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Greeks Struggle Under Economic Reforms

After four years under E.U.-mandated changes, some wonder if the nation should keep forging ahead—or if it should try to turn back.

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Men outside of a soup kitchen in the Omonia neighborhood of Athens, Greece.(Matt Vasilogambros)

ATHENS, Greece—In a neighborhood that most tourists don't see, worn-down men line up outside a soup kitchen, clutching cigarettes and their remaining belongings, zipping up their coats on this cool winter morning.

Inside a spray-painted building across the street, rows of pasta, cereal, Nescafé, and bread fill the aisles of a fluorescent-lit room. There is everything one would expect to find in a small grocery store: shopping carts, a checkout counter, frozen food, soaps, cheese, meats, and paper towels. But this "store" is not what it seems.

 

The tiny facility, not far from Omonia Square, is open two days a week to 200 destitute families who are given prepaid cards with which to "buy" their essentials. The program is funded by Greece's largest grocery chain, Carrefour Marinopoulos, and it reflects a set of very Greek beliefs: that normalcy confers dignity; that tradition mitigates suffering; that, when in Athens, one must do as Athenians do. The program was started to assist poor immigrants, but these days the shoppers, selected by the city from thousands of applications, are almost all native-born Greeks.

Participants in the Carrefour Marinopoulos program may be poorer than most in Greece, but millions share the feelings of disruption and deprivation this staged shopping experience is meant to assuage. Over the past four years, Greece has experienced a collapse of economic and social order so profound that it has all but eradicated the relaxed, sunny lifestyle the nation long enjoyed. Most of Greece's 11 million people have been strongly affected by what is known as "the correction," or simply "reform"—the austerity measures mandated by the other members of the European Union in the aftermath of Greece's economic crisis, and which have radically altered Greek life in ways that, however fiscally necessary, are proving socially and politically intolerable.

Panos Marinopoulos, the grocery chain's 62-year-old CEO, sees a country crippled by the changes demanded by its northern partners. Standing in the mock store in Omonia, he tells me that the forced fixes are worse than the Black Death. "It is true that we have grown based on borrowed money for many years. And that growth was unsustainable," the lanky Marinopoulos says, speaking English in a thickly accented baritone. "But the correction is brutal."

 

The pining for the past is so widespread, in fact, that it is threatening to tip the nation into a period of radicalism and economic isolation, and to destabilize Europe's efforts to recover from its crippling debt crisis.

THE ONCE-GREAT GREEK LIFE

The week I was in Athens, the front pages of most newspapers related with horror the story of a 13-year-old girl in northern Greece who died of carbon-monoxide poisoning. The family couldn't afford to pay the heating bills anymore and was forced to use a makeshift heater, which proved to be deadly. The story was a terrible reminder of the new reality: high unemployment, shrinking welfare, and increased taxes, including those on heating oil.

It's a far cry from the way most Greeks lived for generations. The relatively slow pace, the temperate weather, and the natural beauty of mountains, islands, and the sea all added up to a lifestyle treasured as among the most relaxed and affordable in Europe. Summer was a time of inactivity, when employees were afforded extended vacations and the government would partially shut down. People worked to live instead of living to work.

But this approach to living had disastrous consequences once Greece joined the E.U., government leaders now freely acknowledge. After the nation entered the Union, the government borrowed heavily and increased its spending. Public-sector positions on average paid three times more than private-sector jobs. Government workers retired early, collected big pensions, and lived comfortable post-career lives. Officials created positions for job-seeking relatives. And tax collection was all but absent, so those who could avoid paying taxes did just that.

 

Then, in 2008, the global economic crisis hit Europe like a wave and laid bare the weaknesses of Greece's economy. The financial markets plummeted and Greece teetered on the edge of bankruptcy until three international actors known as the Troika—the European Commission, the International Monetary Fund, and the European Central Bank—took what remained of Greek autonomy in exchange for $328 billion in bail­- out funds.

In order to receive the desperately needed financial support and remain part of the 28-member E.U., Greece was compelled to implement a series of austerity measures, tax increases, and government cutbacks that rocked the foundation of Greek society. Unemployment hit colossal levels. Riots broke out.

Today, unemployment is over 27 percent, according to government statistics. Youth unemployment is 60 percent. Available income has decreased by 30 percent over the last four years. Public pensions have been slashed. Thousands of small businesses have closed. Many people have lost their once-secure government jobs. And the economy, predicts the Organization for Economic Cooperation and Development, will shrink for a seventh consecutive year. The economic numbers look like Depression-era America.

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And Greeks are ground down and fed up.

Ypakoi Pinotsis, a pharmacist whose shop is near the thrice-weekly protests in Parliament Square, says austerity has exhausted her. She says she now works more than 90 hours a week, taking just one day off. Her business profits are down 20 percent since 2010. "The taxes continue, the wages go down, and I don't think something is going better. I don't see this. I don't know what they mean exactly, and for whom. Not for the middle class and for the people that are trying to survive and working," she says. "I'm doing my best. I cannot do it anymore. I'm destroyed physically and mentally."

Indeed, although a recent Pew Research poll found that 69 percent of Greeks say they want to remain in the E.U., reform's toll has led some to suggest that getting kicked out would have been preferable. As Pavlos Sourovelis, a 41-year-old local newspaperman, put it: "The medicine is worse than the illness."

CRISIS MAKES WAY FOR THE FRINGE

When the stories about the girl who died of carbon-monoxide poisoning hit the papers, leaders of the opposition party Syriza took the opportunity to voice their outrage over the austerity measures, which they have promised to scrap should they gain power.

Syriza—the name is a Greek acronym that translates to the "Coalition of the Radical Left"—has also promised to fight for the public-sector worker, restoring pay, halting layoffs, and cutting taxes for the working class.

