August has marked Greece’s exit from eight years of international bailouts and the end of the Eurozone’s long financial crisis. However, the EU institutions and other European leaders gave a warning to Athens which is to stick to the policy commitments it made in exchange for €289 billion of loans.
EU economic affairs commissioner Pierre Moscovici said on Monday 20th of August that Greece will once again be treated as a “normal country” after over eight years of international aid and austerity measures. He stated that the EU lenders will no longer impose “any kind of measure or decision”, adding that Greece is now free to define its own economic policy within eurozone structures. The commission does not aim to give Greece an entirely free hand however. EU officials will travel to Greece on the week of the 10th September to check on developments. Four such visits will be made annually.
Over the last 10 years, Greece’s GDP also decreased by 24.2 percent while unemployment is around 27 percent. It will also have to keep it at 2.2 percent until 2060 to pay back its debt- a massive task for a weakened economy. But the commissioner said he was confident the Eurogroup’s decision to implement a series of “robust, short and medium-term debt measures will meaningfully lighten Greece’s burden and secure its sustainability.” Moscovici also said Greece’s economic structures had been modernised and should be capable of helping create jobs and attract investments. Something that is highly needed if the country is to get back on track.
But even if we accept that the worse is over for the Greeks, one can only wonder how the country will become normal by simply focusing on debt repayment. As if the only thing that Greece’s lenders care about is getting their money back; with interest of course. And while the “Eurocrats” celebrate, the ordinary Greeks have few reasons to be jubilant. For the next 42 years they will be paying off a massive debt that will hinder a generation’s opportunities. if of course during this time, another economic crisis doesn’t weaken further Europe’s most vulnerable, peripheral economies.
The problem with Greece
Greece’s trouble was not only its debt, which is rather political and social to begin with. The country had little chance for stability since its formation and liberation from the Ottoman Empire which left it with a totally broken and outdated system. And if you think that stability and peace have nothing to do with modernisation, then take a look at Sweden, a country that avoided both world wars with diplomacy and political manoeuvring – things that are required to cooperate with both sides of each conflict.
Greece did not enjoy that luxury. Ever since its liberation from the Ottomans, the country entered every war on the European continent, initially with its neighbouring countries over territory, but later in the two most catastrophic world wars with the Western powers’ interference. In fact, the modern Greek state would never have existed without European participation, meddling or influence. For example, it was only able to free itself from the Ottomans after European public opinion was in favour. After its liberation, it has always been a European protectorate.
Its first king was a Bavarian named Otto, while during the rest of the years leading up to WW1, Greece was swinging between being a democracy and a kingdom, with heavy political influence by the European powers. After Otto was forced to leave the country, the Greeks accepted a Danish King, mainly because the proposed British candidate-Prince Alfred was blocked by other European powers. As a reward for accepting a pro-British new king, Greece was allowed to be united with the Ionian islands, which where until then under British rule.
This “give and take” in fact, was continued for many years to come when Greece was sometimes favoured, while others losing out in territories, depending on the interests of the European powers of the time. With the Balkan wars, Greece expanded its territory by nearly doubling its size, always with the agreement and permission of Western powers. However so did its debt to its European lenders. The country went from boom to bust, defaulting many times on its creditors and all this to gain more land while the Balkans were being redrawn.
After the two Balkan wars came WW1, which Greece was coerced into by the Allied Powers. Subsequently territories have been awarded to Greece for its participation and being among the victors, which later were lost during the Greco-Turkish wars. A massive humanitarian disaster was unfolding, with the uprooting of millions of people, under the exchange of populations between the two countries. Then the horrors of WW2 followed, together with a brutal Nazi occupation. Again, Greece tried to remain neutral, but its hopes sank with the attack by Italy in October 1940. The country had not only to endure the pillaging of its resources by the Nazis and the extermination of nearly all of its Jewish population, but the Allied food embargo, which aimed to restrict the supplementation of the Nazi army. It caused thousands of civilian Greeks to die of hunger, especially in Athens.
