Yearender: Trapped in debt, refugee crises in 2015, will Greece have another volatile year?

In the final stretch of a turbulent year trapped in acute double crises, the five-year debt issue and the escalating refugee crisis as of early 2015, more hard work seems to be awaiting Greece in 2016.

According to analysts, the new year might be a critical year for both the Greek economy and the refugee-migration issue.

The combination of the two major challenges during 2015 has been volatile for Greece, Konstantinos Filis, Research Director at the Institute of International Relations, told Xinhua.

"When the EU as a whole appears to be out of its depth with regard to managing the tens of thousands of refugees and migrants you can see the difficulties for a state that is also going through an economic crisis and experiencing a certain degree of political instability," he explained.

Assessing the new Left-led government's efforts to address the economic crisis during 2015, the Greek expert and most local analysts did not see substantial differences compared to previous administrations of recent years rather than a replay of past mistakes.

The time up until the July new three-year bailout agreement was squandered on a game of chicken with Greece's lenders, which cost the country dearly, leading to capital controls and bank holidays.

"Since the government's priority was to avoid the Grexit, the signing of the third Greek bailout agreement in July was in the right direction," Kyriakos Filinis, Postdoctoral Research Fellow at the Hellenic Foundation for European and Foreign Policy (ELIAMEP), told Xinhua.

"The removal of the Grexit risk eliminates the uncertainty about the future of Greek economy in the euro zone and at the same time the acceleration of the bank recapitalization process is going to restore the confidence in the banking system, favoring the investments and the growth prospects of the economy. But, several strong challenges are remaining," he said.

Following the September snap general elections, there have been efforts to correct the economic indicators, but not always in the right direction, Filis added.

The government of the Radical Left SYRIZA party which took office for the first time in January pledging an outright end to austerity and memoranda, followed the same policy of meeting economic goals through increasing taxes which has resulted over the past five years in the shrinking of the middle class -- the backbone of economic activity and a key median for social cohesion.

Fresh delays in the implementation of commitments combined with a new round of growing reactions of Greek society to the latest sets of austerity policies have cast a dark shadow on steps made to restore stability and growth.

Greece's management of the refugee crisis is also divided in two phases during 2015, before and after the September polls, in which SYRIZA came to power again.

In the first phase, a humanistic mindset led to a policy that essentially amounted to directing traffic, whereby any refugees or migrants reaching Greece left for Central and Northern Europe without strict procedures.

"Greece shifted the problem's center of gravity towards our allies, who until recently looked the other way on the refugee issue, believing it was an issue they could hold at a distance," Filis said.

Greece was criticized with negligence, particularly in identifying and registering migrants and refugees, and, by extension, in protecting its borders, which are also Europe's borders.

As the influxes were increasing -- so far more than 650,000 refugees and migrants have landed on Greek shores -- Greece was targeted again as part of the problem, as some European leaders attempted to shirk their responsibilities under pressure from xenophobic movements in their countries, the Greek expert noted.

The truth is the numbers are well beyond not just Greece, but Europe as a whole and as long as the root of the problem, which can be traced to the Syrian conflict, the general instability in the wider region, and the activities of the so-called Islamic State, isn't being confronted, refugee influxes will be increasing.

"Without ignoring the incomprehensible delays in the implementation of agreed measures, due mainly to the weaknesses of Greek public administration and to the sheer size of refugee/migration flows, a number of things need to be clarified," Thanos Dokos, ELIAMEP Director General, told Xinhua.

"Greece -- or Frontex -- cannot intercept small rafts and plastic boats with refugees leaving the Turkish coast without seriously endangering human lives and cannot transform the country into a huge concentration camp for irregular migrants, who will have to be detained indefinitely as experience has shown that large scale repatriation is all but impossible. The deployment of Frontex can be useful but is obviously not a panacea for all problems," he said.

What can be done and which are the prospects for 2016?

On the economic front the government's four major challenges are the social security issue, the debt, public revenues and privatizations, according to Filis.

On his part, Filinis counts among the most significant challenges for 2016 also capital controls and the lack of liquidity, which suffocate the real economy, the high rates of unemployment, especially youth unemployment and long term unemployment, and the delays in important structural reforms, especially in the field of tax administration, with consequent impact on revenues collection, on combating tax fraud, as well as on pension system.

"They need to deal with these issues in a way that imparts growth momentum and confronts the recession," Filis stressed.

The social security issue looks to be the one that will create the most difficulties in the negotiations with the quartet, should the latter insist on further reductions in main pensions.

This, together with the course of public revenues, will determine the course of the debate on lightening Greece's debt.

A condition for this is the successful conclusion of the first two assessments, but a point of concern is the continuing decline in the number of taxpayers who can pay their debts and taxes.

If this phenomenon isn't checked, it will lead to more enterprises' ceasing operations and, possibly, to a partial collapse of public revenues.

Such an eventuality would set the country back considerably and would certainly put off any discussion of the Greek debt indefinitely.

If, however, public finances improve and a sense of domestic political stability is consolidated, the internal devaluation and fall in prices that have resulted from the economic crisis may create opportunities for investors.

A more investor-friendly environment has to be created within the year, and a more constructive stance on privatizations has to be adopted, with clear choices as to the sectors of the economy that are to benefit, along with relevant actions in that direction.

"A possible relaxation of some aspects of the financial support program cannot be ruled out, due to the refugee issue, but, on the other hand, failure to implement the program, on the excuse that the refugee issue has created special hardship, may backfire on us," Filis warned.

As for the refugee crisis, it seems unlikely to be brought under control soon as long as the underlying causes remain untreated.

"The Greek government needs to do much better in the immediate future to accelerate the completion of the necessary infrastructure to accommodate refugees, to increase cooperation, where possible, with Frontex as well as to explain that Greece is not responsible for all of Europe's problems," Dokos said.

"As for future challenges, it is becoming urgent that in addition to migration management, the international community, especially the EU, should focus its efforts on ending the Syrian conflict as soon as possible and that requires, among other, cooperation with Russia," the Greek expert noted.

"Otherwise, in addition to practical, short-term problems, the long-term consequences for social cohesion in several European countries may be difficult to imagine if the refugee flows continue unhindered," he warned. Endit