Several hundred people in Greece lost their jobs on Thursday. For other Greeks, it was business as usual: A few dozen protesters took their banners to the Finance Ministry, a few dozen riot police officers wielded their batons to push them back.
The incident prompted a new and predictable round in the ongoing row between SYRIZA and Public Order Minister Nikos Dendias. Moments before our decision makers banged their heads together in futility once more, the latest shocking unemployment figures (27 percent overall in November and 61.7 percent for under-25s) were published. The juxtaposition between these two events summed up the illness that is threatening to cripple Greece.
Members of SYRIZA’s youth wing, as well as two of the leftist party’s MPs, went to the office of Finance Ministry general secretary Giorgos Mergos to protest comments he made earlier this week suggesting that at 586 euros Greece’s minimum wage may still be too high.
There are several ways to interpret Mergos’s ill-advised comments. SYRIZA took it to be an insult to those earning basic pay, evident from the banner which challenged the official to try to live on that little. If this was his intention, then it is truly condemnable. It seems unlikely, though, that this was the idea he was trying to communicate.
Another way of interpreting his comment is as one that questions whether Greece has reduced its minimum wage enough, given that workers in all its neighboring countries – although not the majority of eurozone states – earn much less. This, however, would demand a debate about the significance that the minimum wage plays in determining a country’s competitiveness. It would require us to discuss the validity of the troika relying on unit labor costs as a key tool for measuring whether Greece is progressing in its reform effort. It would force us to discuss the nature of our economy, how wages are set, what part social security contributions play in determining labor costs, and how we can become more competitive. But why do something so complicated when you can just opt for a publicity stunt, a show of force and the usual verbal jousting?
Of course, the time to discuss all this was about a year ago, when the troika was dogmatically insisting on a reduction to the minimum wage, despite protestations from the government that this would be counterproductive. But just as Greece’s political forces were divided then, even though they were all opposed to the cut, so they are split now, when none of them favors a further reduction. Politicians’ utter devotion to their differences has played a part in robbing the country of any negotiating power it might have.
Issues such as the minimum wage or the current debate over fiscal multipliers provide opportunities for national interest to prevail over political aspiration, but within days of appearing on the public agenda they are reduced from questions of vital economic and political significance to populist brickbats to beat opponents with. The level of willful neglect or sheer incompetence shown by the parties over the last three years has been shocking.
It seems now, though, that verbal assaults are not enough. The government (New Democracy in particular) over recent weeks has invested in a strategy of increasing tension with its opponents (SYRIZA especially). Every slip-up by opponents is seized upon, words are sometimes twisted and denials are sought even if it’s not clear there is something that deserves denying. New Democracy has formed a so-called Truth Team to do its spinning, which included over the past few weeks crudely editing a SYRIZA MPs statement to make it seem he was saying something much more provocative than he actually was.
Then there is the role played by the police, which has become increasingly murky over the past few weeks. An alarming tolerance for crimes committed by Golden Dawn members has been matched by zero tolerance for the actions of leftists, anarchists and minorities. The raids on squats, the photoshopping of injuries suffered by the armed bank robbers in Velvento, the deplorable treatment of immigrants and the repeated accusations of police brutality have created a sense of menace and unaccountability.
This was added to on Thursday when riot police removed the SYRIZA protesters with the help of tear gas and force, resulting in the two MPs suffering injuries. The government presumably feels that a tough, albeit selective, stance on law and order combined with constant attacks on SYRIZA can win it support or even perhaps provide a useful sideshow to the pressing economic and social issues. In Greece we have never been short of sideshows, but this move by the government has all the potential to backfire. In a population where one in four is unemployed and many more are struggling on a daily basis, many will feel those in power are acting arrogantly and provocatively. Those who feel they have nothing left to lose – a growing group in Greek society – will be ever more willing to take on the authority and institutions they believe are treating them with disdain.
The burden of responsibility falls on the government, both New Democracy and its partners, to put an end to the sort of tactics that are inflaming sentiment when social cohesion is already being tested. The government cannot expect to ask exasperated Greeks to conform, to accept further pain and to show more patience when it is an instigator of disrespect itself. Cheap political tricks have no place in today’s fragile Greece and the police cannot be allowed to act with impunity.
In an interview with the BBC on Wednesday, SYRIZA leader Alexis Tsipras referred to the government’s tactics as a “strategy of tension.” He added that the policy was no secret. If the strategy is so obvious, though, why does SYRIZA play along with it consistently? A day after telling the British broadcaster about the government’s dark plans, about 50 SYRIZA members went to the Finance Ministry to protest at Mergos’s office – an action they knew would prompt the police’s reaction and create a new flashpoint. Protests are a natural part of the political and social melee caused by the crisis but there is a difference between a genuine airing of grievances and attempt to provoke a reaction or to outdo an opponent.
Tension can be created by both sides and it is worth remembering that SYRIZA MPs have frequently referred to this government as a “junta” and the troika as foreign occupiers. Tsipras told the BBC that he would “implement the law,” yet he and his party have on occasions encouraged Greeks to flout the law. Tsipras, for instance, said he wouldn’t pay the emergency property tax in 2011 and called for others to do the same. Recently, he revealed that he rents his property and is therefore not liable for the charge, which has to be paid by his landlord.
This last case is also symptomatic of the doublespeak that SYRIZA sometimes engages in. Too many times, words and facts are twisted in the hope of creating an impression and justifying the party’s stance. It is not just New Democracy and its Truth Team that are engaging in propaganda tactics. This week alone, SYRIZA has manipulated the statements of others in an attempt to create the impression that the International Monetary Fund’s admission about miscalculating the fiscal multiplier negates the whole Greek program and that European Economic and Monetary Affairs Commissioner Olli Rehn indicated the minimum wage in Greece would be reduced further next year.
Tsipras told the BBC that his main concern is about how Greece’s unemployed will live. His priorities are absolutely correct, but his party’s actions betray a more complex agenda. SYRIZA has consistently supported strikes and protests by labor groups that have resisted attempts to open closed professions. In other words, the leftists have backed some professionals who want to maintain the barriers to entry that obstruct young Greeks in particular from trying to start a career in various fields. Isn’t maintaining such artificial barriers and unfair privileges also a way of creating tension?
The danger is that just as desperate Greeks are liable to rage against an administration that they regard as duplicitous and authoritarian, so fatigued Greeks will demand a less tolerant approach from the government in the face of what they see as obstructionism and arrogance from the opposition.
