Tag Archives: George Osborne

London calling. Listening, Athens?

Illustration by Manos Symeonakis

On the day London was awarded the 2012 Olympic Games, we played The Clash’s “London Calling” on a radio show I co-hosted in Athens. The song — about a world slipping toward some kind of destruction — was played by a lone guitarist at a recent event to mark the one-year countdown to the English capital hosting the world’s biggest sporting event. A few days later, its lyrics — such as “London calling to the underworld/Come out of the cupboard, you boys and girls” — proved an appropriate soundtrack to possibly the worst civil unrest, rioting and looting the city has ever seen.

It seemed a delicious irony that an e-mail informing me about ticketing arrangements for the 2012 Olympics should arrive in my in-box on Tuesday afternoon, as London and other cities braced for a fourth night of rioting. But there is nothing amusing in seeing the city you were born in being ripped apart a few weeks after the city you live in suffered the same fate. I can feel nothing but sadness at seeing areas I know well, places where friends live and a neighborhood where my father ran a business for more than two decades being decimated by youths who appear to have no comprehension of the damage they are wreaking on communities.

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Democracy’s last laugh

Illustration by Manos Symeonakis

Ahead of the May general elections in the UK, Liberal Democrat leader — and soon-to-be British deputy prime minister – Nick Clegg said the UK faced Greek-style “economic, political and social disruption” if the new government could not “find a way to persuade people” to accept drastic public spending cuts. He made a lot of people laugh then. Last week, a large group of students took over the complex housing the headquarters of the Conservative Party, the senior partner in the coalition government, to protest the sharp rise in university tuition fees triggered by the cuts Clegg had spoken about. Nobody’s laughing now.

Greece is acutely familiar with student protests and arguments about the cost of tertiary education but there are several elements to the British youngsters’ action that should make Greeks sit up and think.

About 50,000 students took to London’s streets last Wednesday to protest the Conservative-Liberal government’s decision to raise the ceiling on annual university fees from about 3,000 pounds (3,500 euros) a year to 9,000 pounds (10,600 euros). Students were enraged first of all by the enormity of the rise – to put things into perspective, graduates in the late 1990s didn’t have to pay a penny for tuition. Just over a decade later, they face the prospect of leaving university with debts of almost 30,000 pounds (35,000) euros. The British government’s scheme to allow graduates to pay this through an extra tax that will be levied once they find permanent employment is little comfort to today’s teenagers and 20-somethings: Given the current economic conditions, the prospects of finding such a job are diminishing rapidly. The coalition government’s public spending cuts will lead to almost 500,000 civil servants losing their jobs over the next few years and the situation in the private sector is not encouraging either.

In Greece, the prospect of discussing any kind of financial contribution by university and technical college (TEI) students toward their fees was impossible at the best of times, let alone now that the education budget is being slashed. Here, however, the argument is dominated by sanctimonious academics and bloody-minded student groups who refuse to accept that scant funding is just one of many problems afflicting Greek institutions, none of which made the list of the world’s top 200 universities published by The Times last week. The British students’ fight seems more inspiring compared to the entrenchment of those who hold tertiary education hostage in Greece, as it’s about competing for a better future rather than refusing to let go of a mediocre past.

The British complain, for instance, that they’re being asked to pay three times as much for their education at a time when the state, which last year provided 8 billion pounds (9.4 billion euros) of funding for universities, is slashing its investment in the sector. In other words, they’ll have to pay more for an inferior product. So, it’s difficult for young people to accept they have to do their bit for fiscal discipline. “There is an appetite for financial rigor, so long as it reinforces recognizable moral principles,” claims Charles Moore of the pro-Conservative Daily Telegraph newspaper, but there doesn’t seem to be anything very moral or principled about putting tertiary education – one of the main arteries pumping new blood to the heart of the economy – beyond the reach of the less wealthy.

