The end of March marks a peculiar anniversary; it was at the end of March of 2010 that the government of George Papandreou “threw in the towel” after failed bond auctions and requested EU assistance. As such, it is important to have a brief look at what transpired in the last six years and understand the seismic consequences these events had –and continue to have- for the Greek state
(a) The Amazing Extent of the Financial Crisis
The Greek economic crisis, that begun in 2009, was a relatively minor event in the global scale, at least on the basis of the sums involved. The country’s debt was not out of line of that of other European states; However, the country appeared to have lost the confidence of the bond market and, because of the lack of alternatives within the Eurozone, it became unable to finance its sizeable budget deficit. It became de facto bankrupt and had to petition for aid by the EU. Furious negotiations from the end of March onwards and through April 2010, led to the first memorandum with the “troika” on May 5, 2010. Although at the end of 2009 the situation appeared manageable, a series of bad political and economic decisions by the successive governments –many dictated by the “troika”- changed a fiscal crisis into an existential one.
Thus, in the beginning of spring of 2016, we can only survey the devastation that all these policies brought onto the country. The GDP has declined by 27% (and it is still falling), the public debt increased from 115% to 180% GDP (and it is still climbing); incomes were cut by 35% of more; pensions were reduced at 11 separate occasions and are expected to be reduced even further; unemployment is at record levels (>25%), bankruptcies have shuttered a quarter of a million businesses, industrial output is on a steep decline and investment has totally dried up.
The economic crisis expanded into a social one. It affected the Greek society dramatically at every level, from health to demography. Births have been registering a substantial decline and deaths are increasing. Suicides have reached a record level. Public health has declined with the removal from the National Health Service of millions of citizens, higher deductibles, record costs for drugs, and dramatic reduction in hospital beds and health care personnel. Emigration is sapping the creative potential of the nation removing from the society its young and educated component. A sense of despondency, anger and resignation is prevailing throughout the country.
The future will be even worse than the present. Wages are still on a downward trajectory; the days in which a starting wage will be below 300 Euros are not that far away (or they are already here); the dream of having a “middle class” life, of owning a house and a small car, of being able to go for a decent vacation or start a family before old age is retreating into the haze of dreamland for most of the youth of the country.
(b) Loss of Sovereignty and Occupation
The economic crisis has been accompanied by an even more destructive legal and political crisis. The Rule of Law has been erased. A score of legislative acts have been unconstitutional; the governments felt enabled to disregard the decisions of the Supreme Constitutional Court. Officially, by an Act of Parliament in August 2015, the country has lost its sovereignty – an unheard of action for any European country since the 1707 Treaty of Union between Scotland and England-. Ultimate sovereignty has been transferred to the European Stability Mechanism, represented in the country by the “proconsul” Marteen Wervey and his team who have total (and the word “total” is not an exaggeration) control of legislation, state finances and state property. The so-called “government” is nothing more than a “negotiating team” unable to pass any legislation that the sovereign entity disagrees with. Even minor administrative acts require clearance by the supervising authorities. The ESM and its proconsul maintain overseers and employees in every ministry; certain departments, such as the National Statistical Service, report directly to them, not to any Greek official. The country is, in no uncertain terms, under occupation. There should be no doubts about it. Foreign troops are not marching in the streets of the country, but the supervisors of the ESM yield more power than any hostile military. This occupation is not a very enlightened one. Its single aim is not to reform to state, but to extract the maximum value for the creditors from the now mandated territory of Greece.
(c) The Cause of the Crisis and the Campaign of Misinformation
But why did all these things happen? Why did the country suffer such a profound disaster? The leading “theory” in Greece is that the crisis was brought about by the civic sins of the population, by corruption and tax evasion, and by unscrupulous and incompetent governments that over-borrowed. The system has worked hard (and it is still working) to convince the populace of the validity of this “theory”. But there is nothing right about this “theory”. It is all a tissue of lies that sound plausible but are totally untrue. The truth is and remains that the adoption of the Euro dramatically undercut the competitiveness of the country and it removed all monetary tools and protections. The main reason for the crisis was the country’s incorporation into the European Currency Union, the Eurozone. In an optimal common currency area, all participants must have the same capabilities in responding to financial crises. To even claim that Greece possesses the same capabilities as Germany –and can, thus, belong into a common currency with this state- is laughable to the extreme. Unfortunately, it is the law of the land!!
If Greece had been outside the Eurozone, the crisis would have been a mild one and it would have been managed effectively. But within the Eurozone, with its prevailing, German-led “austerity” policies -which have been enshrined into European treaties-, there was no escape. Within the Euro, even a moderate fiscal deficit that cannot be financed in the market leads to immediate default; outside the Euro, a country’s central bank can act as the lender of last resort and can contain the crisis within acceptable bounds. Within the Euro, the only way of adjusting for loss of competitiveness is by “internal depreciation” (a fancy way of saying that everybody becomes poorer); Outside the Euro, external depreciation makes exports cheaper and imports pricier and the effect on incomes is moderate to minimal.
(d) The Perceived Lack of Alternatives
With all of that in clear evidence, one would have expected the Greek people to rise in protest, remove the offending governments and return to the status pro ante. Unfortunately, this is not the case. It is not surprising, however. In cases of creeping occupations like the one that the country is experiencing, people retreat to the “comforts of family”, fight for their personal status and well-being and retreat from political life. And just in case there has been any serious challenge to the occupation, the ruling authorities made sure that the population has been repeated terrorized with apocalyptic scenarios of the consequences of alternative scenarios. These terror scenarios are unfolding every time an election or a critical vote is about to happen. Those who propose alternative solutions are pronounced as criminals in want of prosecution, members of the “drachma gang” who only want to descent on the country like hungry vultures and strip her of her assets (as if the creditors are not doing the exact same thing!!!). The propaganda at all levels is intense, effective and pervasive.
The Greek population has been stunned to inactivity. It is not, of course, a unique situation. The country has been paralyzed repeatedly following a massive defeat. It has responded similarly in many previous occasions and only the mythology of the “common narrative” (fictional in most parts) has obscured the truth. Even as the crisis is reaching new depths, the Greek population is totally resigned to it and seems mentally unable to support political forces that advocate a direct “break” with the current policies. The “occupation government” simply swings from one pro-Eurozone party to another to the total indifference of the majority of the citizens. As elections throughout the distressed Eurozone periphery have shown (such as the ones in Portugal, Spain and Ireland), this situation is not unique to Greece.
Thus, within this climate (of terror for any alternative policy) and with no political force mustering any support to break the policies of subjugation, Greece has literally no hope of escaping its present circumstances. Like other countries of the European periphery, it has made its peace with its increased poverty and destitution, with misery, super high unemployment, emigration, poor public health, and a looming third world status. My own guess is that the European periphery would only escape its terminal decline when the fortunes of the European center decline. Right now, with Germany and its erstwhile allies on the ascendant, this does not seem likely. But even if occurs, and if a collapse of the European Core may frees the European periphery, this would be the freedom of chaos, revolution and destitution for all.
The omens for the future are not good and there is little cause for optimism.
Anastassios Retzios, Ph.D.
San Ramon, California
Professors-PhDs@googlegroups.com