We should not disregard the background that this is playing against. Thursday’s unemployment figures show that jobs are disappearing at a frightening rate of about 900 a day. This is politically and socially unsustainable. This week’s statistics also showed the Greek economy shrinking by 6.4 percent last year. At the same time, the eurozone’s GDP as a whole contracted by 0.5 percent, meaning 2012 was the first year since 1995 that the currency bloc did not produce a single quarter of growth. A problem of this magnitude cannot be solved through business-as-usual politics.
While Greece’s parties can disagree on the merits of the EU-IMF consolidation program, they will have no chance of altering it or the country’s fortunes if they are consumed by this domestic battle. Every debate is internalized and guided by short-termism. At the same time, the lack of consensus on the basics puts a brake on progress. How can we demand a united approach from our lenders, who are themselves divided, when we cannot find even a sliver of common ground to stand on together.
Even an agreement on job apprenticeship schemes, which the EU provides money for, the funding of small and medium-sized enterprises via the European Investment Bank and the future modus operandi of recapitalized Greek banks would be small but significant steps toward addressing some of the real problems faced by Greeks.
This crisis has already shown how insularism comes at a cost. George Papandreou’s offer to Antonis Samaras in the summer of 2011 to govern together was rejected by the recalcitrant New Democracy leader. PASOK staggered on in power for a few months until Papandreou’s referendum bombshell, which forced Samaras to reluctantly join the Lucas Papademos interim government while also suing for elections. When they came, the May 2012 polls proved inconclusive and a new vote was held in June, from which Samaras’s coalition emerged and had to pick up the pieces created by several months of instability and indecision. The impact that this uncertainty and lack of coherent leadership had on the economy, on people’s jobs and livelihoods, is evident.
But even if we go back further in Greek history, there are clear signs that mutual distrust will only bring mutually assured destruction. It was 68 years ago this week that the Treaty of Varkiza was signed in an attempt to stop a civil armed conflict. It collapsed within months and years of bloodshed were followed by decades of bitterness and stunted development.
Greece is by no means on the brink of a civil war but it is in danger of being consumed by a new type of enmity and bloody-mindedness that will debilitate the country and set it back many years. There is still time for the parties to step back and address the matter at hand. All sides need to focus on the necessity of economic recovery and job creation rather than the confrontation of banners and batons.
Nick Malkoutzis
Inside Greece 
It is worth remembering that many MPs and Demoses advised against paying the property tax in 2011. The Bar Association took the government to court over the constitutionality of the tax being added to the electricity bill (a common good), and won. Therefore many people continued to pay DEH, but not the tax.
It should be stated clearly that 3 successive governments have repeatedly chosen the easy option of continuously cutting salaries and pensions (when this was not demanded by the Troika), while (1) resisting structural civil reform, (2) refusing to confront the cartels and monopolies, (3) following a policy of non-transparency regarding TAIPED and other appointments, and (4) refusing to significantly reduce their own salaries in line with the cuts imposed sacrifices on the population. Only this week the Ministry of Labour assured greeks that there will be no layoffs in the public sector, when the Troika has pushed for this from the beginning, and while there are 900 new unemployed every day.
The greek population ‘voted for the EU’ and have demonstrated their willingness (no matter how reluctantly) to abide by the sacrifices imposed on them. The fact is though, that there are no forums open for the population to discuss its concerns with the government, leaving only strikes and demonstrations – which is a constitutional right. While the majority of these strikes are peaceful, they are now almost always dispersed with tear gas and riot police using batons. This heavy-handedness with legitimate protest and absolutely total lack of consultation is adding immeasurably to greek feelings of helplessness – yes, not unlike a junta.
Eleni, there is no doubt that democracy has been stretched to its limits over the last few years – not just in Greece. There is no doubt that there is a lot that is dreadfully wrong with the Greek program. There is no doubt that Greek governments and the troika carry a huge burden of responsibility. There is no doubt that the police have taken on a very authoritarian and dangerous attitude. These are all worrying developments that demand citizens’ attention and reaction. However, this is still nowhere near being a junta.
We should point out that if this were a junta, those calling it such would be behind bars, not repeating these and other unhelpful epithets in Parliament, in the streets, at protests, at strikes and on TV. It is an important difference. Getting tangled up in this language means we tend towards populism and simplification of our problems. This avenue won’t provide the solutions.
Thank you for answering!
No, I am not saying that we are under a junta, nor did I express this view. Yet I understand the despair and frustration of those who do say this: up to – but NOT including – politicians. The fact is that too many greeks feel cut off from dialogue with the government, at a time when feedback and dialogue is urgently needed.
We are still very much a democratic republic, and our parliament was voted in. No party received a clear mandate to govern, and so a coalition was formed. This last point is important.
Meanwhile we are in an economic and social crisis of unparalleled dimension, unknown outside of war. To their enormous credit, the greek people have (taken as a whole, and belying their detractors) demonstrated their willingness to endure enormous sacrifice in the hope of a resolution.
The heroes here are the greek populace and not their representatives, whose salaries insulate them from the pain they exact from the voters, and especially the pain they carelessly impose on those who have no franchise, children.
I agree with your article. My own feeling is that given the politically fragile legitimacy of coalition governments (lacking clear mandates), and given the extraordinary sacrifices imposed on the population and resulting humanitarian crisis (a crisis that has been left to its citizens to cope with alone), a wise government would understand the need to demonstrate extra responsibility towards its rather brave people (and voters). Foremost, consultation; secondly, in acceptance of, and fair treatment at peaceful demonstrations; thirdly, in harnessing aid for those who, through no fault of their own, have become victims of the crisis; and fourth, and most important of all (and I believe this one initiative would alter public perception drastically) to ABSOLUTELY PRIORITISE and assume responsibility for providing direct aid to ALL children in need.
The provision of protein breakfasts and hot lunches, sourced / donated from greek supermarkets and farmers; of clothes and shoes, blankets & bedding from greek and european manufacturers; the conversion into family hostels of empty public buildings – the elements and possibilities are there and need not involve the creation of a new ministry. Existing public programmes to emulate can be found in Canada and Scandinavia.
This one decision, to prioritise children, which is indeed the government and the greek people’s greatest single responsibility, would also relieve the fear and despair of the majority of the adult population. Having done so, it could also release tremendous energy – and even optimism.
