It is 11pm. A group of men and women, obviously foreign, descend from a bus that has dropped them off at the lower end of Syntagma Square, the plaza that faces the Greek parliament.
They walk past a man curled in a fetal position at the top of Ermou, a pedestrian street that leads off the square.
They pass another slumped across a cardboard sheet, his head in his hands, then a tousle-haired immigrant, arms outstretched, as he murmurs: “Mister, mister, euro, mister.”
However, the men and women do not look. They walk on cheerily chatting toward their hotel.
The group, a team of technical experts mostly from the EU, are in Greece to monitor the state of its debt-stricken economy — and after several days spent poring over ministerial figures they know how dire the situation is. They also knew that on the ground things would get a lot worse when their bosses at the EU, the IMF and the European Central Bank (ECB) — the “troika” — flew into Athens yesterday to formally approve a new wave of recession-inducing austerity in return for aid.
Amid feverish speculation that Greece is on the brink of default, 16 months after it received the biggest bailout in Western history, the country was the focus of talks at the IMF’s annual meeting over the weekend. There are few who do not believe that time is running out to solve a crisis that began beneath the Acropolis two years ago, but with markets far from appeased, now threatens the global economy.
Surviving on rescue loans from its “troika” of lenders, the beleaguered Greek government is between a rock and a hard place, under immense pressure to make radical reforms in exchange for support, but also pressured by a populace exhausted by the measures.
“Europe’s politicians have persistently been behind the curve. They have made the situation much worse with their policy U-turns, conflicting messages, half-hearted measures and piecemeal approach,” National Technical University of Athens economics professor Yannis Caloghirou said. “The lost time has produced a lot of uncertainty, which has created a lot of fear. For the first time in decades, people are really frightened.”
In Athens, panic is sketched not only on the faces of those who have become increasingly impoverished by the cost-cutting policies the social democratic government has been forced to apply. Earlier this month, as officials announced yet more “shock and awe” measures — job losses, tax hikes and pension cuts in a desperate bid to trim the bloated public sector and secure enough cash to cover public sector wages and pensions — panic was heard in the voices of the ruling elite.
“People justifiably think the crisis is what we’re going through now: cuts in wages, pensions and incomes, fewer prospects for the young,” Greek Minister of Finance Evangelos Venizelos said, looking visibly drained as he responded to the uproar over the measures. “Unfortunately, this isn’t the crisis. This is an attempt, a difficult attempt, to protect ourselves from crisis. Because the crisis will be [Greece following] Argentina: The complete collapse of the economy, institutions, the social fabric and the country’s productive base.”
With Athens confronting a debt load of 360 billion euros (US$487.58 billion) — five times the size of Argentina’s US$95 billion default in 2001 — there was, he said, little choice. Faced with crippling sovereign default, the social democratic government had to take an axe to the profligate public sector, whose 800,000 employees more than anyone have borne the brunt of the crisis.
The alternative, said Venizelos, was too awful to contemplate: deeper recession, political turmoil and the collapse of the banking system. And worse still, the country’s expulsion from the EU.
AUSTERITY NO MEDICINE
However, after two rescue packages worth 210 billion euros, and belt-tightening that has seen the income of the average household drop by 50 percent, the appetite of Greeks for more measures is clearly running out.
Greece’s great economic crisis has been a gradual war of attrition. Massive job losses, tax increases and galloping inflation have sapped the nation’s energy and, increasingly, Greeks no longer believe what their politicians say. With cuts instead being blamed for slashing consumption, deepening recession and missing deficit-reducing goals, austerity is seen as a pointless exercise that far from exiting the country from crisis has exacerbated its plight.
On the street, the view is hardening that the medicine prescribed to rescue Greece’s economy is simply not viable.
“The belt is now at the eighth notch, it’s become so tight there are only two more left, but nothing has improved,” said Georgios Valsamis, a young taxi driver who joined a barrage of strikes that brought public transport to a halt last week. “People in power, MPs, they’re like robots, they do whatever those foreigners [the EU, ECB and IMF] say. We are no longer willing to be a laboratory for failed policies. Low-income earners, those who have been really hit, can’t endure much more.”
That ordinary Greeks, among Europe’s lowest wage earners before the crisis erupted, are being stretched to breaking point is too obvious to ignore. When austerity was first introduced, after the newly elected social democratic government discovered the budget deficit to be three times higher than the outgoing conservatives claimed, families took the blow by reining in spending and tucking into savings.
However, for pensioners forced to survive on less than 500 euros a month and families hit by unemployment that has reached a record 16 percent, there is no more room for maneuver. The death of faith in the future is the biggest fear.
“The worst part is perhaps psychological, because there is no light at the end of the tunnel, no source of hope,” said Thanos Dokos who directs Eliamep, a think tank in Athens. “When you make sacrifices and you know they will come to something, you don’t mind. But that is not the case.”
With the economy set to contract for a fourth year next year, Greece is not only mired in a recession not seen since World War II, but has become increasingly unhinged by the crisis. Athens, already strained by a mass influx of immigrants and home to half of the country’s 11 million-strong population, has been the worst hit amid soaring crime and lawlessness.
NEW REALITY
A new underclass has appeared: in the homeless and hungry who roam the streets; in the spiraling number of drug addicts; in the psychiatric patients ejected from institutions that can no longer offer them a place; in the thousands of shop owners forced to close and board up businesses; in those who forage through municipal garbage bins at night; and in the pensioners who make do with rejects at fruit and vegetable markets. Suicides have also risen, with help lines reporting a deluge of calls — 5,000 in the first eight months of this year, compared with 2,500 for all of last year. The announcement this month of a flurry of new taxes, including a draconian duty on real estate, has come as a further shock.
With the prospect of austerity for years to come, a growing number of young Greeks are either returning to their rural roots or fleeing to countries that can offer them a job in what is described as the biggest emigration wave since the 1960s.
“The measures are the blood price Greeks have to pay so that countries like Germany can convince their own constituents they are being punished for years of reckless spending,” Dokos said. “The government’s failure to implement reforms has made the situation worse, but the measures are also counterproductive. The negative impact on the economy is higher than the cash-flow the country needs.”
With desperation has come a collective sense of guilt and depression — more dangerous, say analysts, than even the social tensions that threaten to tear the country apart.
Recently, hundreds of Greeks piled into a lecture hall to hear Fotini Tsalikoglou, a prominent psychology professor, speak on “the power of loss.”
“Greeks feel like they are in a bad dream,” she says. “You wake up not knowing what will be overturned today of what was overturned yesterday. A common thread that unites people is the experience of fear and desperation.”
Political chaos is also on the horizon, with the latest measures rupturing the ruling PASOK party. While Greek Prime Minister George Papandreou appears intent on long-overdue structural reforms, dissidence among his own MPs has cast a shadow over the government’s survival. With politicians frequently attacked by angry voters, many social democrats say they no longer have the stomach to endorse measures that are turning the nation into “a poverty house.”
As the mood has darkened, so has the injured pride among a people who are acutely aware of their ancient lineage and feel they are being made the scapegoat by the international community.
“Kick out the Troikans. We demand respect. We are a proud nation,” proclaimed a banner held aloft by protesting policemen earlier this month.
“Greece’s fate depends to a great degree on decisions made in Europe,” Caloghirou says. “EU leaders have to act quickly. They have to vote through the second rescue program [agreed in July, but still not passed by eurozone parliaments] now. In uncertainty, you never know what will happen and that is the biggest problem, the biggest fear.”
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