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.

Men outside of a soup kitchen in the Omonia neighborhood of Athens, Greece.
National Journal
Matt Vasilogambros
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Matt Vasilogambros
March 4, 2014, midnight

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.

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.

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