Very well put, Eleni.
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Eleni, I agree with your point of view and would like to add the following:
The reason we are in this mess is because of a condition best described as “burdens mis-allocation”. When the government realized it was broke, it mis-allocated the enormous cost to the entire tax paying population asking the people to share its mess #instead of a formal default#. And the same formula/pattern applied over and over again. When the public sector is found oversized, the government instead of reducing the size of the unproductive public sector it transfers its loss to the entire Greek population and asks everybody to share equally in its screw up. When the government realizes that it has a tax evasion problem#euro 56 Bil. and climbing#, instead of going after the tax evaders it asks again everybody to share and cure its deficiency. In business lingo this is called “dividing something sizeable by a very big number so that it looks manageable”. The operative word here is the “looks” part; not the fact that “is” indeed manageable #because it isn’t#.
Why is the government doing all this? Because it was told from the Europeans that its default was out of the question on the basis of triggering an unwanted systemic event.
Armed with such knowledge the government then embarked in a reign of terror: blundering its banks, depleting its social security funds and steam rolling all over its citizens via reduced salaries and increased taxation.
In fact we all know now that any deviation from the Greek program #the basis of which is European unwillingness to cure architectural deficiencies of the euro# will be addressed through further cuts and taxation.
The whole fiasco places the government in a position of a casino dealer. No matter what, the house can’t lose. Only citizens lose. And citizens can not escape because they are trapped and dominated by the house which neither loses or dies. Only the other players#citizens # lose and die.
Therefore all citizens already know the game is rigged. There is zero trust and there is also a pervasive feeling of despair because of the pre-determined outcome.
Therefore those in government and its friendly circles who say “let’s give it one last push” they are lying through their teeth. It’s not a question of last push or a few pushes until the end. It’s this pervasive inequity that all the citizens have been transformed into unwilling carriers of the state deadly disease. The people have no choice in this. This was decided between EU governments and the current Greek government was tapped in the should to go ahead and subjugate its own citizens for the common European good. That’s the whole thing. No one asked or will ever ask the Greek people to have a choice in the matter. That’s why this government is sporting itself as the “only solution”. Because it knows that no other Greek government has the European o.k. to complete the filthy task. Only this government does. Syriza is not an accepted party. Period. Syriza will not be given a license to undo the European rigged game. It’s hard to say but it is true.
My own opinion is that we will have elections before the end of the year because the faulty effort will collapse. There is no way that this morony could be extended up to or even beyond the German elections. There will be a spontaneous uprising of the south and the north will eventually lose. There is a prevailing feeling of vengeance due to the unprecedented nature of this European crime and extreme inequity against the Greek people and also other people of the European south. When anger spills over then watch out.
I agree with Eleni.
It is abundantly obvious that the present Greek government is no more than a middleman for policies designed in Berlin.
So, why Syriza protests outside a Greek ministry rather than somewhere in Berlin?
What is the reason for this proxy politics? Because it is too expensive to fly and protest in Berlin so we rather do it in Athens?
What for?
What would it take for people to realize that this government is completely impotent? and that its sole purpose is to execute orders rather than question them?
Those who think these matters are within the scope of internal Greek politics are quite mistaken. There aren’t, nor could they ever be under the circumstances. Greek government is no more. These are employees of a an alien group of interests which has zero correlation to what is good or beneficial to the Greek people.
OK we realise that this blog is simply to complain about the EU’IMF and Germany. Elenits, if people want to help their country then they need to pay their taxes. Property tax is gross but other countries have implemented it and people pay, we are struggling and they have given us time. Strikes and demonstrations cause instability. They seriously affect our tourist industry which is a source of employment to private workers. What are the police supposed to do, stand there while young Greeks hurl rocks at them, or allow them to burn a few more innocent citizens. Come on where is the practicality here. I agree public workers should be cut, it should have happened three years ago,but these are the very people striking, few are private workers they are too busy hanging on to their jobs. It’s your right to demonstrate and strike, I don’t think it is when it’s detremental to the life of your country. You don’t want ND, or PASOK, or the EU/TROIKA, who do you want to bring this country into the 21st century. To modernise our infrastructure which at least would put paid to some of the corruption. Where is this Washington, Lincoln, Churchill, Thatcher. He or she would have to be born and educated in Greece up to university, not a Greek uni, years spent abroad in Northern European, America, Canada, Australia or NZ.. Have worked, not just an academic we have too many already. Not a lawyer because we have far far too many of them. Incorruptable and practical, the last two difficult to find. When you do let us know.
I am guessing you are in your 70s…approaching 80 ?
What sort of game is this?
No DEan 71 and still go to work at least 4 days a week. However, if you realised this because I consider stability to be the prime objective at the moment rather than throwing the coalition and ending up with SYRIZA, then you are corect. The truth is that anyone under 65 in Europe didn’t know what hard times were.. The older generation here in Greece are more likely to support the coalition because they know from experience what will happen if this coalition falls. Nobody is saying that they are the best, but simply they are better than any other party at this time. From the 60’s to date, to acheive the actual life style of the majority of Greeks took your Northern European neighbours three generations. Unfortunately too many Greeks have been spoilt with money made with ease, high wages for poor qualifications, public jobs without responsibility, plots of inherited land suddenly making them owners of three or four apartments, masons for extra priviliges and a failed system making bribes acceptable. The problems in the past, the civil war, the loss of democracy to the junta were all caused because Greeks simply could not work together for the good of the country. The same applies today, while Papandreou wasted precious time we have a parliament that is intent on thwarting any effort to modernise our public structure and improve business in the private sector. Citizens are screaming for trials of Akis and the many public and private citizens that are imprisoned but stuill awaiting trial. How does the government insist that courts work diligently when they never ever have. For years cases have been delayed, postponed, court appearances one after the other while plaintifs paid a fortune to lawyers. So many issues that the opposition should be supporting, yet all they are interested in is demonstrations and strikes.
71 and going strong, Ann. Good for you. Well done for what you’ve achieved.
What is you line of work Ann? What’s the name of your business?
Dendro:
I am guessing your age around 77ish?????
I’m asking what is in your mind. Your question tends to the pejorative.
Since you are so inquisitive, 80 this year. What do you make of that?
Nothing. I was told who you really are. Sorry I asked.
