Greek austerity
February 9, 2012
After weeks of negotiations the coalition of the unwilling which makes up the Greek government has finally come to half an agreement. Prime Minister Lukas Papademos' government had already decided on a program of cuts. Now, the leaders of the coalition partners have also put their names to it. That means that the current program at least, which meets the demands of the so-called "troika" of the International Monetary Fund, the EU and the European Central Bank, is settled. But the complicated issue of the debt "haircut" which has to be negotiated with the private creditors remains open. Both the spending cuts and the haircut are the conditions for Greece to receive its second rescue package of 130 billion euros ($173 billion). Without that money, the country will be looking at bankruptcy by mid-March.
But even if all the remaining agreements are achieved, will Greece be out of the woods? By no means: this is merely the end of one act in what has become an ongoing drama. For two years now Greece seems to have been dancing on the edge of an abyss, and every time, catastrophe is averted at the last second. Partly, this is the result of the EU's initial indecisiveness over tackling the problem firmly. But there has also been an unrivalled inability by Greek politicians to work out reasonable solutions.
Hercules and Hydra
The Greek finance minister Evangelos Venizelos has described the discussions with the troika as a fight between Hercules and Hydra, the mythological nine-headed beast. The choice of words is, of course, quite deliberate: the symbolism is meant to speak to the emotions of Greek voters, who will likely head to the polls in the next few months. But in fact this is a parody of the truth.
In Greece, not only the economy has come to a standstill. The same is true of the whole political system as well. The crisis has shown up all its weaknesses and problems. Over years, it has been fed on nepotism and corruption, and it is now fighting for survival.
That is the true Hydra which is tormenting the Greek people. It is not the European partners, which have been publicly reduced by local politicians and the media to the role of implacable creditors. The Greek political parties, especially the socialist PASOK and the conservative Nea Dimokratia, which carry most of the blame for the current situation, are now behaving as if they were innocent of any responsibility, and blame all the hardships of the austerity plan on the creditors.
The sad game continues
This twisting of the truth does not bode well, either for the current austerity plans, or for those which are bound to come in the future. The political parties in Greece have failed to reach any agreement on the reasons for the current crisis to how to get out of it. That applies to the parties involved in Papademos' emergency government as well. That's one reason the measures which have already been taken are not having much of an effect. They are seen as foreign directives and are being undermined in practice.
A small example: 31 percent of all those employed in Greece are civil servants. The Greek governments over the last two years have said that they will reduce the public sector by 150,000 workers by 2015. So far, not much has happened to achieve that goal - but the latest austerity plan lists it for the benefit of the troika once more.
This sad game in Greece will continue to be played, whatever the good news currently coming out of Athens. In the last two years, commentators have often linked Berlin's cautious approach to Eurozone rescue with its memories of the problems of the Weimar Republic, such as inflation and mass unemployment. It is amazing that the Greeks have not also learned from their history. The country was bankrupt once before, in 1893. The stalling tactics and irresponsibility of the Greek parties back then led the Great Powers of the time, which then included Germany and France, to take firm control of the country's finances in 1897. The German suggestion of a Cuts Commissioner or a savings account for Greece, which currently sound absurd, will probably soon become inevitable.
Author: Spiros Moskovou / al
Editor. Michael Lawton