunities: closeness both to EU and to Eastern markets, relatively low costs of living.