@Dean: 74, according to worldcat book publications (assuming this is the same person).
Ann: you may be right that there is a deficit of competent people in Greek politics, but this is also true of political parties across Europe. Are we supposed to tolerate this joke of a coalition that half-obeys the dictates of the Troika, and makes sure that it is the poorest in Greece that suffer the most? Are we supposed to support an illegal and outrageous property tax — because Samaras lost his balls somewhere, and prefers to continue with the mess that Papandreou created? Now the latest outrage, that even the IMF admits that the “plan” for managing the Greek economy was no plan at all, and was the diktat of politicians in Berlin. Yet no apology, no admission that Greece is being destroyed for the sake of German finance houses.
If we don’t tolerate this coalition then the alternative will be a government of a mish mash of far left and anarchists spun together that don’t even act responsibly in opposition. The property tax was considered illegal because it was added to the electricity bills. This happened because PASOK party in the past received EU funding to map all of Greece complete with ordinance survey maps. This would have meant all properties and land ownership registered. Don’t just blame the government because many artists, trade unions, and public workers never wanted this. Work was delayed for various excuses, and the money went elsewhere. The majority of countries do operate a form of property tax, in England it goes on our rates bills and they are very high in some areas. Here in Greece if anyone made money they invested in property, and even many businessmen did the same as operating a business here in Greece is a nightmare. Banks supported this by giving mortgages above the earnings of many private individuals and loaned investors in building holiday villas etc. The tax was added to the electricity bills as there are still no records. I agree this is unfair in many ways especially as many properties have not been declared by owners and also due to the fact that we have constant strikes etc.,the instability has stopped investment and the market has frozen. This is the major problem as many want to off-load properties simply to pay household bills and others to buy a smaller, cheaper property. You expect the German citizen to pay additional taxes to support Greece. When the German tourist arrives here and drives from Athens along the coast to Sounion, or Corinth to Patras, or takes a boat to Myconos, Crete, Lefkada and sees the amount of villas that have sprung up over the past ten years, yes ten years, I didn’t recognose Lefkada, not the city or the coast line, how can you expect them to dig in their pockets.
Even after all this, again I am asking what’s your solution, to take to the streets and demonstrate, or become anarchists and rob a bank or two, or burn property of companies that have invested in Greece? Same story from you and Dean, where is your solution. i have lived with this mentality for years here, complain, complain but no practical solutions.
@Ann
The Germans are not paying for anything, so your question is redundant. The fact that German politicians have tricked people into believing that things are the way they describe (along with the criminal negligence or fraud of the provisions of the Troika “plans” for Greece) is an assault on democracy itself. This was also evidenced by the imposition of bankers as unelected prime ministers in Greece and Italy.
I suppose age is relevant in the sense that as people get older they become more risk-averse, unable to tolerate change and absolutely opposed to novel solutions. Elderly Greek voters are the people who supported ND in the last election, not because they believed in them but because they were scared by the illegal and anti-democratic threats made by German and other European politicians.
As far as solutions are concerned, there is no simple solution. Perhaps you would have asked me the same question when Mussolini demanded occupation of Greece. Would your answer then have been “Malista”? What is clear is that Greece is headed into economic collapse accompanied by social collapse, and doubtless political catastrophe too. The current direction leads almost certainly to a Chryssi Avgi government: is that what you would like?
OXI, Cryshi Avgi. Never. We are civilized you know. Not barbarians.
@Dean. The evidence is that XA has political support primarily because it is nationalist, not because its members are thugs and uneducated people with no sense of decency or indeed strategy for the country. It is not impossible to imagine the party receiving such a large share of the vote, that it would have to be in a governing coalition. The worse things get here, the better for XA.
@Ann. You are completely out of date. Thatcher abolished rates and replaced property taxes with a common poll tax system; this was an effective transfer of money from poor to rich, and she got away with it. Only now is the Labour Party proposing some sort of new tax on second homes, in order to tax the rich. Across Europe, the rich have been undertaxed for decades, while the poor and the lower income middle class have been paying more.
In the case of Greece, the problem of taxing property is that even within a context of escalating property values in the 1990s, the Greek state established a system of notional property values that were very low and remained fixed. Moreover, the land registry system financed by the EU was delayed by decades because the rich and corrupt didn’t want it. Here, we do not refer to ordinary people: these are politicians and their cronies, who became rich through political corruption. Do you really think that these people are going to tax themselves? You’d better thing again.
As far as the DEH bills are concerned, this is an affront to the rule of law and basic morality. The inclusion of a property tax based on square meterage within residential bands is the result of the failure of the state to adopt property registration and accurate values: see above. The reason the criminal moron Papandreou chose to attach these charges to DEH bills is that it represents a form of extortion — similar to Mafia activities in Italy. Either you pay me money, or something bad happens. There is no right in law to demand payment even from people’s relatives, let alone from persons renting a home from the owner.
Let me give an analogy, so you can understand how disgusting this behaviour is. Imagine that you owe me 1,000 euros. You are being very slow in paying the money to me, but I have a plan. Your daughter works for a company, which is owned by a friend of mine. So my friend tells your daughter: “since your mother owes 1,000 euros to so-and-so, I am deducting it from your wages. You’ll have to get the money from your mother.” This would be illegal and amount to extortion: exactly what is going on now with the Greek state. Exactly how does criminal behaviour by the State (and there are many other examples I could offer, involving VAT payments and other taxes on small businesses) improve Greece? This is simply a repetition of everything that is wrong with Greece, and provides no basis for the economy and society to move forward.
Unfortunately Xenos, Chryssi Avgi is very popular with the military. There are a lot of junta elements, royalists and other crap that vote for them. So, a seizable portion of the army is full of them(nationalists et al). Not so the navy or the airforce which are known to be more liberal. Throw in the police and “security forces” as well. And then take half of the clergy and count them in too. I don’t know about uneducated(certainly not impressive in the fields of knowledge) but the common characteristic of all of these elements is “free loading”. Well, with the exception of the police the rest spend the majority of their hours in plotting and spreading some of the most negative sentiment found in Greek society. We are talking about some real characters here.
