Greece is no longer under special surveillance but the crisis is still alive – Martine Orange

On 20 August, after 12 years, European surveillance of Greece ended. At the end of June the European Commission decided that
the strict control imposed on Athens since 2010 is no longer justified, after at the end of April the government returned the last tranche (1.58 billion dollars) of the loan received to the International Monetary Fund (IMF) in advance. “After twelve years […] a difficult chapter for our country is closing, ”said Finance Minister Christos Staikouras. “Greece returns to European normality and will no longer be an exception in the eurozone”.

Despite the reassurances offered by the right-wing Prime Minister Kyriakos Mitsotakis, the Greeks do not believe in a return to normality and are unable to
erase from memory a decade that for them is synonymous with collapse, impoverishment, regression and humiliation. It will take decades for the country to recover from the shock therapy that has been imposed on it and which has brought colossal damage.

The European Commission, for its part, simply ignores the problem. In a letter signed by the vice president Valdis Dombrovskis and the commissioner
to economics Paolo Gentiloni, Brussels underlines that the Greek government has respected most of the commitments made. This is the essential element for Europe, which as regards everything else does not want to dwell on the subject.

An old story
After the end of the European bailout in 2018, everything was done to forget Greece. But like the Greeks, even the Europeans have not forgotten the Greek crisis. That event remains a wound in the European construction, because it is the moment in which the Union has changed its nature: from a set of freely associated countries it has become an assembly of creditors and debtors. Brussels has assumed an unlimited right of coercion, imposing its rules and points of view in the name of defending the single currency and the integrity of the eurozone.

That precedent has stuck in everyone’s mind. The dynamic of adhesion and support has vanished, perhaps forever. On the occasion of her last trip to Athens, in October 2021, former German Chancellor Angela Merkel, considered in Greece as the main person responsible for managing the Greek crisis, offered a few words of apology. Admitting that this had been “the most difficult moment” of her mandate, Merkel said she was aware “of the limitations and challenges that the Greeks were forced to” during the years of austerity.
tax to the country.

Before Merkel, the International Monetary Fund, a member of the famous troika charged with overseeing the austerity plans imposed on Greece, had published several reports on the subject. The conclusions were clear: the programs, based on wrong and distorted models, were a failure for Greece. Rather than rehabilitating the country, they served above all to save the German and French banks which, after the creation of the euro, in 2000, had written themselves out in the country. The reports even read that the IMF should never have participated in that maneuver, with the exhortation not to
never repeat that mistake again.

The European Central Bank (ECB), another member of the troika, never commented on that experience, limiting itself to letting it be known that it would not act
again in the same way. As for the European Commission, it did not draw any lessons from the affair, not even regarding the opaque and undemocratic functioning of the Eurogroup, strongly denounced by the former
Greek finance minister Yanis Varoufakis. For the Commission, Greece is an old story.

A very high price
All this because no one is going to claim a disastrous toll. The GDP of Greece, which in 2008 amounted to 355.9 billion dollars, in 2021 was reduced to 216.2 billion, with a collapse of 39 percent. A trajectory never seen in a country belonging to a developed economic zone. The public debt, instead of reducing, has increased: in 2012 it represented 110 per cent of GDP, while today it exceeds 200 per cent. Yet what once was a problem for Europe no longer seems worrying today, as the state generates enough budget surplus to repay creditors.

This process had a huge price: the complete destruction of the Greek welfare state. Public services, starting with hospitals, schools and universities, have been dismantled. The right to work has been canceled, like all social protections. A sequence of over fifteen pension reforms has
led to a cut of more than 30 percent in the pensions of the Greeks. Everything that could be privatized has been privatized, regardless of the consequences. With guilty delay, today the European Commission regrets having underestimated the Chinese expansion strategy and allowing Cosco shipping to take control of the port of Piraeus.

In the meantime, fiscal reforms are still awaited: in Greece the large estates, from those of the shipowners to those of the Orthodox Church (owner of an infinite number of lands), remain among the main tax evaders. Yet this issue does not seem to be part of the European priorities. Of course, unemployment has fallen – in 2016 it had reached 27 per cent, while today it does not exceed 12.5 per cent – but at the price of a precarious employment and above all of a massive exodus of the population. Demoralized and with no future, five hundred thousand young people, mostly highly skilled, have fled the country over the past decade. Greece is now the eurozone country with the highest percentage of people over 65 (22 per cent).

