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Anger grows over Greek tragedy
21 February 2010
For most of his adult life and 22year career, Dimitris Athanassopoulos has felt secure. As a train conductor working for Greece’s public railway services, his modest pay cheque has kept a roof over his head, food on the table and a sound credit line servicing a number of loans.
But now, as Greece’s enfeebled economy teeters on the verge of collapse, Athanassopoulos is worried.
‘‘Why should I pay the price of this crisis?" he said. ‘‘Why should I lose my job because politicians did not do their jobs right, sinking the country in the red, borrowing and borrowing and borrowing for decades?
Why should I see my country sink and my children’s future destroyed?"
Such emotions are resonating throughout Greece, where the political elite faces the colossal task of crawling out of a crisis which threatens the financial future of the EU.
Greece’s Socialist PASOK party came to power last October, trouncing a scandal-plagued centre-right government with promises to shield salaries and pensions. It also promised a $4.5 billion stimulus package that would resuscitate the economy through infrastructure projects and environmentally sustainable development.
Yet, just weeks after the party took office, Athens shocked the EU and world markets by announcing a budget deficit of 12.7 per cent of gross domestic product (GDP),the deepest in the eurozone - where countries are obliged to keep deficits under a 3 per cent ceiling.
Credit ratings agencies fired back with a triple downgrading of Greece’s sovereign debt. This led to skittish investors dumping the euro, wary of Greece’s ability to pay back its ballooning debt. Then the government - scrambling to reassure EU partners, investors and credit ratings agencies - enacted brutal economic reforms. All to no avail.
A chronic violator of EU budget rules, Greece has only once met the eurozone’s deficit ceiling of 3 per cent since joining the euro in 2001, two years after its inception. It also owes $220 billion to overseas banks - about 115 per cent of its GDP.
Greece, however, is neither the first nor the only member to defy eurozone rules. Spain, Portugal and Italy have frequently flouted regulations, in an area of the continent where laissez-faire attitudes and pliable interpretations of the law are in stark contrast with northern European rectitude.
‘‘You can’t put a straitjacket on a Greek," Athanassopoulos said. ‘‘We obviously prefer to weasel out of situations than deal with them head-on."
Last week, the EU warned Greece that it would press for more austere measures if Athens showed no tangible signs of putting its finances in order by mid-March. It also questioned the role that US investment banks might have played in helping the country mask its fiscal problems.
This forced Greece’s embattled prime minister, Georgios Papandreou, to launch a parliamentary probe to uncover any dubious budgetary shenanigans in the run-up to its debt and deficit crisis.
‘‘Markets and EU politicians aren’t over-reacting," said Gikas Hardouvelis, professor of finance at the University of Piraeus. ‘‘They are right to be sceptical because we have been proven to be liars and cheats in [presenting the EU with] fiscal statistics."
Investors concede they are now much more wary of potential crises after the US subprime mortgage market imploded. The repercussions rocked both sides of the Atlantic and rattled faith in the banking institutions last year.
‘‘The fear isn’t whether Greece will become a second Dubai, but whether it will prove to be another Lehman Brothers," Hardouvelis said.
He was referring to the US investment bank that filed the world’s biggest bankruptcy in the first big fallout of the crisis.
Many Greeks - not just the super-rich - have already withdrawn an estimated €10 billion from local banks, spiriting the money away to subsidiaries or branches in Cyprus, a popular tax haven, according to market analysts and bankers contacted last week.
The move followed a string of belt-tightening measures - including a civil service pay freeze, higher retirement ages and a revised tax system - that were announced by the government earlier this month.
Recent opinion polls showed that seven out of ten Greeks backed the government’s decision to freeze state hirings and cut bonuses, yet five out of ten disagreed with the newly-enacted tax regime.
Six out of ten Greeks rejected proposals to increase retirement ages.
However, 52 per cent of those polled said they believed the country would fall short of its financial commitments without outside help, and 38 per cent said they thought the country would be declared bankrupt.
‘‘We are all feeling the pinch," said Nikos Vassiliou, one of hundreds of workers who flocked to the Finance Ministry in central Athens last week. They were protesting about mass lay-offs at the country’s former state-owned air carrier, Olympic Airlines. ‘‘We are all willing to tighten our belts to get out of this mess.
But we want to see justice, too. We want to see the crooks who made a mint out of Greece’s misery locked up, along with some of the politicians who turned a blind eye to the looting."
Vassiliou’s remarks were met enthusiastically, as protest banners popped up from the crowds and a fresh chorus of slogans was sounded again against the government.
Yet no official addressed their concerns. Still, the spectre of social unrest looms.
Since the government announced its austerity measures, labourers, civil servants and farmers have taken to the streets in almost daily shows of swelling discontent.
Customs officials have led the backlash against the EU backed budget cuts, disrupting trade and angering Greece’s northern neighbour, Bulgaria.
A nationwide job walkout is also set for Wednesday, with millions of workers determined to vent their frustration at the government and the EU decision-makers.
Posters have been seen in the capital, reading: ‘‘People above markets."
And, as the country tries to struggle with the requests from Brussels, Greece has warned that it is being asked to do too much, too fast.
‘‘We’re trying to change the course of the Titanic," said finance ministerGeorgios Papaconstantinou. ‘‘It cannot be done in one day."
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