Also Xenos, this might be at play:
http://www.neurope.eu/blog/funding-far-right
Ann Baker, obviously you are not in the centre each day handing out food to people who have been forced onto the streets, or desperately searched for warm clothes to provide for a shivering child wearing only hoodies in this weather (children grow…) standing in front of you. Sometimes parent(s) still have a roof but no job and little or no money, or semi-homeless living in communal shelter with 11-12 other people in one room, for which they may pay rent, or squat. Ann Baker, perhaps you are enraged on behalf of property owners whose abandoned properties are being “abused” in this way. Nor is this aspect of the crisis limited to the cities.
According to your logic are these irresponsible tax dodgers? If such degradation could never happen to you, do you see theirs as something they could have prevented? I suspect you might be very surprised to see who is actually on the street and why.
The OECD published a study on greek taxation 3 years ago which showed that 76% of greeks (middle class and down) account for 28% of greek taxes. And 25% of greeks (rich, professionals) account for 72% of the total. Further, even if all undeclared ‘black’ activities of the majority were collected, this would only make a 4% difference, ie 32%. The conclusion? Taxation of the middle class and poor can never make up the missing difference. Only tax collection from the rich can make a real difference.
Furthermore, a huge percentage of taxes owed to the state are uncollectible: bankrupt private companies; bankrupt state corporations; bankrupt political parties, ND and PASOK.
Taxation has a part to play – but it cannot get Greece out of its debt impasse.
Greece has divided into haves, still-clinging-ons. and have nots; according to polls, the majority of greeks across all financial classes see this as a humanitarian crisis. The ‘fatigued’ who want the streets clear for their convenience are in a minority.
In the rest of the EU – Belgium, or Germany, let’s say – this state of affairs would constitute an humanitarian crisis of astonishing proportions that would bring down governments, unless their governments immediately addressed them. The fact that greeks have tolerated these sacrifices demonstrates their willingness to resolve the crisis. But as Nick Malkoutzis continuously points out, there is a limit to how much more they can or will tolerate. And why he says that the political parties are wasting opportunities to find common ground, and having established this common ground, address the Troika from a united position.
@ Nick
“If the strategy [of tension] is so obvious, though, why does SYRIZA play along with it consistently?”
SYRIZA are not the only strikers, nor are the majority of strikes partisan. PSI victims, pensioners, handicapped and unions are nonpartisan special interest strikes. The very big demonstrations at Syntagma were pan-citizen events in which parties represented themselves as blocs.
However if SYRIZA (et al) stopped striking, and did nothing, then what avenue of citizen communication is left? There are no citizen’s forums. (Outside of blogs, which have no applicability whatsoever). As a majority government only the coalition has the parliamentary power to initiate pan-party discussion, and they refuse. Experienced as an absence, this is a powerful betrayal of democracy. In this absence, how else can greeks show their concern, anxiety and – yes – fear, EXCEPT through demonstrations? However one votes, it is the only avenue left.
You also mention the need for investment in small businesses (SMEs). Correct! – especially since the greek economy consists overwhelmingly of small businesses. The majority of innovative and entrepreneurial businesses here, (our candidates for growth with European and international potential) at the moment consist of less than 20 employees. Yet the coalition announced this week that the European investment funds will only be used only for large enterprise (infrastructural investment), which can offer 200,000 jobs.
Concerning the minimum wage which would bring Greece in line with other Balkan countries, whether in or outside the EU, this ignores the fact that most of these countries are still emerging from post-communist poverty with cost of living 1/4 and less what it is here. Greeks continues to pay higher prices for goods and services than germans do, thanks to 3 governments refusal to tackle cartels.
Compared to the minimum cost of living / threshold of poverty in Belgium and Germany (relevant since the cost of living is the same) our present minimum wage is less than half!
Don’t get me wrong, Eleni. I don’t argue that SYRIZA or anyone else should not protest. I have written several times about the counter-productive way in which the state has reacted to legitimate protests. However, over the last few months there has been a cynicism to how SYRIZA has chosen to act and there seems to be a distinction between what “political SYRIZA” and “social SYRIZA” want to achieve.
On the issue of SME’s, I was thinking of of the agreement between the EIB and Greece last year on the creation of a guarantee fund for SMEs (http://www.reuters.com/article/2012/07/21/greece-eib-idUSL6E8IL1F720120721). This has progressed painfully slowly and could benefit from cross-party support and oversight.
On the minumum wage, I was opposed to the last cut (I wrote on here about that) and I’m opposed to any further cut. The evidence to support such a move is wafer thing. Greece’s problem lies elsewhere.
@Ann Baker
FYI, our three recent governments have not lifted a finger to support or improve conditions for business inside Greece; nor made any attempt to step in and help when Greece’s healthy and profitable businesses went to the wall. ND, the so-called party of business, has not made support for greek SMEs any sort of priority.
They have, though, allowed greek oligarchs to fill TAIPED with their representatives and scoop up public assets at bargain basement prices.
As for your age, it is personally immaterial to me. I am glad for your sake that you still work. and that you still have a job. At 71 you are not old in greek terms. However most older greeks I know (85 up), do not take your sanguine view, quite the opposite. Having lived through – and fought in – the second war (a war against totalitarian governments), the civil war and its aftermath, and the junta, their point of view is that the loss of democratic accountability is the greatest loss of all. Interestingly enough – if you read English political blogs – you will find that this same fear concerning the UK is being aired overwhelmingly by older people!
ie You may not be aware of it, but this question is not just confined to Greece, but is being expressed throughout the West, from all sides of the political spectrum.
The point of Nick Malkoutzis’ article is that in the face of the economic and humanitarian crisis engulfing Greece, and in the context of economic crisis outside, ALL parties are being insular and irresponsible. Because they are a majority, the onus finally falls on the coalition government 1) to revise its present counter-productive and “selective” enforcement strategy, and 2) most important of all, and long overdue, to initiate an all-party debate on our national and social priorities, with the aim of establishing a consensus. Not only is consensus necessary for dealing with the Troika, but for maintaining social cohesion and legitimacy, through democratic accountability.
