Civil Society, Economy & Trade, Europe, Financial Crisis, Headlines

ECONOMY-GREECE: Austerity Measures Unsettle Public

Apostolis Fotiadis

ATHENS, Mar 1 2010 (IPS) - Xristos Kiriakou, 30, joined the Feb. 24 strike against the austerity measures announced by the Panhellenic Socialist Party (Pasok), although he has never been involved in public protests before.

Greeks protesting against austerity measures. Credit: Apostolis Fotiadis/IPS

Greeks protesting against austerity measures. Credit: Apostolis Fotiadis/IPS

”I have been unemployed for the last seven months and realised that all avenues to a decent job are shut and sealed,’’ said Kiriakou, who had done a year of obligatory military service but had nothing to return to.

A graduate of European Studies, Kiriakou speaks several languages and has work experience, but finds it impossible to get a job that pays more than 700 euros (945.6 US dollars) a month.

”I protested also because I believe that what Greece is being asked to do will not lead to an exit from the recession,’’ Kiriakou said. ‘’It might make the numbers look good for the European Central Bank (ECB) or the International Monetary Fund (IMF) but it will sink our society deeper into desperation”.

For three months now Greece has been at the centre of financial turmoil with the newly elected government accepting that its public deficit was 12.7 percent rather than 3.3 percent and that the debt figures had been engineered creatively by previous administrations.

This led credit trust institutions like Fich, Standard and Poors and Moodys to rapidly devaluate Greece’s lending status in the international market, thus opening the ground for profiteering over Greek debt bonds by hedge funds. When the aggression threatened to destabilise the euro itself, European authorities intervened.


Further deepening of the crisis occurred after the ‘New York Times’ revealed that Greece had been assisted by the Goldman Sachs investment bank to circulate derivatives, hiding the real dimensions of its financial problems.

Soon it became evident that negotiations between the country’s administration and European financial authorities were not aimed at just saving the country from total economic failure.

At issue are the size, speed and severity of the austerity measures that the Greek administration will have to implement, reminiscent of the shock therapies imposed by the IMF in dealing with developing countries during the financial meltdown of the late 1990s. Such policies led to an astonishing deterioration in living conditions and contributed widely to the rise of left-wing forces in Latin America.

Greece initially responded with a Financial Stability and Security Programme that failed to satisfy its European partners, following placement of the country’s authority under supervision by a body comprising officials from the ECB and specialists from the IMF – a move that has extensively been interpreted inside the country as an affront to national sovereignty.

Week after week the list of austerity measures being announced has extended to new taxes, limitations on public sector income benefits, pension age limits, working rights, healthcare and social security while costs have gone on increasing.

This process is set to continue until European partners and market actors are satisfied that the measures are enough to push Greek deficit down to less than the three percent prescribed in the European Stability Pact – an instrument that sets general financial rules for all European Monetary Union members – in less than three years.

“Europeans believe that this is the only way to appease the markets and make sure that Greece will be able to refinance its 17 billion debt bonds that are expiring in 2010 at affordable interest rates. In the next five years the country will have to find the money to refinance a total of 150 billion debts – this is a real nightmare for the country and its European fellow member states,” says Giannis Aggelis, a finance analyst for the newspaper ‘Eleftheros Tupos’.

While the Greek government has accepted the austerity measures, many things now depend on curbing public reaction around the country in order to get them through; a difficult task when one considers Greece’s tradition of militant unionism and strong left-wing social forces which will attempt to resist the measures.

“The government has to pay attention not only to the needs of the markets but also to what is necessary for people,” Giannis Panagopoulos, president of the General Federation of Greek Labour (GSEE) – which has more than 1.5 million members – told IPS.

“Unfortunately the first battle is lost for this administration although it is not responsible for spending any remaining trust in the country’s economy, Greece is now an example everyone wants to avoid. Still it remains a fact that markets are faceless and ruthless and in our case they are asking for blood. Together with speculative interests they are creating an explosive atmosphere”.

Angry crowds fought small but harsh skirmishes with riot police during the demonstration last Wednesday, indicating that public discontent is rising. In a report published last month, before the austerity measures were announced, ‘The Institute of Labour’ run by GSEE said unemployment was expected to rise to 850,000 before the end of 2010, a shocking number in a country with a 4.5 million workforce. The number of unemployed at the beginning of the year was officially 770,615.

“Social reaction has already begun and the strike sends a first message not only to the Greek administration but also around Europe,” Panagopoulos said. “Similar problems will follow in other member states, so more attention and serenity are necessary for coming up with sound political and economic policies that are able to protect the labour force and people who do not own and exploit property”.

Panagopoulos’ warning is no exaggeration. Italy’s debt is in fact up to 120 percent of its GDP and there is evidence that the country has employed similar irregular tactics in hiding debt.

The unemployment rate in Spain is up to 20 percent and the country is not faring any better than Greece.

As Kiriakou says, “If in the future Europe needs to force other countries through shock therapy like Greece it can’t have failed here, which means that in case the Greek public resists the measures a standoff can very well turn into a fight.’’

“Greeks will not swallow the measures,” he says. “Thus if Pasok enforces them on society this might push us back to violence. Don’t forget what happened to this place two years ago.’’

In 2008 Greece was rocked by riots, caused by widespread public discontent over political corruption and outrage over the killing of a 16-year-old by a police officer.

Kiriakou’s belief is shared by many who believe that they are being asked to pay for the mistakes and misdeeds of a small elite group.

“You listen to international media saying how Greece mishandled its fiscal policy and deceived Brussels about its financial wrongdoing, but I know very few Greeks who have been involved in this process.

‘’The people, who cooked the numbers, adopted the euro and failed, but still dictate economic policies are the political elite and their banker friends who preach neoliberal orthodoxy. These people are now are asking us to waste our lives in order to pay for their mistakes. I don’t see why this ought to happen really,’’ Kiriakou said.

 
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