According to the proposed models, Athens should have regained growth and recovered ground starting from 2019, but the crash of the world economy caused by the covid-19 has upset the forecasts. In the absence of tourism revenues, the Greek economy collapsed again. At the end of 2012, the IMF envisaged a
growth of around 6 percent, while the European Commission forecasts 3-4 percent for 2022-2023.

The war in Ukraine, with the consequent surge in energy prices, has again upset plans. In June, inflation reached 12.1 percent, the highest level since November 1993. Gasoline, electricity, housing, transport, food. Greek families are no longer able to survive because wages are too low. Daily life becomes more and more difficult. Holidays are now an inaccessible luxury. Earlier this year, the government approved a $ 6.5 billion aid program which proved insufficient. At the beginning of May, Athens introduced an increase in the minimum wage of € 50, bringing it to € 713 gross per month. But the accounts still don’t add up, the unions explain, asking for the minimum wage to reach at least 825 euros per month. Even at that level, among other things, it would remain lower than the levels of 2008.

According to several economists, Greece is stuck in a poverty trap, with under-skilled, precarious and poorly paid jobs. The debt crisis has further amplified this trend. Encouraged by Commission experts, the governments that have alternated in the country have done everything to accelerate the development of tourism, the simplest and fastest source of income. The sector is more than ever the main driver of the economy. With the arrival of Europeans and Americans in the summer, the government expects a record year, with collections well above 13 billion euros last year. But this money is not reinvested in the rest of the economy.

The banking crisis
Already weakly industrialized before the debt crisis, Greece has fallen further behind. The investment rate is one of the lowest in Europe and unlike all other eurozone countries it has remained unchanged over the course of the last decade. Outlets, demand and credit are lacking in Greece.

The banking system is still burdened by non-payments and unpaid credits. The problem is basically the same as it was ten years ago: the volume of toxic credits has not decreased and is around 30 percent. Most of the small and medium-sized enterprises that make up the country’s economic fabric are considered to be in bankruptcy or semi-bankruptcy.

The European plans and the investments of the ECB should have contributed to the recovery of Greek banks, but in fact the Central Bank was content to cut them out of the European banking and financial system to avoid a contagion of the crisis, abandoning them to their fate. The inability of Greek banks to guarantee the financing of the economy risks having dire consequences for the country’s development, especially as the government could not support them even if it wanted to (which is far from established).

Although Athens officially finances itself on the markets, in reality its fate is linked to the ECB’s bond purchase program, which ensures indirect state financing. But this does not prevent Greece from presenting the highest interest rate in the eurozone, over 3 per cent.

As part of the relaunch and support programs launched at the time of the health crisis, Greece has become one of the largest beneficiaries of European money. Athens will receive 17.8 billion in guarantee funds and 12 billion in loans. Furthermore, the country is one of the main destinations for climate projects and those for the development of the digital economy. With great publicity and high-sounding statements, in mid-2021 the Greek Prime Minister announced the launch of the “Greece 2.0” program. Thanks to European funds, the country would have had to change its model and decisively enter the economy of the future.

Since then, the war in Ukraine, inflation and social tensions seem to have prompted the government to downsize its ambitions. Athens no longer talks about changing the model, but on the contrary seems to try to re-propose the same practices of the past: the methods of distribution of aid and financing guaranteed by Europe only favor large companies (even foreign ones) which represent only a small part of the ‘economy. All small and medium-sized enterprises seem excluded from the mechanism. Faced with these developments, the European Commission, in charge of monitoring the proper conduct of its
programs, did not react. But this now seems a habit when it comes to Greece, regardless of the context.

Brussels has nothing to say about the reception conditions and the treatment reserved for refugees who land on the Greek coast, and does not seem to care in the least about the espionage carried out by the internal security services on opposition MPs and MEPs. The same silence covers all the measures taken by a very right-wing government that attacks the freedom of universities, freedom of expression and freedom of information.

Greece is now at the bottom of the group of democratic countries when it comes to freedom of the press. This democratic crisis that accompanied the trauma of austerity seems to leave Europe indifferent. Officially Greece is still part of the eurozone and the integrity of the Union and its currency has been saved. But apart from the currency, it is as if Athens had left the EU.

(Translation by Andrea Sparacino)