Is Greece Out of the Frying Pan?
Greece’s Prime Minister George Papandreou started the week by pitching world financial markets into a dive with the announcement that Greece would allow its citizens, who have been photographed daily for the past half year rioting against EU imposed austerity measures, to vote on whether or not the country should accede to those measures. He ended the week with his job in uncertainty, a condition shared by many of the G20 nations, which were holding a summit in Cannes, France, to address growth and imbalance in the world economy. Eying Greece, Japan’s finance minister, Jun Azumi, said, “Everyone is bewildered.”
So, for the benefit of Minister Azumi, here are five bewildering aspects of Greece’s dilemma, perfectly cleared up.
Retiring while in their 50s was an attainable dream for many Greeks, especially since income-tax evasion was an avid pastime of the populace and a low enforcement priority of the government.
1) Why all the protests and rioting? Street theatrics, ranging from silent vigils to fire-bombings, are a democratic institution in Greece, with the popular appeal of NASCAR weekends in the United States. The current season of civil disobedience goes back to Christmastime 2008. Central Athens hosted a running dialogue between police and rioters addressing endemic political corruption and a dismal job market. Somewhere in the exchange, police fatally shot 15-year-old Alexandros Grigoropoulos; in retaliation, anarchists burned down the official Athens Christmas tree and defaced its replacement. In May 2010, unrest erupted in agitated furor: Pressuring the government to reject proposed “austerity measures” attached to a €110 billion bailout, tens of thousands of people jammed into Syntagma Square in front of Parliament, chanting “thieves, thieves” and launching DIY incendiaries. A stray gasoline bomb killed a man and two women in the Marfin Egnatia Bank. One year later, May 25, 2011, at least 25,000 people reconvened in Syntagma Square for a so-called silent protest, chanting “Thieves! Thieves! Thieves!” By June, protesters were attacking Parliament and police with bottles, rocks and firebombs. Since then, the rampage against austerity has continued unabated.
2) How did Greece go broke? Greece enjoyed one of the world’s highest standards of living—up until as recently as 2008. Counting their customary holiday bonuses, workers typically received 14 months’ of salary per year, while kicking back for a month-and-a-half of fully paid vacation time. Retiring while in their 50s was an attainable dream for many Greeks, especially since income-tax evasion was an avid pastime of the populace and a low enforcement priority of the government. Bureaucrats were far more avid in pursuit of the bribes and kickbacks afforded by an entrenched system of civic corruption. The global economic meltdown created an enduring unemployment spike and revealed, in 2010, that the government had been faking deficit numbers for years, a disclosure that constricted the country’s financial markets and made Euro zone neighbors less avid to extend helping funds.
Stocks will tumble in Europe, Asia and America, investors will shun bonds from Portugal, Spain and Italy, the Euro will slide, and, finally, U.S. tourists will be able to once again obtain a café au lait in Paris for less than $10.
3) What is this austerity the Greeks are so freaked about? In exchange for a cash infusion, the International Monetary Fund insists that Greece puts 30,000 civil servants on 12 months’ notice with a 60 percent pay cut and replaces only one out of every 10 workers leaving the public sector. Pensions of more than €1,200 must be cut by 20 percent, and pensions for people who retired before age 55 must be cut by 40 percent. Real estate taxes, taxes on cars, tobacco and alcohol, and taxes on large companies will all be hiked. Government holdings in the state lottery, airports, 2004 Olympic venues, hotels, beaches, marinas, casinos, the main gas distributor, gasoline companies, railways and motorways must be sold off. In the meantime, Athens already seems powerless to placate its angry police force, to remove towers of rotting garbage from the streets, to stop sex trafficking, to reverse tides of drug addiction and homelessness, to provide the prospect of employment to its educated young, or to make public sector workers—from street cleaners to doctors—feel virtuous about having taken 30 percent cuts in salary.
4) Why the Nazi imagery? The Eurozone, a monetary union of countries that has adopted the Euro as a common currency, includes 17 member states, but five of those—other than Greece—are Italy, Spain, Portugal, France and Ireland, all shaky in the economy. That leaves Germany, with its solid bottom line, a lot of room to toss its weight in dictating bailout conditions. After German Chancellor Angela Merkel, addressing the Bundestag, warned her countrymen that the Greek solution would require “permanent oversight,” a banner was hung in Syntagma Square reading Arbeit Macht Frei, the notorious “work will set you free” motto that was suspended above the gates of the Auschwitz death camp. The Nazi allusion both accuses the government of being collaborators with the Germans and hearkens back to a civil war that followed the Nazi occupation, a running dialogue that killed tens of thousands and ushered in 30 years of military rule.
5) What does chaos in Greece mean to the free and sedate United States? Anyone who has ever played dominoes knows that the tiles take much longer to set up than they do to knock down. If Greece rejects the conditions stipulated by the EU and IMF, its bonds will default, European banks will stagger, lenders will tighten up, stocks will tumble in Europe, Asia and America, investors will shun bonds from Portugal, Spain and Italy, the Euro will slide, and, finally, U.S. tourists will be able to once again obtain a café au lait in Paris for less than $10.