Debt noose tightens
Up until the mid-1990s, Greece’s two mainstream parties treated the mammoth size of the public debt as a threat not only to fiscal stability but even to the country’s very future. Gradually after 1996, in a trend that peaked with the country’s membership of the Continent’s common currency area, the eurozone, the government of Costas Simitis succeeded in selling to society the mantra of a «powerful Greece» that rode on the back of a thriving economy. PASOK’s political skullduggery was aimed at projecting a facsimile of reality that would translate into more votes for the Socialist party. The repercussions of all this were devastating. The PASOK rhetoric washed over legitimate concerns, loosened self-restraint and pushed Greek society into an unchecked level of consumerism. The deficit revision conducted by the conservative New Democracy government and the reports by the European Commission were sobering for the average citizen. According to official data, about a quarter of all tax revenue is used for servicing the public debt. Interest rate payments absorb more money than what is laid out in the public investment program, which is used to finance the country’s big infrastructure projects. In fact, it’s more money than the sum of all subsidies to the social security funds. And this is happening at a time when, thanks to low interest rates, the budgetary burden for the payment of interest rates is relatively small. For those who find no comfort in illusions, the numbers are undeniable: Greece is heavily in debt and faces the hefty consequences of unchecked borrowing. To make matters worse, loans were not used to fund development projects but to cover outstanding fiscal needs. In light of current circumstances, there can be no other solution but a policy of gradual debt reduction. No doubt every government wants to retain room for handouts to help them reap political benefits. The national economy, however, has long since lost all room to maneuver. The economy is deep in the red; Prime Minister Costas Karamanlis and National Economy Minister Giorgos Alogoskoufis have to stay the course. PASOK must elevate the common good above partisan self-interest by joining hands with the government. The reason is not merely because this is a major national priority, but also because it is largely to blame for the current woes.