A new episode in the Greek drama
Translated from www.grenzeloos.org
One more episode of the Greek drama is about to be played in the coming 2 months. After repeated bail-outs, hair-cuts and ‘successful’ (according to the European media…) interventions of the EU, the European Central Bank (ECB) and the IMF, Greece is about to default. According to many economists, the default will take place on the 20th of March, the day that Greece has to refinance a mega-bond of more than €14 billion. If the new loan-agreement (the so-called PSI) is not realized, then Greece will not be able to refinance this mega-bond. However, even if the PSI is realized, the default will only be postponed for a few months.
The Greek people have reached this point through iron and fire and are expecting to move on with as only assurance that things will only get worse. Unemployment has exceeded 18% and for young people 45%. Salaries and pensions have been cut by 30-50%. Taxation has increased so much that an average household has to count at least on one salary less per year. For the first time after decades, the homeless and the hungry become a visible and rapidly growing group in the big cities. NGO’s of medical personnel, such as the ‘Doctors without Borders’, recall their volunteers from third-world countries because of the expansive growth of demand for their services as people cannot afford the rising costs of health care. For the first time after the civil war of the 1940’s, pupils at schools were not given books because the fund for printing them was not released on time by the government. In 2011, 500 children (a number that is the double than the year before) were abandoned in orphanages just because their families did not have the means to support them.
Even for the most extreme anti-Greek European media, such as German Bild and the Dutch press as a whole the failure of the Troika (EU-IMF-ECB)-recipes to put the state finances of Greece in order is now more than apparent. These policies had a twofold aim. On the one hand, they aimed at saving the European banks from the losses of a Greek default and the euro from collapsing. As the former president of the Bundesbank stated (Spiegel, 21/5/2010), the rescue package for Greece “…was about protecting German banks, but especially the French banks, from debt write offs”… “Looking at that, you can see what this was really about — namely, rescuing the banks and the rich Greeks.” On the other hand, this crisis was a great opportunity for the Greek and European elite to achieve a major redistribution of wealth to its benefit.
The chosen strategy, the so-called ‘internal devaluation’, served both causes. It is nothing else but the well-known recipe of the IMF that has been repeatedly applied with disastrous consequences in Latin America, Southeast Asia and Eastern Europe. The idea is simple: Greece cannot leave the Eurozone (at least for a period) because this will lead to a default. Therefore, the European taxpayer grant loans to keep the state debt rolling. At the same time, the government is applying harsh austerity measures that aim in reducing the labour cost to a minimum in order for the country to become competitive. Together with directly reducing the labour costs, the government removed all barriers for financial and non-financial investments: employment protection is abolished, regulation in investments is lifted, massive privatizations in prices much lower than what is recognized as the ‘market price’ are taking place.
As in previous cases, the ‘internal devaluation’ led to an economic disaster. The reduction of government expenditures brought the economy to a halt. The state stopped pumping money to the market through state projects in construction, education, energy etc. This resulted gradually in the closure of approximately 65.000 companies. This in turn boosted unemployment. High unemployment, combined with harsh salary- and pension reductions as well as with uncertainty brought consumption to a standstill. Greek banks, although they have receive more than €110 billion in subsidies and guarantees from the state are refusing to provide any cash to the market. Even the financing of investment projects with EU funds cannot continue because banks refuse to provide the required 10% that they are supposed to!
Fear
At this moment, although the puppet government of the banker Papademos enjoys a wide parliamentary and media support (including having right-wing extremists in the government) and insists that they are close to find a solution, everybody is convinced that the end will come. Currently, the Greek elite are behaving as the armed robber that is trying to get everything possible before leaving a robbed house. Companies that are not hit by the crisis and are making huge profits cut down salaries to ridiculously low levels, reduce working hours, introduce flexible labour and violate the employment legislation. A very characteristic example is the Greek Steelworks SA. Although, in 2010, this company made €227 milion profit, and in the last 2 years it had to raise production by 15% to meet increasing product demand, it demands from its workers to do the same work in less hours and with lower wages. In this company, workers are already 2.5 months on strike because the employers wants to reduce the working force by 30%, reduce working hours per day to 5 and cut down salaries to €500 per month.
