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Greece in a State of Shock


Up close, the most striking feature of the reforms being forced on Greece by its international creditors is their destructiveness and futility. The pay cuts, tax rises, cuts and job losses agreed to by parliament in Athens last week will serve only to send the economy into a steeper tailspin, even if it extracted a much-needed €8bn in bailout money from the EU leaders. "Nothing but a lost war could be worse than this situation," one left-wing ex-minister tells me. "What is worse, no party or political group in Greece is offering real solutions to our crisis."         

On the right, there are similar lamentations. Asked if there is the possibility of a revolution in response to current disasters, Simos Kedikoglou, an MP from the opposition New Democracy party, says, "I wish there could be a revolution." He argues that a revolution might at least have a sense of purpose and direction but "we are in a state of shock, and the danger, rather, is that we will have a social eruption, because people have lost hope".

The mass rallies and 48-hour general strike that paralysed Greece last week were a sign of how far Greeks feel the reforms insisted upon by the Troika – the IMF, European Central Bank and European Commission – are a recipe for a permanent collapse in living standards. The marches were bigger than before and socially more diverse. Smartly dressed women working for new technology companies and retired bank officials mixed uneasily with garbage and dock workers, but all had a similar complaint: their incomes are being cut past the point where they can make ends meet. 

Greeks feel, probably rightly, that the extent of their calamity is not understood in the rest of Europe – or, if it is, is thought to be a richly deserved punishment for greed, laziness and corruption. "Do you think we are the parasites of Europe?" Sophia Giannaka, an MP from the ruling Pasok party asks me, the day after she reluctantly voted for the EU/IMF reforms. She says that Nicolas Sarkozy had told the Greek Prime Minister, George Papandreou, that the Greeks "are the virus that is poisoning Europe". 

Greece is certainly damaged by a perception abroad that borrowed money and EU subsidies have financed a life of self-indulgence. Articles in foreign newspapers about the Greek crisis abound in phrases such as "eye-popping waste" and "bloated workforce". Mr Kedikoglou reckons that the number of employees dependent on the state is 1.2 million, which should be cut to 600,000, but he is clear that this cannot be done at once. 

Down at the union headquarters of the municipal employees – one of the prime targets of the reforms – their combative leader, Themis Basalopoulos, denounces these figures for public service workers as grossly inflated and propagandist. He says the number usually quoted, of 780,000 workers, "includes soldiers, policemen and even priests". He adds that his members' income is being cut by 40 per cent.

Mr Basalopoulos leads the 22,000 garbage workers in the Athens region, whose strike has left every city street with heaps of rubbish. The government is trying to end the strike by court orders and use of private contractors, but, in a sign of the authorities' increasing inability to get their way, neither has proved effective. 

Below Mr Basalopoulos's office marchers from every district in Athens assemble behind their banners. Few are in their twenties and many are in their forties and fifties, reflecting that not many Greeks want to be manual workers. A strain on many parents' incomes is the money spent on extra tuition for their children, to get them to university or to gain professional qualifications. But, as the economy implodes, it is these jobs that are disappearing. "The younger generation don't have a future," says Mr Kedikoglou. "They don't even have a present. Our best minds are going abroad. If I was 25 years old and studying abroad, I would never return to Greece."

None of these deeply rooted economic and social problems is going to be solved by the Troika's prescriptions. These may raise taxes and broaden the tax base but, in a deepening recession, the government's receipts are less than expected. Greece should be trying to attract more tourists, but restaurants are becoming more expensive because of a steep increase in VAT. 

There is a further reason why the EU-IMF imposed reforms – tax rises, public-service salary cuts, suspension of collective bargaining, 30,000 public service workers suspended and the tax base broadened – may not herald real change. They are being imposed by the very people whom most Greeks blame for misgoverning the country and benefiting from pervasive corruption. Nobody has been arrested. Ex-ministers live lavishly in Athens' most luxurious properties. Everybody speaks furiously of the immunity of the political elite.

"A feeling of injustice hangs over Greece and angers Greeks even more than the austerity measures," says Ms Giannaka. She is visibly uncomfortable with the failure of her own party to punish notorious wrongdoers. She admits that the party "has not been able to create a sense of justice".

An obvious solution to the government's lack of legitimacy would be a general election. The opposition complains that Mr Papandreou played down the impending crisis in the last election, in 2009. Furthermore, he is dissolving the welfare state that Pasok itself largely created over the past 30 years. "They are killing their own child," says Mr Kedikoglou. Ms Giannaka admits, "The socialist dream of Greece in the 1990s has been totally destroyed."

This leaves the ruling party without much identity and highly unpopular but, with 153 seats out of 300 in parliament, it has every reason to avoid an election.

For the present, the government feebly agrees to everything suggested by the Troika, but implementation is slow and episodic. The government's own isolation grows and parliament itself was under siege for part of last week. Greeks are still going along with changes that reduce many to poverty in the hope of avoiding total ruin, but don't see why they should pay up if personal disaster looks inevitable. Why, one politician asks, should "Greeks care if Greece goes bankrupt, if they are already bankrupt themselves?" 

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