GREECE UNDER BANKER’S ATTACK

Highlighted extracts from Guardian report by Aditya Chakrabortty in Athens, Sunday 19 June 2011 21.00 BST Article history

“….as George Papandreou, Greece’s beleaguered prime minister, also prepares to hold emergency discussions with European commission president José Manuel Barroso, the assurances have done little to dampen concerns that Athens is heading towards default. The chances are “so high that you almost have to say there is no way out”, said Alan Greenspan, the former US Federal Reserve chairman. His prediction followed reports that 18 months after the eruption of Europe‘s worst crisis in decades, the European commission has begun to have a “profound sense of foreboding” about Greece and the future of the eurozone.

Twenty months after the socialist leader assumed office – only to discover that, at 15.4% of GDP, Greece’s budget deficit was three times higher than that claimed by the outgoing conservatives – Greeks’ patience with austerity is running out. A year of wage and pension cuts, benefit losses and tax increases has taken its toll: almost a quarter of the population now live below the poverty line, unemployment is at a record 16% and, as the economy contracts for a third year, economists estimate that about 100,000 businesses have closed.

With Athens erupting into violence last week as tens of thousands of protesters marched on parliament, it became clear that the prospect of further belt-tightening is a line few are willing to cross. Banners draped in central Syntagma Square – the hub of relentless demonstrations in front of the parliament building – proclaimed only dictators would pass such measures.

The Spanish-inspired movement of the Aganaktismenoi, or “outraged”, who gather daily in the square – often venting their spleen in loud outbursts – has added to a climate already charged by fear, uncertainty and despair. For the first time since the return of democracy with the collapse of the colonels’ regime in 1974, Greeks say that they are determined to take fate into their own hands beyond party or political creed.

“We are the silent majority who are sick of the corrupt people who have ruled this country for far too long,” said Apostolos Anagnostopoulos, a pensioner, wagging his finger angrily at the parliament building. “What this and every government has to understand is that Greeks aren’t willing to pauper themselves to pay off debt for which they are not to blame. We are in revolt, people may be killed, but whatever it takes we are not going to let those measures pass.”

Like many of those who have joined the protests, Anagnostopoulos says he was spurred into action by the spectre of Greek resources – state-owned assets from prime real estate to public companies – being sold at fire-sale prices to foreigners as part of a €50bn privatisation drive. “Our creditors, the EU and IMF, have basically told Greece ‘sell everything, let foreigners run your ministries, give up your wealth’. It’s outrageous.”

When Greece was all but locked out of the financial markets last May, Papandreou accepted a €110bn loan from Europe and the IMF. The idea was that the money would tide the country over for a year, in which time his government would at least start sorting out its public finances. For Angela Merkel, Nicolas Sarkozy and the rest of Europe, the loan came with some pretty tight strings attached: they charged the Greeks interest well above the official eurozone rate, and set demanding budget targets for the Pasok socialist government.

A year in, and the deal is not working. Greece has been in recession for two years and on official forecasts this will be its third. When I ask Athens University economist Yanis Varoufakis to describe the economy, he shoots back one sentence: “It’s in freefall.”

Sitting on the balcony of his flat behind the Acropolis, he throws out some statistics: 50,000 businesses went bankrupt last year, industrial production fell 20% and will drop another 12% this year. Unemployment has surged, so that one in six of the workforce doesn’t have a job. These are the sort of figures associated with a depression, and the predictable result is that the public finances are getting worse. Greece’s debt has ballooned to 153% of GDP; on Varoufakis’s projections, even if ministers manage to make all their promised cuts, the government will owe three times the entire national income.

Behind these numbers lie the stories of a society in distress. One man talks about his daughter who works in the in-store restaurant of a large supermarket outside Athens; at closing time, she and her workmates have started giving out the unsold meals to the newly unemployed – the 21st-century equivalent of a soup kitchen. An employee of a local council notes that they pick up 17% less rubbish than a year ago, simply because people have cut back on food. The owner of an art gallery tells me her son has just started his first job; holding a master’s in accountancy, he works six hours a day in a mobile-phone shop.

The lazy accusation to hurl at Greece is that it had a bloated public sector and so was bound to come a cropper. Not so, says Varoufakis: the country has a public sector in line with the rest of Europe (although, nearly everyone I speak to agrees, one that does not work as well), but takes in taxes some 35% below where they should be. Wealthy Greeks have always treated the country’s tax system like a church collection plate: what they give is strictly optional.

The anger against the austerity and the politicians imposing it is palpable; whether it will translate into political success is debatable. Papandreou may be one of the most hated men in Greece, but there is no mainstream politician who has an alternative toacting under creditors’ orders. This isn’t about an electorate taking on a government, either, but the impossible political arithmetic of disparate groups of Greeks on one side versus the IMF, the European Central Bank and 16 other eurozone members on the other.” […themselves also under the “creditors’ orders” of the IMF and the ECB].

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