Crash of the titans

It is astonishing – and illuminating – to see how quickly Greece’s fortunes have changed, how political inertia and cowardice drove the country to a dead end and how badly its image has been tarnished internationally. Only six years ago, in 2004, everything seemed to be going smoothly, with Greece a proud member of the eurozone, winner of the European Championship in soccer, host of the glorious Athens Olympics and proud midwife of Cyprus’s EU accession. Greeks were enjoying a building and credit boom, thanks to the unprecedented low interest rates that resulted from the powerful new single currency, the euro, and through the continued largess of the state’s spending. Greece was also the only country in the region that was both a member of the EU and NATO. As a member of those international organizations (and as a member of the eurozone) it enjoyed a standard of living far superior to those of all its neighbors. Today Greece is in a struggle for survival, and all of its people are caught up in this battle, as participants and as collateral damage. Unlike previous great struggles – such as those against foreign invaders or homegrown despots – here there is no specific enemy, no target to unite the people in resistance. Here the «invader» comes in the form of successive governments that pandered to special interests, allowing citizens to slide deep into personal and national debt as their country became addicted to borrowed money; the «occupying force» comprises large segments of the population itself, who will try to delay accepting the changes that we have to make to become more productive. This will be the most difficult battle of all – transformation rather than liberation. The omens so far are ambiguous. On the one hand, over 70 percent of the population believes that the government is right to move toward harsh austerity measures in order to win the support of our EU partners and force down the premium on our borrowing, yet each group that faces direct consequences of these cuts can be expected to put up a fight. We are already seeing strikes by taxi drivers who are opposed to plans that will change the way they are taxed, customs officials who don’t want their pay supplements reduced by taxes, public servants who reject a pay freeze and so on. At the same time, the Greeks can count on absolutely no good will from abroad. Our fiscal recklessness has been highlighted at a time of great uncertainty in the world, raising hackles among anyone who fears that he or she personally might have to pay the cost for bailing out Greece. This feeling is particularly evident in Germany, as the letter to Greeks by Stern magazine writer Walter Wullenweber (Page 12) makes abundantly clear. It is not only that our EU partners are angry about our lying to them (and to ourselves) about the state of our finances, nor is it only that they will have to help us politically or economically (or both), but there is also the rather damning fact that in many aspects the Greeks enjoy a more privileged life than their German partners in the EU. Through all this borrowing, Greek salaries and pensions rose far above (about 30 percent) Greek productivity. This means that even if salaries in many cases (though not all) were still lower than the German equivalent, pensions were higher, and usually paid at an earlier age. So there is no longer a feeling of the richer EU countries helping their poorer partners – Greece’s mess comes across as exploitation of the underprivileged by the pampered. All of these factors illustrate how difficult Greece’s coming battles are. Facing hostility on both the domestic and international front, the country’s politicians will have to put their traditional squabbling behind them and unite to save the country. Because where we thought that we were titans, who had the power to do whatever we wanted with borrowed funds, reality has brought us crashing down. It is no coincidence that Finance Minister Giorgos Papaconstantinou raised the alarm last week. «We’re trying to change the course of the Titanic. It cannot be done in a day,» he said.

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