It is hardly a surprise then that the party, which has been on the country's political fringe for decades, has in the past few years seen its poll numbers skyrocket. A Public Issue survey in January found Syriza leading the ruling conservative New Democracy party—which retains power in Parliament via a coalition with the socialist Pasok party—by 3.5 percentage points, claiming 31.5 percent support. And Golden Dawn, the far-right neo-Nazi party, has capitalized on anti-immigrant nationalism and is polling higher than Pasok, a once-major political force that produced powerful and historic prime ministers, and which holds the handful of parliamentary seats that make the current coalition possible.

That coalition government survived a vote of no-confidence led by Syriza in November, but just 153 of the Parliament's 300 members supported it. Syriza will be able to conduct another vote in several months. Government and business leaders fear that the coalition could collapse—and with it the Troika bailout program and any chance of pulling the country out of the recession and into a stable economic state.

Like most longtime fringe parties, Syriza has much experience circulating radical ideas and opposing the political establishment, but little actually governing or living in political reality.

The party's leader, Alexis Tsipras—young, handsome, an eloquent speaker—calls himself Cassandra, a figure from Greek mythology who could predict the future but was cursed so that people wouldn't believe her. Through a translator at a December conference for the American-Hellenic Chamber of Commerce, he called reform "catastrophic." He lambasted the "cartels of vested interest" and the "corruptive political system."

(Tsipras declined to be interviewed by National Journal, because the publication was "too American." A colleague at Forbes was also denied an interview, because his publication was "too capitalistic.")

"The two parties that led us to the crisis [New Democracy and Pasok] now appear to be the saviors of the crisis," Tsipras said at the conference, clearly suggesting that appearances might be deceiving. "What is at stake is the dignity of our country," he warned.

While Tsipras promises to end the austerity measures if he becomes prime minister, experts say he's unlikely to follow through. If he gains power, he might attempt to renegotiate some of the terms of the financial assistance from the Troika, says Theodore Pelagidis, an Athens-based fellow at the Brookings Institution, but that effort will likely fail, leaving Tsipras to return to Athens loudly condemning both the international body and the then-former coalition government.

Pelagidis, who is also an economics professor at the University of Piraeus, predicts that Tsipras will ultimately declare faith in the euro and continue the bailout program. He notes that Tsipras has backed off such threats in the past when it was politically expedient to do so: Several years ago, the once-leading proponent for leaving the E.U. changed his public position and now advocates staying in the Union.

"It is only a power game," Pelagidis says. "It is populist strategy to take over power in a country that suffers from misinformation, lowering wages, and unemployment."

Nonetheless, popular support for the party continues to rise—and that's making those who view austerity as a necessary evil very nervous.

THE FIGHT FOR GREECE'S FUTURE

"Greece will become a normal state again," Prime Minister Antonis Samaras told a crowd of prominent business and government leaders at the December economic conference, and there are some indications that the country is indeed headed in that direction. Business and government leaders are lauding recent reforms to the public sector and touting the country's first "primary surplus" in a decade, with the government at last taking in more than it spent. But the E.U. is still not content with Greece's progress. And a political turnover resulting in an anti-Troika government could reverse it all.

The Greek political elite know this, and they're trying to quell concerns. They invite foreign journalists and international investors into Athens to show off their successful government reforms and economic growth. (The American-Hellenic chamber paid for my trip.) The unrest could be worse, they say. There aren't as many violent riots in the streets of Athens as there once were. There are fewer and fewer protests and sit-ins. Economists say the recession could end this year, and Greece is expecting economic growth of six-tenths of 1 percent.

But on the ground, people tell me a different story. "I think we are at the end of [the] tunnel, but we are not out of it," says Marinopoulos, the grocery-chain CEO. "I welcome such optimism, but I don't see it happening very, very soon."

Marinopoulos is more sanguine than most. Polls suggest that nearly everyone in Greece still thinks the country's situation is bad—a perception that may not change quickly enough to avert a collapse of the current governing coalition and a showdown with the Troika.

It's going to take at least two years for the Greek people to actually feel the positive effects of reform, says Yanos Gramatidis, a former president of the American-Hellenic chamber. Until then, it's up to the government and the business community to increase communication with the public. That's simply not happening right now, Gramatidis says, which is why the outrage remains.

"You can't really say that the Greeks feel better, because they suffered a lot," Gramatidis says. "It is up to us to change this adverse mentality in a positive way."

The current president of the American-Hellenic chamber, Simos Anastasopoulos, told me that because Greece hadn't had a political uprising, a "silent majority" of citizens wants the reforms to go through. But the key word is "silent." If those Greeks really are out there, most of them haven't made their voices heard.

One who has is Kyriakos Mitsotakis, the minister for Administrative Reform and e-Governance. He believes that, to move forward, Greeks must accept that there is no way back.

Down the road from the InterContinental Hotel, in a converted swanky apartment overlooking the first modern Olympic stadium, Mitsotakis says that he and other government leaders have moved on from the old way of thinking. His office has been charged with going after fraud and waste in the government, and prosecuting wealthy Greeks accused of tax evasion. He's also the man in charge of firing 15,000 public workers by the end of this year, thanks to a directive from the Troika to shrink the public sector. In addition, he is trying to find new ways to make the summer months more productive.

"The old ways of doing business in Greece went bankrupt when the country went bankrupt," the young minister says, holding a coffee mug that reads, "Be Happy!" It's a fitting motto for a man who knows the transition has been painful for Greeks, but who believes that his country doesn't have another option.

The question now is whether Greeks will take that advice, or whether they'll pour reform's bitter brew down the sink.

This article appears in the March 1, 2014 edition of National Journal Magazine as Lashed to the Mast.

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