This war ended again with Greece being among the victors, however it was not treated accordingly. It was in fact used as the battleground of the first proxy war between the two emerging ideologies in Europe; communist and capitalism. In December 1944, the Greek nationalist army and the Athenian city police, together with the British forces started fighting against the Greek communists and their various insurgent parties that were joined by many Greek guerrilla regiments which until then, were fighting together with the nationalists and the British against the Germans.
This led to a disastrous civil war from 1946 to 1949 between communists and nationalists which divided Greece for decades to come. British forces were actively involved in this war and in the years after, just to make sure that the country will remain under Western influence which almost saw Greece nearly ending as another British colony. For the same reason a US backed junta was promoted in 1967 that lasted seven whole years. During this time the Greek state was the oppressor of its people, turning it into a brutal police state just to keep the Soviet and communist influence out of Greece. It wasn’t until the late 1970s that the country was finally able to manage a robust enough democracy that soon allowed it to join the precursor of the EU, European Economic Community, in 1981.
However, it has never been a “good pupil” in Europe. With the “Metapolitefsi” years which was the return of democracy in Greece after the junta, we have seen the rise of the PASOK political party which mostly governed Greece through the 1980s. One of the characteristics of this era, was that PASOK and its leader Andreas Papandreou’s policies were focused on reducing the gap between Greece’s social classes, which was created by years or conflict and the Cold War, by using EEC funds available to him. While the goal was reached, it created a culture of entitlement, corruption and nepotism as the centralised Greek government relied on the expansion of its public sector to create jobs.
With the promise of political allegiance, people found employment in the public sector and for a few decades, Greece had a thriving middle class. However, while PASOK and its main opposition -the New Democracy party- were wasting Greek and European funds in order to stay in power, the country saw little reforms in order to become competitive. The Greek public was starting to enjoy prosperity but it was standing on weak foundations. Not only had the years of wars have allowed corruption to take hold in the Greek society, as the only way to survive in such harsh and dehumanising conditions was to do deals “under the table,” but it also led to a huge mistrust towards the Greek state and its institutions by its citizens. This attitude can be blamed for avoiding engaging with government bodies such as the revenue or the police.
After such oppression during the junta years, coupled with foreign meddling, political, social and economic instability, extreme poverty, deep social divisions due to the civil war, the Greek psyche has become self-centred and survivalist with a great disregard for the state’s laws, something it should have abandoned such practices after the 1980s. In addition, the Ottoman Empire had left Greece with a system that was not compatible with the rest of Europe and denied it a strong and stable political environment to proceed with reforms, something that Greece never got the chance to enjoy. The divisions caused with the civil war, created a society in conflict with itself, that instead of focusing on modernisation, they wasted resources in fighting each other, living to constantly reopen past scars.
This schizophrenia was encouraged by the two main political parties, in order to stay in power. They deliberately kept the country divided, with populism, nepotism and the promise of jobs in the public sector. If anyone was to change the country and proceed with reforms, it should have been the PASOK and New Democracy administrations, which failed in this task dramatically.
However, the mess that followed was not just Greece’s fault. Europe was becoming increasingly unhappy with the country’s use of European funds, yet not only did they tolerate it, but they invited Greece to join the euro-zone, even though it was clear that the country was not ready. It was a political decision that made no sense in financial terms.
Since then, every time the European institutions and their supporters called for further integration, or deepening fiscal union, it was the governments of the biggest EU economies like France or Germany that opposed such development. Even when the economic crisis started being felt, Europe decided that it needed a scapegoat to put all the blame on, not to accept that the euro-zone was incomplete and lacking the right tools to govern itself and be sustainable. Soon after the Greek government admitted that its budget deficit was much higher that the euro membership allowed, the other EU governments started a barrage of accusations and counter accusations towards the Greeks as a nation.
Not only did they pay little attention to the fact the economic crisis started in the USA, with the corruption and bad financial choices made by many of its institutions-notably the meltdown of the Lehman Brothers Investment Bank, but they turned on Greece as the single cause of what was to come. In fact, the first European country to default on its debt and go bankrupt was Iceland, yet no one bothered to examine why this happened to them in the same extent.
