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– Kea, Greece

Many top journalists covering recent events in Greece seem, if nothing else, to have enjoyed the chance to employ snippets of Ancient Greek history remembered from their schooldays. Coverage has been full of classical references: ‘Pyrrhic victories’, ‘debt odysseys’, even a ‘modern-day Gordian knot’ – to name a few. I know much less about Ancient Greece than its modern descendant so I’ve chosen a different reference: ‘Freedom or Death’ is the Greek national motto, emanating from their struggle for independence from Ottoman rule in the 1820s. Nowadays this powerful ideological tradition seems lost to Greek consciousness as they strive to steer clear of political stagnation and the worst government debt crisis in recent history. Greece can only survive economically by remaining beholden to a myriad of creditors, the alternative being a default on its repayments and potential financial oblivion.

Essentially Greece has been overextending itself financially, particularly during the last decade. When the Greek government adopted the Euro it could borrow a lot more money at better rates, vastly increasing public expenditure. This was already approaching an unsustainable level before the onset of the global financial crisis, which tipped Greece over the edge. It no longer had enough money coming in to pay off its debts. A cycle of decline developed, with potential commercial lenders seeing Greece as a liability and the government being unable to find anyone to borrow from to cover existing debts. This is why the EU and the IMF are providing a (second) bailout – to allow Greece breathing space to improve the credit situation and attract lenders again. For any country to consider borrowing more money to pay off existing debts might well sound wildly irrational, almost like the approach promoted on daytime TV by a dubious loans company. But the fact is that European governments have been operating on deficits for centuries – one example of the many contradictions that seem to lie at the heart of our international financial system.

The credit being extended to Greece comes at a heavy price for the Greek people. It has forced the government to make drastic cuts to wages, pensions and job numbers in the public sector, as well as tax rises for the wider population. Hence, beneath the broad strokes set out in the news by economic correspondents, there is an undeniably painful situation for ordinary Greeks. Their place in this drama has not been given much consideration beyond the petrol bombs recently seen flying around Syntagma Square in Athens. By any standards, these austerity measures, while necessary, are sudden and severe. It is therefore unsurprising that there have been several demonstrations of public anger on the streets of the nation’s capital.

Media commentators often focus on the same catalogue of inefficiencies in Greece’s government: the ‘ghost’ jobs (where someone is paid a wage but never actually does anything), cushy pensions, nepotism and pervasive corruption. Add in nationwide tax evasion and the resultant portrayal suggests that they almost deserve their current difficulties. These flaws are often juxtaposed with the Athenian protests, implying that the protesters are defending their right to maintain the crooked perks of public employment. The fact is, however, that almost everyone supports the eradication of corruption and inertia. They attach most of these problems, with some justification, to the incompetence and venality of the political and financial elite. In the meantime some of the poorest people in the country are put under serious pressure, most recently when the income tax threshold was lowered to €8000 per year to ensure the government austerity programme falls in line with EU-IMF bailout conditions. Next time you see a riot in Athens on the news, remember that a lot of Greeks are both innocent of their current circumstances and are suffering greatly for them.

In essence this conflict can be reduced to the claims of two opposing factions. One camp focuses on government expenditure and argues it must be cut back at all costs. The other claims this could actually stifle economic growth, blames international banking failures for the current problems and argues that the public sector workforce does not deserve to shoulder the consequences alone. It is a fractious dialogue, and one that is being repeated across Europe. Both sides are right in some respects, yet they are also guilty of oversimplifying what is an immensely complex situation.

The worst feature of the Greek debt crisis, above all, has been the level of antagonism that has prevailed. The notion that it is a national emergency demanding an ethos of compromise and cooperation has been conspicuously absent. Even if Greece’s account books are patched up with this latest bailout, cynicism and dejection are prevalent enough to discourage investment, growth and overall market confidence. Ordinary people are so disillusioned with the political leadership that it is questionable whether efforts to cut public spending will even be complied with. This may not be the last time the Greek economy stumbles, and the mood both within and without its borders remains decidedly pessimistic. [Insert Ancient Greece reference here].

Image from: http://www.commentopia.com