It can only be galling for students struggling to put themselves through university to hear Prime Minister David Cameron and his Chancellor, George Osborne, claim: “We’re all in this together” when they talk about their drastic cuts. The students ask: How can Cameron, Osborne or any of the 22 of 29 cabinet ministers who are millionaires feel any solidarity with those who have to deal with the impact of their austerity measures? Echoing the feeling of complete detachment between politicians and the public that has become familiar in Greece, British daily The Independent wrote in its editorial of the student protest: “The fury on display seemed to contain other strands, such as a sense of ‘them and us,’ and the conviction that direct action was the only way to convey the desired message to those in power.”

Despite the siege of Conservative Pary headquarters, the main target of the students’ anger was Clegg, who had warned of a fierce reaction to unfair cuts but seemed incapable of heeding his own advice. Students were enraged by the Lib Dem leader, because he made tuition fees one of the top issues in his election campaign. He promised he would “implacably oppose” any attempt to increase the cost of studying but his supposed principled stand buckled soon after the students helped put him in office. Last week’s protest was the just the beginning of an effort to remind Clegg and his colleagues of elected officials’ obligations. “This was the first step in holding politicians to account and using the democratic powers in our control in order to win our case,” said Aaron Porter, the head of the National Union of Students (NUS).

The NUS has indicated it will adopt a so-called “decapitation” strategy, which will see students target the constituencies of Clegg and other Liberal Democrats in the run-up to the next elections with the aim of unseating them. It’s in their embracing of the potency of democracy and their determination to invert the pyramid, so the real power lies with those who cast the ballots, not those who amass them, that the British students demand Greeks’ attention. Greek voters got a taste last Sunday of what it feels like to no longer accept politicking, when independent candidates Giorgos Kaminis and Yiannis Boutaris were elected mayors of Athens and Thessaloniki, respectively. Although they were endorsed by PASOK, the ruling party’s support was so feeble it actually helped both men appear true lone riders promising a different set of values rather than members of the traditional political herd who are bound by commitments to the party.

The British students, aided by the verve of youth, have reacted to betrayal in an instant. For Greek voters, disorientated and disenfranchised by blind party allegiances and years of broken promises, the process has been much slower. Yet the victories of Kaminis and Boutaris are signs that a new way of thinking can emerge: one that dispenses with the constraints of the past and the fear of the unknown and which imbues voters with the belief that they have the power to punish the layabouts, the liars and the crooks. So, the British students and the Greek people face the same challenge: to find a way of soaking up this moment of enlightment and harnessing the power of democracy. If they manage it, they could have the last laugh.

 

Painting by numbers

Illustration by Manos Symeonakis

 

Thessaloniki – Legend has it that Thessaloniki’s White Tower got its name after a prisoner held within its walls whitewashed the 27-meter tall structure so he could receive his ticket to freedom. For Prime Minister George Papandreou, who failed to impress in the northern city last weekend with a flat economic policy speech and an unconvincing display at a marathon news conference, there was no such hope of liberation from the shackles that bind his government.

On Sunday, whether it was the locals lounging in the cafes at Aristotelous Square, the protesting firefighters marching toward the Thessaloniki International Fair, or the police officers –as ever looking like bored guests at a relative’s wedding – guarding the Makedonia Palace Hotel where the Cabinet had decamped to for the weekend, nobody seemed particularly bothered by what Papandreou had to say.

His appearance simply confirmed what Greeks already knew: tough situation, tough choices, and tough times ahead. But almost a year after PASOK came to power and some six months after it agreed with the European Union and the International Monetary Fund on a strict plan to tackle its debt crisis, people were entitled to hear something more substantial about where the country will go from here, something to give them hope that a course has been plotted through this economic maelstrom.

Papandreou’s only real note of optimism was in a section of his speech dedicated to Greek entrepreneurs and businesses excelling internationally – proof, the prime minister suggested, that the desire and ability to succeed is strong. Yet, even this attempt to lift the mood rang slightly hollow: one of the companies Papandreou mentioned was a start-up that created iSteam, an iPhone application downloaded by more than 3 million users, but on Tuesday a young entrepreneur involved in the project revealed the firm had been founded in the UK because of the excessive red tape in Greece.

