The country will exit from its final international bailout within weeks but, with no sign the debt will ever be paid off, some fear another crisis
Greece’s oldest literary society, the Parnassos cultural club, stands opposite a church on one of Athens’s oldest squares. Its neoclassical facade and monumental columns were designed to impress. The society, named after the home of the Muses, had a single objective: to promote the nation’s “intellectual, moral and social improvement” as Greeks, newly freed from the shackles of Ottoman rule, sought to pursue the course of other European states.
It was here that poets and writers came, that Maria Callas first sang, that every artist of every hue first exhibited, and royals and prime ministers flocked. It is also why Parnassos’s fortunes have reflected those of Greece.
“These crisis years have been difficult years,” says Leonidas Georgopoulos, the sprightly septuagenarian who sits on the society’s board of directors. “You could say it has been an era of decadence. But decadence is always followed by renaissance and that is what we are hoping for now.”
Greece is approaching the end of an odyssey. After eight drama-filled years, it is now barely six weeks until the debt-burdened country exits its third and final international bailout programme. Renaissance, rebirth, recovery are mots du jour as the historic date nears. And relief is etched on the faces of officials in Brussels.
“Greece is about to stand on its own two feet again,” the European Union’s economic chief, Pierre Moscovici, enthused last week. Freed from the shackles of international supervision, it could regain its place as a “normal country in the eurozone”.
After looking over the abyss, coming perilously close to crashing out of the euro, seeing their national income slashed by austerity-driven recession, their unemployment rate skyrocket, their brightest and best leave, Greeks had come through the worst. The ordeal by bankruptcy was over. The EU had stood by its partner – whose links with ancient Greece played an indisputable role in Athens’s admission in 1981 as a member of what was the European Economic Community – and economic Armageddon had been averted.
But was Moscovici right?
In the Greek parliament’s members’ common room, the MP Harry Theocharis ponders the new state of affairs. Denouement has come with a whimper. Under the crystal chandeliers and portrait-heavy walls of the meeting room, there is little sign of jubilation. In the building whose cliffhanger votes punctuated the crisis, is there really nothing to celebrate?
“Of course there is relief but it is not enough for people to get excited,” says the deputy who headed the Greek finance ministry’s public revenue department at the height of the crisis and now sits in the 300-member house as an independent. “Economically speaking we are still sputtering and there is still a lot to be done. Our creditors are not going away. In January another round of cuts worth €1.8bn will be implemented. And we’re talking about fiscal targets in 2060. I’ll be 90 by then.”
But Theocharis shares the conviction of Alexis Tsipras, Greece’s leftwing prime minister, that the country will win back a degree of political and financial independence. Psychologically that is not insignificant three years before Greece marks the 200th anniversary of the start of the war of independence from the Ottoman empire.
“We can approach it knowing we will have regained a sense of control over our destiny,” he smiles. “Frankly, it’s amazing that with a 25% loss of GDP we didn’t lose democracy as well. Perhaps it’s our symbolic attachment, being the birthplace of democracy and all that, but every day I marvel that we managed to keep our faith in it.”
In global financial history no country has received as much money as Greece. Since May 2010, when it became clear that three decades of economic mismanagement had brought the state to its knees – creating a deficit quadruple the size of that allowed by Brussels – the EU and International Monetary Fund have sought to avert bankruptcy by committing more than €300bn in loans to Athens. The country has taken stock of €260bn, although most of that money has instantly gone back to creditors in the form of debt repayments.
Rescue has come at a price. The conditions attached to such aid have been tough, unpopular and, at times, punitively aggressive. Pay and pension cuts, tax rises and structural reforms, many deeply disliked if long overdue, have been at the root of creditors’ relentless demands. But the fiscal straitjacket has also stifled economic growth. From 120% of GDP at the start of the crisis, the ratio of debt-to-economic output now hovers around 180%, by far the highest in the EU.
“The country was bankrupt in 2010, but the creditors pretended it was a cashflow problem, when really Greece needed a restructuring of its debt early on,” says Professor Loukas Tsoukalis, who presides over the Hellenic Foundation for European and Foreign Policy, Eliamep. “Internationally that wasn’t feasible because everyone was so afraid of the consequences it would have for French and German banks.”
