Greeks suffer the wounds of austerity cuts
Updated: 2011-11-28 07:22
By Fu Jing (China Daily)
A cleaning lady works on Mount Lycabettus,overlooking Athens. [Photos by Fu Jing / China Daily]
Greece has long been accustomed to spending beyond its means. Officials have admitted the government has cooked the books in the past, producing false fiscal statistics, and has turned a blind eye to tax evasion.
As a result, the country has now accumulated a debt load of 360 billion euros - five times the size of Argentina's default in 2001.
And even if the austerity measures are fully implemented and half of the debt held by private banks is written off, Greek debt will still be 120 percent of its gross domestic product by 2020. The benchmark set by the EU is 60 percent of GDP.
Every recipe for the crisis has put the government in a difficult position. If Greece stays in the eurozone, its leaders must submit a written guarantee to the EU to pursue its austerity drive to meet its fiscal targets and reduce the budget deficit to avoid bankruptcy. And it must continuously take an axe to the public sector, chipping away at its 800,000 jobs.
However, these austerity measures will deepen the recession, result in less job creation and further worsen social unrest. There is no fiscal maneuver available to boost the economy.
This is why Greeks are debating whether Greece should retain EU membership. "It is a big issue and it is still uncertain," said Nikis Koutsiaras, a lecturer in EU economic and social policy at the University of Athens.
Because of the worsening economic prospects and the social cost of the crisis, Koutsiaras is afraid the political situation may worsen. "I am not sure if the technocratic government, which has been appointed for an interim of three months, will survive for that time," he said. "There is a high risk it will fall before the three months, and this depends on whether or not Greece will remain in the eurozone."
Koutsiaras said the crisis has made most Greeks both fearful and ignorant. "They are not panicking about the issue. If anything they are apathetic."
He said it is impossible to predict what will happen, as there are many technical aspects and people tend to display signs of apathy. Socially and economically, people are exhausted. "In turn I think this may lead to social upheaval," Koutsiaras said.
Not all Greeks are pessimistic. Christos Vlachos, director of the Greece-China Business Council, based in Athens, said the country still has many historic, economic, cultural, social and geographical assets.
Vlachos, who is in China for business talks, said the country urgently needs political unity and for the leaders to show decisive courage and determination to lead the people out of the woods.
"Greeks need to be inspired with the leaders' short-term measures and long-term vision," he said. "For example, can Greece think about asking for China's investment to build a high-speed railway to link Athens and Thessalonica? It is unthinkable what kind of miracle this 500-kilometer project can bring for Greece, whose population is less than 11 million, just half of Beijing's.
"We have been waiting a long time for inspiring decisions from our leaders," Vlachos said. "They should think beyond austerity and we should not be let down again and again."
Eveline Filon contributed to this report.