Small Greek businesses went to the wall when we joined the Euro. We didn’t have to, we did it, our mistake. Common sense says you don’t give your purse to your neighbour, but we did. We could not compete and at the same time cheap goods flooded in from China, and shops and malls mushroomed. Greek manufacturers, clothing, shoes, electronics, etc went to the wall. There has never been a government for business in Greece, the bureaucracy, corruption from tax inspectors, post dated cheque government scam, law courts which cannot give a decision after four or five years for a stamped cheque against an invoice, which resulted in thousands in debts to small companies. OK, now when we received the first bail out from the TROIKA the money was distributed to banks for loans to private companies. What they did was, ring companies, like ours, with an overdraft and advised us that they were closing our present loan and opening up a new loan account, to sweeten it they gave us two years moretorium on the sum, bank interest only for two years. Of course they didn’t adjust the interest rate and the truth is that all companies for bank loans of spare parts for assembly or manufacture in Greece carried a 10 % interest charge plus bank charges approx. 11.6% UK companies were paying 4% and I’m quite sure other countries also supported manufacturers. Now, they will give loans for development and Elenits says quite rightly we should support small businesses. For most Elenit it’s too late as they are really struggling but WHO will organise this system. You have read earlier what Guest said for OAED, a complete waste of space with dimmies and corruption throughout the department. They couldn’t have organised a kid’s party. We cannot organise, here in Greece we cannot work together and we cannot operate an honest distribution of funds. If the money is for funding, there will be masons, government officials, ministries etc all on the make. I agree in this case with handing this to a few major companies that will give employment and which at least they can check on. I sincerely hope that they will use this money wisely and honestly, there is no alternative way. This is in fact an honest opinion as it will damage our hopes for selling our factory and taking our pension, but as Greece is now, who could you trust.
As for the rest of your comments, I agree with Guest it is frightening that GD have made so much of an impact, the only choice would be vote for SYRIZA that are a bunch of rubbish without any experience and banks would be bankrupt the foloowing day. Nobody would fund us a Euro, or want to buy any asset. Greece will fall to ashes, red cross aid etc., and then you can once again start again. My choice is to stay with the TROIKA and let them hang over us while we modernise our infrastructure, obviously they have realised that tax problems came mostly from tax departments that worked for themselves rather than Greece. and believe me that is the truth. Privitise everything except, courts, taxes, police, health and education, finish the public services. They were used for votes and dead men’s shoes means that the sandwich boy is now running the Post Office. One thing I would like to know is it the actual constitution that makes it impossible to finish public workers that are charges with criminal offences. We have IKA public workers in prison from last March for the pension scandel and they still being paid 50% of their wages.
@ Ann
Just a few points:
– After 2 PSIs and the defaulted (as in, unrepayable) loans of state companies, ND and PASOK, greek banks are already bankrupt.
– The greek state is also bankrupt and has defaulted – in all but name.
– The European Investments funds will be used for infrastructure only, with no productive value. (Like Roosevelt’s TVA)
– The Constitution does not protect criminals in any sector, however politicians do.
And a question: when you say ‘masons’ do you means construction companies? Or freemasons?
@ Nick
I draw your attention to Dean Plassaras’ post (3rd reply after my first comment).
Reading it, it simply clicked for me. I also draw your attention to this analysis, which was partially in reply to recent Telegraph and Guardian articles.
http://bilbo.economicoutlook.net/blog/?p=22745&utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+economicoutlook%2FFYvo+%28billy+blog%29
One of the difficulties for most people in comprehending the economic crisis from 2008, its impact on the eurozone, and the political and economic decisions made inside the eurozone impacting the PIIGS, is that much of the action has taken place in the higher reaches of the market and macro-economics, a highly specialised area of knowledge. For non-economists like myself, this has presented a huge challenge and learning curve, before we can even attempt to arrive at evaluations.
Unfortunately the conservative papers seem only to support the prevailing orthodoxy, though I have appreciated your analyses over the past few years.
Still, no matter which way it is explained, what we see is a transfer of wealth to bankrupt german and french banks, the destruction of PIIGS economies to provide poverty-level, social-insurance-free wages for future “investors”, a transfer of increased (!) public debt onto citizen shoulders, and the constant assurance that this is the only way forward. Of course this isn’t the only way forward!
Without naming names, the only beneficees are private insolvent banks outside Greece, and in the long term, EU creditor country industries. Meanwhile the EU is using the crisis to push its political agenda, while Germany as the no1 EU donor calls the shots, not on behalf of the EZ, but her own behalf.
The mystery to people like me, who actually love our countries, is why our politicians agree to this, ie the impoverishment of our people, destruction of our once-sound banks, etc. Why and where are they heading?
Masons are heads of public departments, local mayors and anyone that can give you a contract for a commission or find a family member a job in the public service. For instance my neighbours are very sweet people but a family apartment building with ten adults all public employees, police, embassy official, fireman, ministry food dept, OTE, DEH.
Ref banks no Elenits the first bail out to include cash benefits for small businesses was before the PSI. The banks had problems because they accepted the ridiculous and illegal post dated cheques scam and also preferred to lend to private citizens property mortgages rather than invest in the private sector. They also in some cases took commissions for loans from private companies. If as in other countries USA, UK, we had allowed banks to confiscate properties where mortgages are not being paid, they would all close their doors. My assistant accountant had three mortgages on the same property two from one bank and one from another, at the time we implored her not to get into so much debt. Others actually stated, well we will take the mortgage and if we can’t pay we will let them take the property. Obviously none of these are paying their mortgages. When banks didn’t bother to check the earnings related to the loan, and gave credit card loans without any securities, what do you expect. The only bank that I know of that is tuned to business is Pro bank. They are also the most polite and have tried to find a buyer for our factory and we don’t owe them a cent.
Elenits foreigners and Greeks from abroad have always supported charities here. We have all donated clothing food etc over the years for immigrants and now for Greeks as well. Take a trip to Kifissia on a Saturday night, it is another world. The only way that you will change the attitude of Greeks is if you change the grammar to Nick and I, instead of I and Nick, and teach your children to love one another not politics in schools.
Ref public workers charged with criminal activities. Nick will answer this better than any of us. If it’s not in the constitution then for sure there is a law that makes it difficult if not impossible to fire public workers. We had a teacher that was charged as a pedophile, he was removed from the school. took a six months sabbatical and then was reinstated at another school. We knew of a tax department which was corrupt and the new head of inspectors told us that they had been persuaded to leave voluntarily with full remuniations and pensions as it was too complicated to charge them in court and have them dismissed. See my comment above ref the IKA employees, how can they receive 50% of wages, why weren’t they charged immediately by the courts and simissed. I think this isn’t a matter of political choice, I think there is a problem here with our laws relating to public servants.