In his seventh-floor office, the airconditioners whirring, he momentarily pauses. “You don’t have to be a revolutionary to acknowledge that, initially, the economic adjustment programmes made excessive demands. OK, much of Greece’s political class was in a state of denial. But the result was the implosion of the Greek economy.”
Still, the academic who previously advised presidents of the European commission and European council, is like Theocharis, incredulous that democracy has fared as well as it has. “If you had told me that Greece would lose a quarter of its GDP, that unemployment would reach 27%, and that democracy would survive, I would not have believed it.”
Thugs may have appeared in the form of the far-right Golden Dawn, polarisation may have worsened and discourse coarsened, but institutions remained intact. “Given what has happened, that is remarkable. The bad news is that the price we have paid is huge. Socially, Greece is an injured society, it is traumatised and it is humiliated.”
Parnassos, in some ways, stands as the perfect metaphor for society’s full-frontal collapse. On the surface it still has a patina of acceptability – the decor that most have come to expect of Greece. For the EU, dealing increasingly with the twin ills of nationalism and populism and keen to put Greek drama behind it, that is more valuable than words.
But radical downsizing has also had a corrosive effect. On its shoestring budget, the club’s staff has been cut to two guards, two concierges, two cleaners and two accountants. Every month the society struggles to pay its bills, mostly because of the onerous task of having to keep up with taxes. Lack of funds has meant the club’s 75,000-strong collection of books – one of the finest in Greece – has begun to suffer. In the building’s basement, tomes spill from bulging wooden shelves, their spindly 18th- and 19th-century spines destroyed by the dust, damp and debris from ceilings that have partially collapsed.
At 78, Georgopoulos belongs to a generation brought up on loss, starting with the Asia Minor catastrophe that followed Greece’s disastrous military campaign against the Ottoman Turks. The rout in 1922 led to the loss of territory formerly ceded to Greece and a major exchange of ethnic Greek and Turkish populations.
In his own life, he has witnessed brutal German occupation, the bloody civil war that came on its heels, and seven years of military dictatorship before the return to democracy in 1974. The latest crisis comes high on his list of national defeats, but despite it all, he remains irrepressibly optimistic. “God must love this country,” he says whimsically. “We have suffered so many defeats, lost so many wars. Most nations would have disappeared.”
Georgopoulos need not have exerted his efforts on saving Parnassos. As co-founder of the largest law firm in Athens, he could be enjoying carefree retirement. But he belongs to the great band of Greeks who have rallied during the crisis and proved that the good give. The vast network which has emerged, in an outpouring of solidarity both for fellow Greeks and refugees arriving in rickety boats from Turkey, have been the glue that has helped keep society together.
Levels of extreme poverty shot up from 8.9% in 2011 to 15% in 2015, according to the Athens-based thinktank Dianeosis. One in 40 of those affected are pensioners, long thought to be worst hit by cuts. But the thinktank has also calculated that one in four are young Greeks, aged 18 to 29 – people who are among the million who have lost jobs, or from the start have never been able to find one.
Many believe it will take a decade, at least, before the nation claws back lost income and returns to pre-crisis living standards. Worsening demographics have not helped: after Bulgaria, Greece has the lowest fertility rate in the EU, with the population dwindling by almost 3% as a result of emigration and fewer births during the crisis.
“So many have learned to be poor, so many have been excluded from hope,” says the leading sociologist Konstantinos Tsoukalas, adding that with no lexicon to describe progress reversed, progress as a concept may equally be denuded of meaning. “Yes, we have survived as part of the EU but God knows what this survival will amount to. If Greece had left the European system, and it was touch and go, I doubt with its limited productive capacity and the existential crisis and violence that would have erupted, it could even have stabilised the situation.”
Stabilisation has resulted in a fall of around 20% in unemployment. Hope also appears to be on the rise. In the middle of a record tourist season, the Hellenic Entrepreneurs Association announced last week that research showed optimism had grown by 20%.
“I suggest that we make this new optimism the driver of growth. That we turn it into creativity and productivity,” said Vassilis Apostolopoulos, the association’s president, as he opened its annual forum.
