For at least 4 weeks large crowds collected in Athens outside the Parliament building in Syntagma Square to protest against the measures imposed by the IMF, ECB and EU (the Troika) and laid before the MPs by the ruling Pasok (socialist) government. They modelled themselves on the Indignados of Spain and called themselves the Aganaktismeni. Their demonstrations were peaceful, if raucously rude to all politicians, by making obscene Greek gestures towards parliament with 5 open fingers and chanting “Thieves, Traitors!”
Well, yesterday the Indignants lost their battle as the measures were voted through on pain of Greek bankruptcy. The Indignants are a mixed bunch. Some are those who have lost their jobs or businesses in the crisis; some protest about government cuts to pensions and allowances; others are threatened teachers and civil servants; some are trade unionists concerned about jobs and privatisation; others are New Democracy (conservative) voters opposed to anything Pasok does. So the motives of the Indignants vary greatly, but they have been numerous and law-abiding.
The intellectual case for the measures imposed by the Troika has not been made. The package passed involves government spending cuts and new tax increases totalling €28bn, a crackdown on tax evasion and a privatisation programme aiming at raising €50bn. Immediately European funds of €12bn will be released and discussions will start on a second Greek bailout to raise €120bn (the first raised €110bn). With unemployment said to be 16%, industrial output falling, the retail economy very depressed, private spending paralysed, it is clear that further deflation is not appropriate. The conservative New Democracy supports the privatisation programme and government cut-backs but think taxes should if anything be lowered to stimulate the dying economy, as without some growth, insufficient revenues will be generated. Other voices outside Greece say the measures are superfluous, Greece cannot pay its debts, default (or more euphemistically, reconstruction) is inevitable and the sooner this is faced the better.
It is likely that the Indignants’ relative restraint will turn to anger. Their demonstration yesterday was hijacked by about 300 hooligans throwing stones and Molotovs at the police who replied with stun grenades and indiscriminate gassing. Innocent passers-by and diners were assaulted by the out-of-control police; media footage seems to confirm that some of the “hooligans” were working in collusion with the police as agents provocateurs. There is a murky story here, but in Greece these things are never properly investigated. But the public is outraged.
It is outraged by the actions and attitude of the government too. Dapper George Papandreou has the corrupt and tainted blood of father Andreas running through his veins and presides weakly over a ramshackle regime. His deputy, the hugely obese Theodoros Pangalos, delights in insulting his own countrymen telling the Turks that the Greeks are “lazy” and that we (government and citizens) “ate up the money together” When he threatened the populace with tanks, even some Pasok MPs called for him to go, and on a recent outing he was pelted with yogurt. The other deputy prime minister is the recently promoted Finance Minister Evangelos Venizelos, quite a smart operator (although also a 22 shirt collar size) who is a party rival of Papandreou and would succeed him in normal times. Venizelos’ knowledge of economics is quite untested and this is not the time to start learning.
Speaking of the regime as a government is misleading. It has shown itself incapable of governing and just bounces about like a cork in a sea. Statutes are passed but just gather dust on the shelf as the so-called political elite has neither the will nor skill to implement them. The tame MPs obey orders, doing nothing to jeopardise their own position as elected members, enjoying large salaries, generous allowances and many perks – much more than a Westminster MP. They have cut their salaries by a nominal 5% but these are the same politicians who helped themselves to allegedly €55m of bribes from Siemens on telecom contracts, dropped €100m on the Vatopedi land swap with the Church and pocketed a further huge sum, said to be €230m, on the purchase of submarines for the Greek navy. Corruption is even admitted but gloating politicians hide behind tight statutes of limitation.
Tax evasion on a huge scale by the entire professional and business class plagues Greece. Lawyers, doctors, architects and so on work on a cash basis. So do small businesses of all kinds; it is not just casual labourers who play this game and civil servants and tax officials are often complicit So the Troika’s measures may be passed, but implementing them is quite another issue.
It has to be said that the Troika has been inept and slow-moving. No leadership has been shown – the only charismatic character was Dominique Strauss-Kahn, who talked to and chivvied Athens politicians, but he has left the scene ignominiously as the world knows. The remaining protagonists, unelected Oli Rehn, Jose Barroso and Herman van Rompuy (who? who?) are deeply unimpressive placemen, finally reverting to crude bullying of the Greeks, which has been much resented
In truth Greece cannot take on more debt which it has no realistic chance of repaying and creditors will have to take a loss (a “haircut” in the parlance of the investors). The Troika want more time to move the debt away from the banks (which they will have to recapitalise) and towards the hapless European taxpayer. This will infuriate the thrifty Germans especially, made much worse by Portuguese, Irish and even Spanish contagion. In any event, for Greece the party is over. Its exit from the euro seems inevitable and from the European Union quite possible.
This is a sad end to a noble experiment. Sentimentally Greece should be part of Europe – it has a great historical affinity and many European merits. But the economic and social facts point in another direction. Greece has a semi-developed economy, weak institutions and only a tenuous rule of law. It is much more like its Balkan neighbours Serbia and Bulgaria and is only marginally ahead of Levantine countries like Turkey, Syria, Lebanon and Egypt in its social atmosphere.
It is tragic to see clever, educated Greeks with little prospect of employment: a beautiful country’s physical assets neglected or auctioned off: its ordinary people exploited by greedy politicians. This is the heavy price of membership of an economic bloc which does not fit. May Greece recover and prosper!
SMD
30.6.11 Copyright Sidney Donald 2011
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