statism watch

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Matthew Campbell, The Sunday Times
May 2, 2010

Anger is intensifying over cuts to be made as part of the EU deal to save the economy

MAY DAY protests in Greece turned violent yesterday as youths in gas masks and hoods set fire to vehicles, smashed shop fronts and threw molotov cocktails and rocks at police in an explosion of fury over austerity measures they claim will hurt only the poor.

Tourists were cut off from their hotels as thousands of communists, civil servants and private-sector workers converged on a main square in Athens to vent their rage at the European Union and the International Monetary Fund (IMF).

“No to the IMF’s junta,” they chanted as a youth in a black hood produced a hammer to try to smash windows of the luxury Grande Bretagne hotel.

Another painted anti-capitalist slogans on the facade, and demonstrators intervened to prevent him from spraying an Australian woman with paint as she tried to get back into the hotel. Japanese tourists stood taking photographs of the mayhem with mobile phones before being forced to retreat, coughing and sneezing, under a cloud of tear gas.

The violence came as negotiations were concluding between the socialist government of George Papandreou, the IMF and the EU over a multi-billion-euro rescue package for Greece.

Anger has grown against the EU for insisting on tough austerity measures in return for a bailout worth an estimated €45 billion (£39 billion) this year alone, and up to €120 billion (£104 billion) over three years.

Some young Greeks prefer to blame their elders for the mountain of debt that has resulted in Greece, like a wayward child, being placed under the tutelage of the men from the IMF.

“I cannot help but blame my parents a little for what’s happened,” said Achilles Zacharoulis, a 36-year-old cardiologist. “They were here all that time,” he added, referring to the past three decades of mismanagement and fiscal insanity. “But what did they do to stop it?”

Vaggelis Gettos, 24, is just as alarmed at the burden being heaped on the young by austerity measures expected to be announced today, and has pledged to resist them in more protests this week against what he sees as a plot to impoverish Greece.

“We will live much worse than our parents,” he said. “Why should we be made to pay for their mistakes?”

The question of who was to blame and who should pay for the greatest crisis to afflict the single currency was a subject of heated debate, particularly after a leading credit rating agency put the cradle of civilisation in the same category as Azerbaijan by reducing its government bonds to “junk” status.

Economists regard the bloated civil service with its jobs for life and generous pensions as a cancer consuming the country’s resources. The older generation, the experts grimly concur, turned the state into a giant cash machine to be plundered at will.

Today the party is over, however, and that makes some experts optimistic: Greece now has no choice but to implement much-needed reforms that will bring swift results. “It’s like a dentist putting a child in braces,” said one observer. “It’s not nice, but necessary for growth in the right direction.”

Even before it was announced, the rescue package had provoked angry outbursts. On Thursday, Gettos and friends tried to break through a police cordon outside the finance ministry only to be forced back by tear gas.

They were in the thick of things again yesterday when police used tear gas to prevent protesters from marching on the American embassy.

Even greater social unrest is expected as resentment simmers among poorer families at being told to tighten their belts when wealthy Greeks can protect their fortunes by moving their money abroad, some of it into property bargains in London.

“It’s always the poor people who pay,” complained Katerina Ioannou, 20, in the cafeteria of the Athens University law faculty, a hotbed of student activism. “If I get a job as a trainee lawyer I’ll only earn €300 [£260] a month,” said Thanos Petrou, 21. “How can anyone survive on that?”

Some are already referring to a “lost generation” who will never find jobs or security, but the students, proud of their university’s reputation for being at the forefront of the uprising against the military dictatorship in 1973, are not the only ones planning resistance.

Mikis Theodorakis, the 84-year-old musician who composed the score for the film Zorba the Greek, calls for revolt against what he sees as an American plot to turn Greece into a “protectorate”. Bureaucrats will raise their fists at the barricades in a general strike and protests on Wednesday to protect their considerable perks from the IMF.

They and other public sector workers are virtually unsackable, can retire as early as 45 and get bonuses for using a computer, speaking a foreign language and arriving at work on time.