But for the Greeks things were different. Soon German workers were blaming them for not getting a salary rise and not the euro-zone’s weaknesses. The country’s media and government, angered at Greece’s lack of clarity and responsibility, poured a toxic propaganda against all its citizens. It resembled the harsh treatment and humiliation that Germany itself received after it lost WW1 which resulted in the rise of nationalism and the Nazis in their country, paving the way for an even more disastrous war in Europe. Our continent it seems, never learns from its mistakes.
In return, the Greek media opted for old clichés about the Germans, that were equally unrealistic, biased and offensive. Europe was turning against itself and its unity was put to the test. Soon people realised what they haven’t done since the euro was introduced; that whatever happens in one country, deeply affects the other and the continent as a whole. You see until then, money lending and borrowing was easy. Everyone got complacent and overspent, each government according its own agenda. In Greece, partially this was to sustain the public sector with little appetite for change or reforms, to maintain the status that has been established over thirty years ago.
In addition to this, the country had to overspend as now was sharing the same currency with economies such as Germany, the Netherlands and Finland which were more robust. In fact, the euro itself was designed around the German mark, making it more fitting for exporting, used by more industrialised economies like the Northern European ones, not for a largely agricultural country like Greece.
In order to cope with rising prices that the euro itself, together with greed by the local tradesmen brought, Greece opted in for increasing its public spending by raising of salaries and pensions, hosting the 2004 Olympic Games and generally living beyond its means. One could blame solely the Greek government for that, but after all it was French and German banks that profited from this madness and continued to encourage it by throwing cheap money towards Greece. Once the euphoria ended, someone had to pay the price, and it was the ordinary European citizens, not just the Greeks that ended up with the bill.
The view from an EU citizen from two bailed out countries
Suddenly European media were so focused on Greece and its faults, that the country went through incredible scrutiny and humiliation. It seemed that no other nation had such an extensive prying in its internal affairs.
During the first years of the Greek economic crisis, I was living in Ireland and I have now established myself for good there. One of the reasons why I left my home country was because I could not tolerate its sluggish, corrupt government and had always wished for Europe to become a federal entity, as I saw this as the only solution to modernise not only Greece, but Europe as a whole. However, soon I realised that the main impediment to such goal was not corrupt little Greece, but the bigger, richer nations like Germany or Britain. Thus, I found it peculiar that now it was them that were so keen in accusing Greece for lack of compliance with EU’s requirements, while themselves dominated the European project, often shaping it according their own interests.
Many times, it was them who first broke EU rules, like Germany did with the Maastricht treaty. As I continued to observe this unfair ridicule of Greece, I often wondered if I grew up in the same country that the European media were describing. Not that I was not aware of the level of corruption and nepotism in my native country, yet I found it hard to accept that all these things were happening only there. People claiming benefits illegally or pensions for their diseased members of their family. Taxi drivers not issuing receipts, while many refused paying taxes altogether. It felt surreal.
I had to explain to my Irish colleagues why Greece was so corrupt, while they expected me to answer their questions which they often could not accept or understand. “Why do Greeks take so many holidays and don’t like to work harder,” they were inquiring, but when my response was to ask them why do they often call sick at work, usually on Mondays after a heavy drinking night out, left them uncomfortably surprised. They expected me to apologise for my country’s bad behaviour yet they haven’t done their own self-criticism beforehand, just like any other European nation. Instead of blaming the collective bad policies regarding how the euro was introduced, European leaders needed to diverge their voters’ anger towards Greece.
Having lived in Ireland already for over five years while working in the country’s public sector, I have witnessed the same type of corruption here, although I cannot be sure about its extent. No taxi driver in Ireland-and in fact in most European countries that I have visited, ever gave me a receipt unless I asked for it.
The same applies for free tradesmen in Dublin, of which many also often avoid giving an invoice unless asked. I have heard of cases of people working while claiming benefits, while many landlords not declaring the true number of tenants in their properties and thus, the real income they generate. No European media bothered to look so extensively in Ireland’s, or in fact any of the other EU members engulfed by the economic crisis, such as Portugal, Spain or Italy. It is highly unlikely that the same level of corruption that exists in Greece, is not also present in Italy, a country with a Mafia still in control of a large part of its economy in the south. The fact that even the OECD supports the Greek people’s claim that they work among the longest hours in the EU, naturally escaped everybody’s attention. You really need to work hard in Greece, especially if you are in the private sector. The problem is the system and the economy are so fragmented and disorganised, that it does not generate enough products for exports, or sustainable growth.
