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Did austerity cause a humanitarian crisis in Greece?

Will the Greek presidency of EU mark a new narrative for Europe and Greece?

Last updated: 07 Jan 2014 12:16
Matthaios Tsimitakis

Matthaios Tsimitakis is a journalist based in Athens.
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Only1.6 percent of the bailout money is entering the real Greek economy [EPA]

Interviewed by Euronews a few days ago, Greek Deputy Prime Minister Evangelos Venizelos, stressed that a new narrative for Europe is necessary, if the youth across the continent are to embrace its ideal once again and not interpret it as equal to austerity, unemployment, shrinking incomes, poverty and vanishing prospects. Assuming the EU's presidency on January 8, in Athens and all the way to the next European elections in May, the Greek government is planning to serve this cause, he said.

A new European narrative should be articulated along the lines of culture, history, democracy, the famous European welfare state, as well as growth and innovation, Venizelos suggested. Surprisingly, he believes that Greece could become a source of inspiration as tragedy is turning to success.

Venizelos was referring to the projection of a primary surplus of 6 percent in Greece this year, which is the greatest fiscal adjustment a modern Western economy has ever succeeded in making in a five-year period. Greece entered the crisis with a deficit of 12 percent in 2009.

No one within the democratic array of political forces in the continent could disagree with such a declaration of principles, especially when Eurosceptic and far right wing forces are on the rise across the continent. However, the validity of the statement, coming from the people who created the problem in the first place, is at least questionable. If Greece were to use the presidency as a chance to articulate such a narrative, it should resist the imposed austerity.

In ancient Greek tragedy, the protagonist pays with personal destruction, a "tragic flaw" caused by wrong judgement, a failure of morals, or a failure of character. In the case of the Greek government a false analysis of causes and consequences is not only present, but indeed it is tragic too.

Sad leitmotiv

To use a German literary term, the leitmotiv of the humanitarian crisis caused by austerity is constantly present in the government's "success story" narrative and may drive the plot to a different direction.

Contrasting the achievement of the primary surplus, the latest and most thoroughly documented proof that austerity is fuelling the worst social crisis a nation has survived in times of peace, came a few weeks ago from main Greek opposition party, SYRIZA. SYRIZA leader Alexis Tsipras met with European Commissioner for Economic and Monetary Affairs Olli Rehn to give him a report titled: "The Greek rescue plan: A humanitarian crisis [Gr]."

Greece hopeful over EU presidency

What is striking about this paper is that it correlates financial figures to social woes, in an unflinching manner. Citing reports by the Greek ministry of finance, it shows that 98 percent of the bailout funds are directed back to Greece's lenders, rescuing French and German banks, while only a tiny 1.6 percent of the European Stability Mechanism's (ESM) money is entering the real Greek economy.

While workers and pensioners are being overtaxed, which has resulted in a significant reduction in consumption, and despite the severe cuts these people have suffered, driving almost half of the population to poverty, Troika - the IMF/EU bailout programme, and the government have done very little to tackle the real problem of tax evasion.

According to SYRIZA, government authorities found that 6,575 offshore companies owed millions of euros in taxes, but so far, only 34 - 0.5 percent - have been called by the authorities to settle their accounts. The 34 companies alone owed more than 40m euros ($5.4m) in taxes.

About a year ago, the infamous "Lagarde list" of 2,000 possible tax evaders, businessmen and politicians alike, who took large amounts of capital out of the country, was leaked, leading to the prosecution of ex Finance Minister George Papakonstantinou for not going after these cases. Again, almost nothing happened since then and no authority ever mobilised to hold these people accountable. Unsurprisingly, Venizelos who succeeded Papakonstantinou in the finance ministry has been accused by his predecessor and SYRIZA for hiding the list too. Tens, if not hundreds of millions in taxes, have been avoided due to the apparent unwillingness of the governors to go after those tax evaders.

In contrast, in 2012, almost one million people lived below the poverty line, according to the finance ministry. Among them, more than 65,000 had to survive with less than 3 euros ($4) per day, while 102,000 people earned an income that ranged between 1,000 ($1,358) and 2,000 ($2,716) euros per year.

According to the Greek statistical agency, cited in SYRIZA's paper, by the end of 2012, austerity shrunk the labour market by 20.8 percent (870,000 jobs were lost since 2009) and it took more than 40 percent of the labour force out of the national insurance system. Outrageously, the IMF, in a working paper issued a few months ago, seems to endorse black labour practices, by claiming that paying fines for uninsured labour is more competitive than actually respecting labour laws. 

Invisible crisis

A humanitarian crisis is not always visible in everyday life; however, there is a fact that puzzles even its deniers. Pollution caused by braziers and stoves people use to heat their houses - since they cannot afford oil prices anymore - has created a new toxic cloud over Greek cities. CO levels are going far above alarming levels on cold days, forcing the government to introduce emergency state measures, like the closure of schools and even a curfew at night, in order to control the problem.

Samaras compared the high numbers of the unemployed in Greece to illegal migrants, arguing that the combination of both can create an explosive mixture.

But the tragedy of the Greek government's wrong judgement does not only lay in its denial to recognise the catastrophe of austerity, or its desperate effort to present it as a "success story", it also reflects in its denial to understand the dynamics in the broader continent.

PM Samaras hopes that he will get the EU to further cut Greece's debt to sustainable levels by April, when the Troika will evaluate the implementation of the Greek budget. It is highly unlikely that they will agree to such a drastic demand though, as this could reflect on the behaviour of their electorate in their countries. According to the European Commission, no cut can be done this year, and Greece is not expected to start borrowing again before 2015, despite what the government is publicly saying.

In all countries with bailout agreements, democracy is shrinking and unemployment is soaring, states a report by a European parliament committee, formed to examine the Troika's responsibilities in this crisis. One of its preliminary results shows that false projections by the IMF have played a major role in the unfolding of the humanitarian crisis.
Additionally, according to the Organisation for Economic Cooperation and Development (OECD), crisis-hit countries are driving the race to income inequality at the moment. The OECD claims that the financial crisis, "not only weighted heavily on incomes from work and capital but also made their distribution more unequal".

Austerity or not?

So, is austerity really a recipe for the salvation of troubled peripheral European economies, or is it a political project aiming to change the balance across classes and societies? Greek PM Antonis Samaras knows that he cannot do much about the big discussions like the banking union, or the negotiations on the free trade transatlantic agreement, but he gave a glimpse of the issues he will put focus on while trying to fix social problems, in an interview he gave to the Austrian newspaper Kurier [Gr].

Samaras compared the high numbers of the unemployed in Greece to illegal migrants, arguing that the combination of both can create an explosive mixture. It is the xenophobic rhetoric already tested in Greece that should alarm everyone in Europe. Not only did it not reduce unemployment, but it also led to an unprecedented violation of human rights and opened a way into the parliament for neo-Nazi Golden Dawn.

The Greek paradigm is not inspiring European values but rather disgraces them and puts shame on  Europe. The Greek presidency can only buy political time for those in power in Greece.

So, political time for austerity is what is at stake here, but then again, opinion polls suggest that even that could be too much to ask for.

Matthaios Tsimitakis is a journalist based in Athens.

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The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera's editorial policy.

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