Some of them get as many as four extra months’ salary a year, compared with the 14 months that are paid to other Greek workers. One of the most generous bonuses is paid to unmarried daughters of dead employees in state-controlled banks: they can inherit their parents’ pensions.

Stefanos, 49, seems to embody the Greek good life. He retired as an army captain last year on a full pension and says he is quite happy planting his garden. He worries, though, about how to protect his savings from the crisis. “What about banks in Germany?” he asked friends around a dinner table in Athens.

“There’s an awful lot of fat to cut from the system,” says Yannis Stournaras, a former government financial adviser, in what sounded like understatement. He is considered one of the architects of Greece’s entry into the euro zone in 2001 but dismisses as “utter nonsense” allegations that Greece fudged its figures in order to be admitted.

Today the country’s budget deficit is 13.6% of GDP and the overall debt stands at €300 billion (£260 billion). Unemployment among 16- to 24-year-olds has risen to 30%, according to government figures. Crime, too, is increasing in Athens.

“I feel like a prisoner here,” says Ilias Iliopoulos, head of the powerful civil servants’ union, gesturing to new bars on his windows after two recent burglaries of his office.

“People are stealing so they can live, so they can eat,” he said. “And it will only get worse. These [IMF] measures will drag hundreds of thousands of Greek citizens into a life of poverty.”

Resentment among Greeks at being singled out as lazy and corrupt has hardened into outrage at Germany, whose leaders complain that the Mediterranean country should never have been allowed into Europe. Greeks were particularly hurt by German suggestions that they sell their islands to pay off the debt.

Yannis Criticos, who works for an international ferry operator, said that one of his secretaries had written an angry letter to a German tour operator client to complain about “bloody Germans” being jealous of Greece’s sun-drenched Mediterranean lifestyle.

“He was very upset about it,” said Criticos, who was attending the launch of a tourism fair in Athens last week. “It took a while for him to calm down.”

Vitriol is also being heaped on Angela Merkel, the German chancellor, by Giorgos Trangas, a popular radio talk show host.

“She looks like an apple strudel that’s been squashed by a Wehrmacht lorry,” he said on his programme.

In an evocation of Greece’s wartime suffering, Trangas has taken to introducing the show with a rendition of Deutschland Uber Alles and the sound of goose-stepping soldiers. This is to highlight what he describes as “another German occupation”.

As if in the path of an advancing army, Greeks are hiding their money. In the end, Stefanos, the retired captain, opted like his friends for a safety deposit box. The super rich, for their part, have shifted an estimated €11 billion to Cyprus and other havens since the start of the year, according to Konstantinos Michalos, president of the Athens chamber of commerce.

“I try to be optimistic,” he sighed. But things had got to “a tragic level”.

There was hope, he believed, if the government lifted numerous restrictions on business. It costs more to transport a sack of potatoes from northern Greece to Athens than from Athens to Dusseldorf, because haulage, like many other sectors of the Greek economy, is an impenetrable cartel.

When Michalos started a commodities trading business in London in the 1980s, the paperwork took him 48 hours, he said. In Greece’s “Soviet-style” economy he had to go through 117 bureaucratic procedures to get the right government permits. A wealthy friend of his had taken 10 years to win permission to put up a hotel.

“It would have taken him another 10 years or a large payment under the table if he wasn’t a friend of very important politicians,” said Michalos. Stournaras, an Oxford-educated economist, who believes that lifting these restrictions and trimming fat from the public sector will have an extraordinary effect on the Greek economy.

“I’m sorry because poor people will suffer, but this could get us back on our feet within three to five years,” he predicted.

Others believe the country is in for a much longer haul.

Zacharoulis, the cardiologist, is far from being alone in thinking that it may be time to leave in search of a more secure future, perhaps in America or Britain. Gettos, the radical, would also like to get out.

“I’ve always wanted to see the world,” he said. “But you need money for that and I don’t have any.”

That is likely to become a Greek chorus.

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