Tourists at the Acropolis in Athens earlier this month. Instead of Greece crashing out of the euro zone, the country is on the verge of a successful exit from its bailouts.
It’s nearly springtime in Athens: Street trees are heavy with citrus, wildflowers are erupting in the pine-scented hills and the air is thick with talk of a Greek exit.
But not the kind of exit that has preoccupied the country, and Europe, in so many seasons past.
Instead of Greece crashing out of the euro zone, and perhaps taking the currency’s credibility with it, the country is on the verge of something many never thought possible — a successful exit from the bailouts that have kept its debt-ridden economy afloat for the better part of a decade.
And that’s not the only surprising sign of revival for a country that weathered the worst peacetime economic crisis of any industrialized nation since the Great Depression.
Unemployment, which peaked near an eye-popping 30 percent in 2013, is down below 20 percent and falling. Once-stratospheric bond yields — a sign of investor panic — have landed safely back to Earth. Overall growth in 2018 is due to match the healthy clip of the United States.
Greek Prime Minister Alexis Tsipras attends the swearing-in ceremony of newly appointed ministers in Athens on March 1.
Greece’s escape from what was once widely seen — even by its own government — as an indefinite slide into economic oblivion resonates well beyond the country’s borders. It reflects a return to relative normalcy across Europe, which, for the first time since the global financial crisis began in 2008, is looking economically vibrant, with a robust currency and, at least compared with its peers in the Anglosphere, less potential for market-rattling political maneuvers.
“Europe now has a story to tell: ‘We used to be the punching bag, but look at the U.S. or look at the U.K.,’ ” said George Pagoulatos, a professor at the Athens University of Economics and Business. “Europe has suddenly emerged as a pole of stability, and the euro is now clearly at the core of the European project.”
That is not to say that Greece or Europe is fully healed. For Greece, especially, the impact of a downturn that wiped out a quarter of the nation’s economic value runs deep and is still vivid in the minds and pocketbooks of the country’s 11 million citizens.
But instead of managing endless emergencies, European leaders are now focused on trying to shore up the structure of their crisis-prone currency before the next storm hits. Instead of staving off bank foreclosures and government credit defaults, Greek politicians are debating how and when to share their growing budget surplus with taxpayers.
None of that could be predicted — for Greece or for Europe — less than three years ago, when the two seemed locked on a collision course that carried grave threats for both.
Throughout the spring and early summer of 2015, the newly elected leftist government in Greece and its austerity-minded creditors stared each other down as a deadline loomed for repaying a portion of the country’s vast debt.
Greek officials demanded debt forgiveness and less stringent terms for getting their books back in balance. The creditors — a troika consisting of the European Commission, the European Central Bank and the International Monetary Fund — held firm, threatening to kick Greece out of the euro zone unless their terms were met.
The Greeks blinked first, accepting a new 86 billion-euro ($107 billion) bailout largely on its creditors’ terms — but not before the country missed one of its payments, its banks closed for over a week to avoid insolvency, and long lines formed nationwide at ATMs that spit out a daily maximum of 60 euros per customer.
“It was a mess,” Konstantina Gogi recalled. The communications manager had in early 2015 just returned to her native land with her husband after riding out what they thought was the worst of Greece’s economic turbulence during the first half of the decade in London.
But only weeks into her new job, with the economy in meltdown, her boss told her he would have to put her on unpaid leave. With openings scarce in Athens, meanwhile, her husband had to move three hours away to find work. They wondered whether they had made a mistake in coming back.
“Greece is home. But with the scenario of returning to the drachma, everyone was terrified,” said Gogi, 34, referring to Greece’s pre-euro currency. “We always said, ‘If things get really bad, we know how to live abroad.’ ”
Only now can she smile about it: They stuck it out in Greece. Both have jobs in Athens. They’re the parents of twins. And many of their friends who lived abroad are choosing to do what they did — move back to Greece.
“There was light at the end of the tunnel,” she said.
Not everyone’s story has turned out so well.
At a betting parlor in central Athens, where people come to wager a few euros on the day’s soccer match, manager George Falidas said the only thing that has changed lately among his customers is their resignation.
“Their wallets are still empty,” he said. “But they’ve gotten used to it.”
So has he. The 39-year-old said his pay has dropped by 20 percent in recent years even as his taxes have gone up by a third. “I cut my expenses. I cut my needs. I cope,” he said with a shrug.
Falidas’s experience explains why, even as macro-indicators such as unemployment rates and bond yields show marked improvement, the economy’s rising fortunes have not yet been broadly felt.
But that will start to change as the recovery gains pace this year, said George Chouliarakis, deputy finance minister and chair of the Greek government’s Council of Economic Advisers.
Greece’s economy is forecast to grow at a 2.5 percent rate in 2018, beating the 2.3 percent average for the euro zone and the European Union as a whole.
Greek growth is all the more notable because it comes at a time when the government has been severely cutting back to meet the terms of its bailouts. In recent years, Greece has slashed pensions, shed thousands of state employees and hiked taxes to prove it is fiscally responsible enough to remain in the euro zone and repay its debts.
During the 2015 standoff with its debt collectors, Greek leaders including Prime Minister Alexis Tsipras warned that such drastic steps would amount to “suicide” for the country. But he quickly pivoted when he realized the country was not prepared to follow through on its threat to go it alone outside the euro zone.
Since then, the Greek government — still led by a party that identifies as part of the radical left — has calmly complied with its creditors’ demands. Chouliarakis said the medicine, bitter as it was, needed to be taken to restore credibility.
“One of the most significant obstacles to growth in recent years has been the high level of uncertainty,” he said. “Nobody knew whether Greece would make it.”
Now, he said, that’s not in doubt. The last of the Greek bailouts is due to end in August, and Greek and European officials alike have said they believe the country will be ready.
“Greece has to stand on its own two feet,” Chouliarakis said. “It has to be an equal partner in Europe.”
But whether Greece and Europe are prepared for the next crisis, whenever it may come, is still debated.
The conservative New Democracy party, chief rival to the governing Coalition of the Radical Left, known as Syriza, has argued the country should seek a precautionary credit line when it leaves behind the bailout, in case of emergencies.
New Democracy, which is leading in polls ahead of elections expected by next year, gives Syriza grudging credit for overseeing the start of an economic rebound. But it argues Greece could have recovered far more quickly had Syriza not picked a fight over the bailout terms with Europe’s heavyweights after coming to power in early 2015.
“We are now where we were at the end of 2014,” said Christos Staikouras, New Democracy’s point person on economics. “We lost three years.”
Even as Greek politicians debate the past, the conversation in Europe has turned to the question of how a similar crisis can be prevented in the future. French President Emmanuel Macron is pushing hard this year for changes that would more tightly integrate the euro zone and, he argues, prevent the sort of clash over Greece that nearly broke the group apart.
Germany has long been reluctant or unwilling to countenance any change that could put its taxpayers on the hook for its neighbors’ profligacy. But Berlin has lately softened its stance.
It is a measure, said Nick Malkoutzis, editor of the economic analysis firm MacroPolis, of just how much the Greek crisis has changed the outlook in Europe.
“There are enough people out there who understand that we can’t go through that again,” he said.