An article in the online edition of the Austrian newspaper, DIE PRESSE discusses the questionable success of the Greek bailout. The article attempts to shed light on facts neglected by the media and politicians.“Greece was not rescued. We cannot talk about international solidarity at all. No one knows whether this will lead to a political catastrophe.”
The general opinion regarding Greece is that its EU partners have rescued it with billions of euros, and that is why Greeks must quietly carry the burden of their past mistakes. This however, lies only on the surface. If we look closer, we will see that the truth goes much deeper.
In the first place, Greece has not been saved by the bailouts amounting to €240 billion. Rather it is the international banks which have been rescued, some of which would have been destroyed if their Greek loans had collapsed. Since the beginning of the Greek economic crisis, the Greek State has had to carry an increasing burden, with added loans, albeit at favorable 1.5% interest rates. On the other hand, the “solidarity” with the Greek people as claimed by the Austrian Federal Chancellor Werner Faymann, may not be all that it seems. It was in the form of a single haircut of around €107 billion imposed on private creditors. This is the amount of the total debt that Greece does not have to pay back.
Surely the core of the problem originated in Greece. For decades, the two largest parties, New Democracy and PASOK, funneled state revenues to their respective supporters. Taxes were not seen as a serious civic duty while the public service swelled. A large circle of civil servants from both parties shamelessly helped themselves to state funds. Only recently have bribes been revealed, involving senior Greek officials in arms deals with companies in Germany, Sweden and Russia. The majority of the Greek population, who have never had a piece of this cake, must now pay to keep their country afloat. The fact that they are protesting is understandable, but that they seek the causes of their downfall in Germany and other EU countries is not.
The accusations that Greece is reluctant to take on more reforms, in many areas of the State, are justified. But the fact is there have been a total of six packages of austerity measures imposed by the Greek government since the so-called bailout by the Euro Partners. These have resulted in higher across the board taxes, lower wages and pensions, as well as a significant increase in unemployment. Those who lose their jobs do not even have health insurance, as is the case now for three million people. The Greeks, whose wages were without doubt, too high relative to productivity for many years, must now endure far larger cuts than citizens in all the other EU countries. This does not compensate for past mistakes, but does demand respect for the beleaguered Greek population.
Greece has not been restructured through the rescue packages. Even if the government is able to exit the euro bailout at the end of this year, which hardly anyone believes, an immense amount of debt, far above €300 billion remains. The economic well-being of the country relies solely on tourism. The slender state will still be there, pared-down by creditors, but the prospect of replacement jobs in the private sector remains an illusion.
No one can say today whether the financial and economic crisis will grow into a dangerous political one. If radical leftist forces like SYRIZA or those from the far right such as Golden Dawn should ever come to power, the international relief efforts and the modest reforms already achieved would most likely be wiped out. However, this risk analysis also reveals how unstable the ground was on which the bailout was built.