According to the plans of the government and the Troika, 150.000 civil servants will be fired until 2015. The salaries of the remaining are already severely cut. To give an example: a newly hired primary-school teacher earns €560.
Taxation is not anymore just a means to collect money to pay the debt. It is openly used as a means to deprive people from their property. The new property-tax that was recently introduced, forces people to pay up to€10 per m2 of their housing property. The tax is not progressive, which practically means that i.e. elderly people with a €500 pension that own a house in their home place are required to pay €400 property tax! When asked about the threat for these people to lose their homes, government spokesman I. Mossialos bluntly stated that the percentage of home occupancy in Greece is too high! To make things more clear, the government plans to enable the possibility of paying personal debt to the state by giving in personal estate!
All limits to privatization have been abolished. With the so-called fast track investments, everything is for sale: beaches, islands, mountains, forests, archeological sites. The protection of the environment or the preservation of cultural heritage of the country are no longer considered obstacles in these investments.
A sector that has practically escaped the austerity policies is defence. In return for the EU-loans, Greece continues to finance the German and the American military industry. In 2010, the cost of the delivered armament from Germany increased by 42%. German shipyards have already received €2 billion for submarines that were either delivered broken or not delivered at all.
Resistance
The situation in Greece can be described as a social war that for the time being is mostly waged from the one side (the Greek elite) against the other (the people). In this, the Greek people are not just facing a neoliberal government, but the EU and the European elite as whole. Greece is used as the guinea pig of the EU, where the European elite are testing the measures that they want to apply more or less in the whole Europe. With the current approach to the Greek crisis, the banks and the financial elite want to ensure that people in the whole world will continue to pay for their profits and for their losses. In this respect, for the people, there is no easy way out, and no way to return to the pro-crisis situation.
After the mass rallies of the summer that faced the severe repression of the security forces, the government has launched a wide propaganda effort to convince the Greek people that the chosen solution of ‘internal devaluation’ within the eurozone is the least worse scenario. They also argued that failing to realize this scenario would lead to an exit from the Eurozone and to a default with even more devastating consequences. This line of argumentation has so far managed to convince a large part of the population. The formation of the puppet-government of Papademos which was forced to include also the conservative party and the ultra-right extremists deprived the elite from one of its last alternatives, as the conservative party that was initially against the austerity policies is now implementing them. As the situation and the everyday life in Greece is becoming more and more difficult for the people, the arguments of the elite are quickly losing ground.
The Greek people balance between fear and anger. For the first time in modern Greek history, a military parade at the occasion of the ‘no’ against the Italian invader back in 1940, was turned into a mass demonstration on October 28th. This actually forced contrary to the common belief in Western Europe the government of Papandreou to resign. Even after the establishment of the Papademos-government that somehow calmed the reactions, wildcat strike actions break in several workplaces without the support of the trade union confederations. The ‘no-pay’ movement is spreading, convincing people to refuse to pay the new taxes, the absurdly high toll fees in the highways and the equally absurdly-high tickets of public transport. According to the first estimations, 42% of home-owners refused to pay the new property tax.
Probably the most important issue is that the Greek people is gradually realizing that the EU and the euro are part of the problem and not the way out. They are also realizing that the only way out of this crisis is the way that will be defined by them and for them. It is absolutely sure that the relative calmness that prevails now is just preceding the big storm. In this situation, the people have less and less to lose from a decisive fight. Currently, there is no political alternative defined, as the left has not defined a clear political way that will topple the government and the policies of the EU. However, this will not stop the reactions of the people. The ‘big bang’ will come, sooner or later. When it comes, its outcome will depend to a large extend by whether it will create a chain reaction in the rest of Europe.
Dimitris Pavlopoulos works as an assistant professor at the Vrije Universiteit Amsterdam.
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