The fact these creative minds were put off by the business environment here says more about Greek reality than the thousands of words in Papandreou’s speech. In fact, there was no indication in what the prime minister said that his government has plans to create a more conducive atmosphere for business, nor an acknowledgment that the terms of the EU-IMF agreement are stifling economic activity. If structural reform, civil service pay cuts, pension reductions, higher taxes and the slashing of public spending are all ingredients of the nasty, but necessary, medicine that Greece has to take, then there has been no move by the government to concoct a potion to combat the ugly side-effects such as negative growth, unemployment, dwindling consumer spending, poor business sentiment and inflation.

All that Papandreou proposed in Thessaloniki was a reduction in tax on reinvested profits and the fast-tracking of foreign investment programs. Both are welcome moves but collectively they fall short of what’s required. It’s hardly the formula to dislodge Greece from 83rd place on the World Economic Forum’s Global Competitiveness Index, which was published last week. Ranked last in the EU and nestled uncomfortably between El Salvador and Trinidad and Tobago, it will take more than a few common sense measures to thrust Greece onward and upward.

There has been no convincing attempt by PASOK to discover the missing link between structural reforms and the measures needed to stimulate the economy. Instead, Greece faces the prospect of slipping into a vicious circle where a lack of growth would prompt a steady stream of fresh austerity measures to make up for revenue shortfalls. In this scenario, Greece’s fiscal position would steadily worsen and, like a dog chasing its tail, the government would be sniffing out funds just to service its debt and for nothing else. Ultimately, Greece’s credibility on the international financial markets would disintegrate and the whole purpose of entering the EU-IMF fiscal agreement would be defeated.

Trying to get the balance right between fiscal adjustment and growth is an unenviable task and the only saving grace for Papandreou and his government is that they’re not the only ones who don’t have convincing solutions. The opposition parties, for instance, have been heavy on the criticism of the belt-tightening but light on counter-proposals. Foreign experts, meanwhile, are offering suggestions that Greece cannot contemplate politically, such as debt restructuring, default or exit from the eurozone.

The UK is facing a watered-down version of Greece’s problem and critics there have begun challenging the Coalition Government’s drastic deficit reduction strategy. Recently, Ed Balls, a longtime economic advisor to former Labour Prime Minister Gordon Brown, warned in a speech at the Bloomberg financial news service that Osborne’s hefty spending cuts would send Britain into double-dip recession and cause long-term damage. He singled out Greece as an example not to follow, arguing that the spending cuts are undeliverable and that a lack of growth will eventually lead to the markets losing confidence.

“The Greek crisis may have started with concerns over the government’s ability to service its debt but it is now a more fundamental question about whether its economy can grow and its society can remain stable,” said Balls. However he has few useful proposals for Greece. Balls suggests less stringent cuts, spread out over a longer period of time – a luxury not available to Papandreou’s government – and support for a series of programs aimed at boosting employment.

It’s hardly a groundbreaking idea but some kind of apprentice scheme for high school graduates, whereby firms are given financial incentives to take on teenagers would at least be a place for PASOK to start. Papandreou had once been in favor of allowing firms to be excused from paying social security contributions for young hires for a certain period. He might want to reconsider this idea, even though it would be anathema to the left wing of his party, as it would put spending money in the pockets of thousands of teenagers while helping emerging businesses limit their costs. But bolder ideas will be needed. Perhaps the government needs to put the billions spent on feeding, training, housing and transporting Greek youths who have no interest in doing their military service to better use. Why not offer them the opportunity to do community work and spend a fraction of the money on paying them a small wage instead?

However, all this is minor tinkering when major interventions are needed; interventions that will help drive Greek companies forward, that will boost the tourism sector, that will support innovation and that will strip away the bureaucracy which limits entrepreneurship. Greece has been a global economic test case this year and if it manages to find a way to balance drastic fiscal adjustment with economic revival new ground will be broken. Making this happen within the current constraints is an order of massive proportions but that’s what the prisoner must have felt like when, bucket and paintbrush in hand, he stared up at the White Tower. Nevertheless, the job got done and the chains were broken. Maybe there is a positive message to take from Thessaloniki after all.

This commentary was written by Nick Malkoutzis and was published in Athens Plus on September 17, 2010.