Tag Archives: Greece recession

Will anyone be left standing at the end of Greece’s marathon?

Illustration by Manos Symeonakis

Of all the European leaders, Economic Affairs Commissioner Olli Rehn is perhaps the last you would expect to have a finger on society’s pulse. Yet it was the Finnish technocrat who produced the most apt analogy at the end of an epic Eurogroup session that ended on Tuesday morning with eurozone finance ministers agreeing a new bailout for Greece.

“In the past two years and again this night, I’ve learned that ‘marathon’ is indeed a Greek word,” Rehn told reporters. There seemed to be an exquisite timing to the marathon reference, even though most journalists were too bleary-eyed at that point to appreciate it. Marathon can refer to one of two things: one of the most decisive battles in history, in which the ancient Greeks repelled the threat of the Persians and a disastrous future, or the long-distance race which marks the lung-busting effort of messenger Pheidippides to inform the Athenians of victory over the invading army.

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Back to 2004? More like 1929

Illustration by Ilias Makris

He meant it as a warning, but when Finance Minister Evangelos Venizelos said a few days ago that Greeks’ incomes would be returning to 2004 levels, it could have been interpreted as the most optimistic thing the government has said for months.

In many ways, 2004 was the most hopeful year Greece experienced for decades. It had a growth rate that was the envy of many eurozone countries, it pulled off the miracle of successfully hosting the Olympic Games and the national soccer team became the biggest outsider to ever win the European Championships. It was a time when everything seemed possible.

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Staring at defeat

Illustration by Manos Symeonakis

Some had hoped for a dramatic and inspiring last throw of the dice to drag a confused, beleaguered and sometimes reluctant country forward, but Prime Minister George Papandreou’s speech in Thessaloniki last weekend felt distinctly like an admission of defeat.

Any address that begins by focusing on the failings of the previous government, as Papandreou’s did by rehashing the argument about New Democracy’s disastrous management of the Greek economy, is condemned to look back rather than forward.

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Paying the cost of the crisis

The news earlier this month that Greeks, acting on fears the country might exit the euro, transferred 30 billion euros to foreign banks, many of them in Switzerland, would have left most people in the debt-ridden country perplexed. It is a year since Greece signed a deal with the European Union and the International Monetary Fund to receive a 110-billion-euro bailout to prevent bankruptcy. That agreement came with strict terms and over the last 12 months the government in Athens has imposed the kind of austerity measures that make it difficult for Greeks to imagine that some of their countrymen might have enough spare cash to deposit in Swiss bank accounts.

One of the key features of the loan agreement has been repeated tax increases. Value added tax (VAT) has gone up several times since last year, income tax has been adjusted, duties on alcohol, fuel and tobacco products have been hiked and the tax on pensions has been increased. As a result, Greece now has the third-highest VAT rate in the EU, the second-highest duty on petrol and the third-highest social security contributions in the 27-nation bloc.

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