A look at modern Greece’s true problems
In addition, many of Greece’s problems were highly exaggerated. Yes, people in the Greek islands often leave their homes unfinished to avoid higher taxes, however this is because they enjoy a different tax regime than the rest of Greece. It is not something that applies all over the country as the government is trying to offer people in the islands an incentive to stay there by offering them various tax breaks. The habit of many of the Greek people to offer money to doctors, allegedly for a bed in a hospital was also something that was portrayed very poorly. Yes, there are doctors who take advantage of this Greek custom, resulting in corruption. However, the phenomenon started out as a way to thank doctors for their help and services, back then when Greece was very poor, and its doctors inadequately paid. People often used to support them financially but it was not obligatory initially.
One good thing that came out of Greece’s shaming though, was the soul searching that followed. Many Greeks admitted their mistakes and realised how badly this affected the economy. I have heard people regretting the things they’ve been doing, like overcharging tourists or not declaring some of their income. But the truth is that they were brought up to believe that what they were doing was “necessary” to make money. These people were raised in almost absolute poverty, most were uneducated in a very unequal system that in order to achieve anything you needed to bribe or affiliate yourself to a local politician. It is a system that originates in the Ottoman years yet our ruling elites conveniently used it to remain in power.
And while it is easy to blame the Greeks for perpetuating a highly dysfunctional system, how many countries have proven to be quick in reforms? One of the biggest EU economies is France, itself being brought to a standstill at every attempt to reform. You see once a system is set, it is hard to change as people who have profited from it will resist the necessary reforms.
In the case of Greece, not only the established elites resisted reforms, but through the constant instability, wars and foreign meddling, the country has never had a chance to take control of its finances, politics or social issues and tackle them. Greece is in fact a very young, immature democracy, despite being the birthplace of this political system. What it mainly lacks though is leadership. Ireland’s governments want to match its neighbouring countries and forced ahead with major reforms. Being surrounded by progressive, rich nations while itself being the most conservative and backward country in Western Europe, gave the Irish an ambition to change and reform. Once their economy got almost in parity with the rest of the developed EU economies, it could attract educated workforce from all rich nations of the world; US, Australian, German, French, Japanese, Dutch, Swedish, Italian and British young job seekers arrived in Ireland, changing its social fabric and influencing further the necessary reforms.
Greece on the other hand, has a leadership which thinks of nobody else but themselves and wants to remain in power by perpetuating the status quo and the policies that allow them to do so. Most young educated Greeks are leaving the country to find work elsewhere in Europe and around the globe since there are no jobs created in their country in the field of their studies to offer them a career. So Greece is left with its pensioners, lower skilled workers, pensioners from the richer European countries that buy property there and lower skilled immigrants from poorer non-EU countries. How can this nation be modernised, where can it find a dynamism and ambition in order to achieve this goal, since the pensioners and the public sector workers care little for change? Consequently, I was very surprised when the European leaders tried to bully the Greeks to not vote for a “populist” party like Syriza in the elections right after the first bail-out, trying to maintain one of the establishment parties-like PASOK and New Democracy- in power. They were afraid of the changes and the challenges they would bring if another political regime gained power in Greece, although they knew very well that it was the establishment parties that brought the country to this mess; with the cooperation and tolerance of their European partners of course.
That can be explained if you look at how the Greek governing elite, blamed its own people and threw them at the mercy of the foreign tabloid media by portraying their voters as lazy and corrupt. Naturally to hide their share of responsibility, while maintaining their power and Europe’s support, by avoiding the grilling by the EU institutions and the other European governments. Something that the Irish leadership did not do. Not only were the austerity measures in Ireland not as harsh as in Greece, but the country’s government came up with a far more functioning plan to solve the problem. They did not impose savage cuts in salaries that amounted to 40% of the wages, allowing the debt to grow further and throwing the country into the jaws of international usurers; just like the Greek leaders decided to do.