O.k. Enough fractional talk. Numbers time and focus back on the big picture:
http://www.bankofgreece.gr/Pages/en/Bank/News/PressReleases/DispItem.aspx?Item_ID=4189&List_ID=1af869f3-57fb-4de6-b9ae-bdfd83c66c95&Filter_by=DT
Actually Dean the only big picture we can see is the alternative is worse. As for comments that the older generation don’t take risks, take a good look at yourselves, what have you achieved on your own, without help. Don’t forget when we were young we had to work day and night for our education and we took risks. Here in Greece the majority of Greeks have had it so easy that any measures that affect them personally they start screaming while the rest of us older generation foot the bills.
Yeah right Ann. Let’s build a country of old geezers, unproductive citizens and self-made mediocrities so that their “sacred” savings are protected and don’t have to support the following generations which had it easy and achieved nothing. Sounds like a good plan. When do we start?
The only comments I see from you are info that you pick up from other webs or news reports. What I don’t see are any positive ideas. Are you productive? Have you employed Greeks in the past? Did you bring funds into this country? No I would like to see the wretched public service brought into line, most of it privitised and work opportunities given to our young people instead of the majority of employees that are inapt and don’t want changes. Are you calling me a self-made mediocrity? This just shows how little you understand the business sector, I am very proud of what we achieved here, in a corrupt and incompetent public sector, with useless governments that couldn’t run a kindergarten. As for you Dean tell me what you have done for Greece, but you can keep your comments because frankly I am not so insulting and you are extremely ignorant.
You must be on a roll today. Yeah, that’s exactly me. Ignorant, uneducated, no formal knowledge of management. Never lead people to do anything and certainly un-contributing to Greece. I now see why you have succeeded in business. You are really a shrewd judge of character and talent.
I won’t use your blog again Nick because frankly I think Elenits has some good points but when a blogger literally hogs the site and starts discussing age this isn’t necessary. I like to hear young people and their points of view and have a great affection for many of the young people that worked for us in the past. Young Greeks travelling abroad working on vessels like Blue Stars and SFF in foreign ports, Holland, Norway, Germany and showing our products on stands in Italy, Germany, China, they were proud of the products they helped to manufacture. We gave them responsibility and a happy working environment without strikes, and all political parties. I agree with Elenit and I think you are also coming round to the fact that we have to work together. History has repeated itself too many times here Nick, we have to move on instead of living in the past. Frankly don’t give as hoot for the EU, I care that our children have had to leave their homes, I know so many over the past years and this is sad for the country and for us. Crying now means nothing, I have never seen Greece use their youth as in Northern European countries. Good luck with your blog, I will stay with Kathimerini where there are more opinions and less spite.
o.k. I am leaving the blog. You make sure it grows.
I find this attitude to be not only childish but pigheaded. Intransigent ideological positions and a lack of serious debate characterise the problematic Greek political scene. Ann: you are merely replicating what is wrong with Greece, by taking this attitude. Clearly, you don’t like people to disagree with you: that reminds me of Greek private sector employers, who prefer their businesses to fail rather than listen to expert advice and promote those employees with relevant skills.
@Dean: you don’t achieve anything with overt aggression. I understand and share much of your frustration, but still…
Xenos:
What you perceive as aggression is pure frustration. Frustration that almost no one seems to get it. Everyone is entitled to an opinion but not the facts. And the facts are undisputed.
Despite two successive PSIs (PS1+PSI2 = 110+32 = euro 142 Bil.) the Greek sovereign debt remains at about the same level.
http://www.statista.com/statistics/167459/national-debt-of-greece/
Therefore what we deal with here is an issue of lies and deceit. The grand lie is that the haircut was designed to help Greece to reduce its debt level. The truth is that the PSI was a Berlin fabricated construct to detract attention, buy valuable time for Merkel while at the same time wrecking the Greek economy beyond repair.
The other lie is that the so called “bailout” was some form of aid to Greece. As it turns out it is a pure debt substitution scheme (replacing one form of debt with another) with zero benefits to Greece. Greece today, by following the faulty European recipe, has the same debt level and a 30% loss in her GDP. That’s not help; it’s called reckless damage.
Yet, here we are. Instead of understanding the big picture and trying to explain it we talk about weekly fashionable events and peripheral issues such as batons and other daily nonsense.
Each of you has his/her own reform theory while you fail to recognize that reforms is an exogenously introduced topic. It acts as a cover for the lies and the lack of public understanding on the real issues.
Reforms will be a topic for the next few decades, but reforms are neither the cure for the problem nor a substitute for the minimalism, incrementalism and obstructionism of the Berlin criminals. When you evaporate 30% of a country’s GDP, of course you need to talk about reforms. However, reform as a consequence of damage is not the same as reform for increased efficiency. Destruction implies reformation because what you just destroyed needs to be replaced with something else. Hence, to be re-formed.
This is more like a case of rape in which afterwards you assist the rapist to artificially rectify the damage as well as the facts.
Be well and prosper. On my end I believe that citizens unable to comprehend the nature of their problems fully deserve the misery than ensues. The Greek tragedy here is how much off target everybody is. We have become a nation of idiots and for that I am afraid there is no cure.
Thanks all for your hospitality. It’s time for me to go.
@Dean: I agree completely with your first two paragraphs. I was saying exactly the same thing to someone in the German embassy yesterday.
I do not agree that the failure to understand this indicates the stupidity of Greece. These matters are complex, and it took economists some time to get their heads around the reality when this all started. People not accustomed to thinking about these things found it difficult to comprehend. The bigger problem is the collusion of the press and political class of Greece in misleading and lying to people.
Well, I would suggest that it depends what one agrees with. If one says that Greece’s sovereign debt per Y/E 2012 was about the same as per Y/E 2009, one can agree with that because it is correct. If one says that the PSI’s did not bring Greece any benefit, it is incorrect. In the months up to PSI1, interest payments abroad averaged 800-900 TEUR per month. In the months between PSI1/2, those interest payments had declined to the 200-300 TEUR range (not only PSI1 but also interest rate reduction). After PSI2, it will be even better. I suggest a monthly reduction of 500-600 TEUR in interest payments abroad is a benefit. It’s not the solution to the problem and it most certainly is not a ‘grandiose benefit’, but it’s a benefit.
Some more food for thought: if the debt remains the same despite alleged 142 BEUR PSI’s, then this means that without the PSI’s debt today would be 142 BEUR higher than it is. Think about that logic.