But while Greece was approaching the end of an era, the businessman also cautioned that the economy remained weak. Without dynamic growth that is inclusive, private-led, outward-looking and risk-taking, recovery could be elusive. “We have to realise that this is the beginning of a critical new era,” he said, insisting that the conclusion of the country’s third rescue programme would amount only to the “symbolic closure” of the cycle of bailouts to which Athens had been subjected.
As of 21 August, Greece would have to “continue the necessary corrective reforms to unlock the economy’s productivity, strengthen its competitiveness and reinvigorate entrepreneurship”.
Nobody believes the country can successfully pay back its debt. A deal, unveiled last month, giving Athens the ability to extend payments on its accumulated €320bn debt pile by a decade, has provided much-needed breathing space to modernise the economy but is widely seen as inadequate if Greece is to avoid further crisis down the line.
Tsipras, once fervently anti-austerity but now an economic pragmatist to a degree that has surprised many, appears willing to stay the course – even if polls show his Syriza party lagging far behind the main opposition, centre-right New Democracy.
“But,” says Stergios Pitsiorlas, the deputy finance minister, adjusting his spectacles, “it will require a big change of mentality here, one that accepts we can no longer live beyond our means – that surpluses, not deficits, are the way forward.”
In this post-Trumpian world of political strongmen and global unpredictability, Tsoukalas now fears for Europe more than Greece. The professor belongs to the tradition of leftwing intellectuals who fervently believe in the innate strength of Europe being united.
“If Europe doesn’t explode, Greece will be able to survive, and that will be a good thing because if we weren’t in Europe, this country would be much more like the Middle East in terms of fanaticism, violence and poverty,” he says. “But I fear the precariousness. If these tendencies grow, if Europe’s cohesion goes on being challenged, Grexit will be back on the table.”
Stories from a decade of austerity
Ioanna Iliadi, 62, president of the Athens Hospice for Neuro-disability
“Nobody believed the crisis would last so long. At the hospice we look after society’s most vulnerable, the weakest of the weak, those with incurable illnesses and nobody to care for them. But we’ve been hit sideways. From 2012, when I took over, we’ve been forced to reduce the patient intake, cut staff and shut down one of our hospital wings at a time when waiting lists are only growing.
“As a private philanthropic foundation we survive on donations, particularly properties left to us by relatives of our patients. The taxes we’ve had to pay since the [bailout] programmes began have been prohibitive. Meanwhile, our rents have dropped by more than half because nobody can afford them, and our donations from private individuals are down by 66%.
“This is the reality of Greece under international memorandum. Every day is a struggle, with most spent running after food and medical supplies.”
Dionysis Ammolochitis, 41, president and chief executive, Manifest Facility Management
“The crisis is something that happened to Greece – it didn’t happen to me. I set up Manifest in 2003 after working as a salesman in another company but it’s only in recent years that our turnover has soared. When others were on their knees, getting scared and pulling out, we moved in and filled the gap.
“In 2009, at the start of the crisis, we had fewer than 50 companies on our books. Now we have 150, mostly multinationals, like Coca-Cola, and 600 employees. We’ve got private equity funding. To get it we had to undergo intense due diligence.
“My motto has always been ‘think big’, go on, look straight ahead, just like a German. I’ve had a lot of business coaching and I’ve always been a bit daring. But the secret has also been positive thinking. Whenever the news was bleak I’d tell the team, ‘There is no crisis, don’t turn on your TVs, don’t worry. I built this and, if need be, I’ll do it again.’”
lina Zeppou, 30, part-time dance instructor
“For a third of my life, Greece has been in crisis. I should have got used to it but my parents died early and I’ve had no economic support. Before it began, I had my own car and rented a flat and was waitressing six nights a week.
“Suddenly, in 2010, that stopped because everyone panicked and my shifts were cut. I had to leave my flat. With nothing to lose, I moved to London. I took up dance again but it was the year that the UK tripled tuition fees, so I couldn’t afford to stay. I decided to return to Greece and enrol on a course here but it cost €350 a month, which meant doing bar work at night and getting up at 8am to attend class. I still do both but now I teach part time as well.
“I wonder how long I’ll be able to keep up at this pace. If, say, I have to go to the dentist or something crops up, I’m immediately over-budget.
“Once, on the metro, I was caught without a ticket and had to say, ‘Look, I’ve literally got €2 in my pocket.’”
by Helena Smith – theguardian.com