The NATO burden
On top of that, Greece is burdened with heavy NATO membership spending which is something that countries like Ireland, Austria and Sweden do not have to bare. It is second only to the USA in keeping up with its membership obligations and payments, while richer countries like Canada, Belgium, the Netherlands, Denmark and Germany itself are falling short in their contributions. With an excuse that we need to protect ourselves from Turkey, a NATO ally of ours, the Greek government has convinced us that we need to overspend in arms and military spending. To the detriment of course of our economy and to the benefit of those countries that sells us their weaponry like Britain, France, Switzerland, Sweden, Germany and the United States. It is no wonder that this situation is being perpetuated and tolerated by our European and NATO allies, since they are making good money out of us, yet they blame us for being on the receiving end of the EU budget while we must spend a large part of it straight back into buying arms from them.
When this crisis begun, I was hopeful that Greece will receive some of the punishment that it deserved in order to get a grip and modernise so that one day I can return back home in a fully functioning European economy and democracy. However, it soon became apparent that Greece was being scapegoated and used to sustain other nations’ economies that in fairness tried to get their money back and protect their interests. What Greece needed all these years was a new governing elite to push for reforms and proceed with attracting investments, not become heavily indebted one more time.
And while calls were often being made for another approach to solve the euro-zone crisis, the European elites, following Germany’s wishes, opted out for punishing the Greek people for their government’s lack of competence. But how could any Greek that had no choice when it was decided for their country to join the euro, bare the whole blame for the block’s woes?
Does any EU citizen have an acute knowledge of their country’s finances, or is fully aware of how their government runs its books? We as Europeans must decide that we need to familiarise ourselves with each other’s background and problems that we are facing. It is not good enough to accuse or to blame without understanding the root of the issue. We now have managed to deal with the crisis yet still we haven’t achieved long term reforms on a pan-European level. The debt is spread to the periphery of the euro-zone however what happens when the next crisis challenges our economies?
In Greece things are so bad that people confess that they are forced to tax evade again. “If we were to declare everything, there will be simply no money left to survive,” many of the country’s small business owners declare. The type of austerity that the EU and Greek governments have imposed on Greek people, with taxes higher than Sweden’s yet salaries and pensions as low as Slovenia’s, have destroyed the local market and money is scarce. The country’s brightest have abandoned the country while public spending is limited as expected by Greece’s lenders. However now they declare the country as “normal,” ready to accept investments and generate new jobs. What I fear is another generation being raised in poverty, forced into corruption and tax evasion due to lack of opportunities just like their grandfathers, thus perpetuating the very attributes that Europe despised in the Greeks in the first place.
I hope this time, Europe’s “meddling” in Greek affairs, will be to bring it in line with the rest of Europe. The country does not need more European money from now on, in fact it never really did, and it is obvious that the reliance on EU subsidies proved to be a huge mistake. What Greece needs is investments, jobs and a fully integrated European economy under one single currency and market. If the Germans want to have the Greeks as equal partners, they will have to understand the need to establish a new Greek economy that is compatible with theirs; which means the industrialisation of Greece so that it can become an exporting country.
And not just Greece, but the whole of the euro-zone must be reformed and the problem here is not the peripheral economies, rather those of the core. Will they choose to keep subsidising the weaker European states or will they accept to spread investments outwardly towards the periphery? One of the core issues is that we are trying to integrate countries with a very different mentality due to historical, religious and cultural differences. In addition, Europeans need to know that this type of economic model which Europe tries to adopt, was not designed to match equally everyone’s mentality or available resources but rather that of a small core, which in their majority belong to the north-western, protestant group of countries. We cannot force the rest to change as quickly, especially when we ridicule and humiliate them, imposing either debt or subsidies over them instead of offering equal opportunities for employment, prosperity and growth.
It is not just Greece that must change after all and become a “normal” country, but Europe as a whole that needs to be transformed into a “normal” functioning union of states, if that is what its people desire.