I was and still am a fervent opponent of how the bail-out’s were structured but to say that the bail-out’s had zero benefit for Greece is a well-entitled opinion but has nothing to do with facts. From 2010-12, Greece had a primary deficit of about 20 BEUR and that had to be financed from offshore. The economy registered a current account deficit of about 45 BEUR and that had to be financed from offshore. Finally, deposit flight was about 80 BEUR and that had to be financed largely from offshore as well.
It is correct that close to 80% of the rescue funds went straight back to creditors as payment of principal and interest. Greeks can be mad at that but I would suggest that tax payers of the lending countries have much more reason to be mad at that. Had the troubled banks been bailed out directly (instead of indirectly via Greece), tax payers would today have something in exchange for they bail-out money, i. e. equity stakes in those banks. By routing the bail-out’s through Greece, tax payers are holding an empty bag whereas bank shareholders have not yet been diluted.
Where I agree is that real ‘help for Greece’ would have looked quite differently from doing just enough to keep the country afloat. ‘Help for Greece’ would have meant to do everything in the book to make a weak borrower strong again (by that I mean the economy and not the state). The only way to get money back from a weak borrower is to make him strong again, If one fails to do that, one is only postponing the hour or reckoning (and the timing of the write-off’s).
Klaus:
I am surprised that you were a banker and speak of such nonsense.
So replacing loans of higher interest rate with loans of lower interest rate is a benefit while keeping the loan balance the same? That’s the disgusting narrow view of a lender. And raiding private investment to the tune of 142 Bil. euro is a benefit to Greece?
This is the death of Greek banks you are describing without any opportunity to participate in the reconstruction of the Greek economy.
So, your idea of inviting the FDI(which you promote as the snake oil in your simplistic blog# is to ensure that private investors are wiped out? Why would capital ever return to Greece? to be wiped out again?
I suggest that you quit your suspicious nonsense and your pathetic attempts to create false hope lest the German disaster is exposed. You are nothing but a false prophet, a propagandist and a racist ( Greek economy consists of Greek selling “souvlaki” to each other). Shame on you !
Now I am really out of here. You are free to repopulate this blog with German folk tales like you were doing before I got here.
The very minor benefits that you describe are really trivial details, and reminding us of them tends to distract from the big picture. It is the sort of error that second-rate university teachers make, and I am surprised at you, Klaus. I do not ascribe this to ulterior motives — as Dean seems to do — but your rosy view of the recent past is not realistic. An independent observer might suggest that your optimistic projection of the future also has no foundations.
The truth is quite simple, but has been obscured by complexities and details. Germany decided to throw its weight around for the benefit of German banks and maybe the German economy. The optimal strategy, as they saw it, was to leave the euro in moderate crisis (and therefore not strong — good for German exports) and Greece in dire straits. Having decided on this basic approach, and rejecting the expert advice of the IMF it seems, everything else falls into place. The moralistic Protestant posturing and the claim of superior German values over Greek ones, the hectoring (in true Thatcher style) about fiscal balance, etc. — these are all political techniques to humilate an opponent. I have not even mentioned the outrageous interference in the Greek elections — which in my view the Greek president should have taken to the Greek and European courts, as a fundamental attack on democracy in Greece.
I agree with Dean’s final analysis and also Xenos for pointing out how difficult it has been for the ordinary non-financier, non-economist to get their head around complex macro-economic issues, higher details of the market (shadow banking, LIBOR, derivatives…), let alone retroactively decode Lisbon and the incomplete euro structure. One big learning curve. Throw in the unadmitted, propagandised, intra-EU politics and the head spins.
However we have had enough time to get up to speed, as EU citizens. As greek citizens we watch the same old kleptocrats in parliament do the Troika bidding on the one hand and protect their friends on the other. Of course, meanwhile, the public sector has to be reformed, and the private sector liberated from being its Karageozi’s donkey.
These are interior matters and the question is by whom, and using which template. Obviously by greeks, using the best examples possible.
I will leave you too, but with a little irony 🙂 After the greek revolution the English were assigned the task to set up the greek banking system, with perfect results. Our banks have been one of Greece’s great assets. Unfortunately the French were assigned to set up the civil service – leading to 180 years of Kafka-esque complexity, complication & inevitably corruption. History is being repeated now, (the Great Powers divvying up the structure) – and once again the French are assigned to the civil service, Belgians on ‘transparency’ issues :), germans on ‘opening up the professions’ (while they have the most closed professions in Europe), etc. etc.
I have a question for Xenos. You are quite clearly an academic and an insider in Greece. I have to say that your opinions are spot on and they are expressed in a way understandable to non Greeks. The question is as follows: are you offering your analysis to EC power centers in an official or unofficial capacity of advisor? If so since when?Or is your research widely distributed so that the above can access it if they decide to study Greece seriously?
Thanks, skylaki! I research (and used to lecture) in a specialised area of political economy. Most of my research and policy advisory papers since 1990 are published online. Currently I am finishing an edited book on the Balkans and an expert paper on North Africa for the UN and OECD: those will be published. I am also involved with some empirical research on labour markets in Italy and Spain, funded by DG Employment; on Greece I am preparing some confidential reports, and cannot say more about their destination.
I’m trying to bring research moneys to Greece, partly to provide employment for some assistants and provide good training in research, and partly for the actual relevance of the research.
The Greek state (and especially the two main parties) seem deternined to block independent academic thinking: I am on the blacklists of both parties (and have worked with both) and am very rarely invited to speak in Greek venues. I think I must have made more public appearances in Spain than I have in Greece. I tend to appear anonymously everywhere on the net, after some unpleasant incidents and threats in the past. However, I will appear in real name next month on openDemocracy
I think your aim to ‘bring research money to Greece’ is very important. Greece desperately needs to get away from the insular academic thinking: outdated, inferior, suspect and short-sighted ideas expressed by all political party hacks and their supporters. I can very well believe and understand that you have been targeted. You’re not alone.
Thank you, Rosemary. I have already succeeded with some modest amounts, but the criminal behaviour of the Greek state in imposing VAT on academic non-commercial research income means that there will be next to nothing to pay researchers. They are destroying Greece with every ***k-up that they make, while leaving their useless political cronies in state employment. Even Mitsotakis has started to understand…!
I have made an ‘educated guess’ as to who you are, based on previous comments and other knowledge. Maybe I’m mistaken….we’ll see!