Greece is practically bankrupt since May 2010 when the country could no longer borrow from the international markets, since interest rates were exorbitant. Ever since Greece has been under a bailout programme by the so-called troika, a collective of technocrats coming from the European Commission the European Central Bank and the International Monetary Fund. The bailout programme was officially sealed by the signing of a memorandum by the Greek government and the troika officials. The deal envisaged a 110 billion euro package to be given to Greece in a series of installments. The money given to Greece had two characteristics (i) were accompanied by high interest rates, (ii) had as a prerequisite the implementation of harsh austerity measures to cut the budget deficit to the desired levels. The implications of these policies have been significant in violating human rights and the very principles of democracy. It is important to first have a quick review of the common misconception about the matter, to better comprehend the ways in which fundamental rights and values are being violated, to service a debt burden that is impossible to bear.
The first of misconceptions is that the crisis is purely Greek, caused by the internal malignancies of the Greek economy. Though it is true that the Greek state and economy are ill regulated, it is pure fallacy to argue that the crisis is a symptom of these deficiencies. Such an assumption omits the over-leverage of private banks (wide openings in risky ventures) on a eurozone-wide level, the institutional flaws of the Euro architecture and the fact that any member-state of the euro has practically lost a considerable part of its sovereignty and policy tools over economic matters, since those have been transfered to the European level, through the process of European integration. I have written a series of articles explaining how the crisis in the entire eurozone is "systemic". What we tend to call "Greek", "Irish", "Portuguese" and other crises are nothing more than emanations of the broader crisis that is deeply rooted in the institutional gaps of the euro. The euro was ill designed from the outset. It was like a riverboat never meant to sail in stormy oceans. So when it did, after the collapse of Wall Street in 2008, it started leaking from left, right and center. Ever since the euro edifice has been unraveling and there is nothing to stop it at the moment. Greece was only the first victim in the domino effect. Now a few years later everyone can see how the crisis is spreading to the other eurozone countries. The sheer size of the Greek economy is ancillary to cause such a stressful situation, suggesting that other more profound problems existed from the very beginning and Greece was nothing more than the scapegoat for many political powers in Europe, to avoid their own responsibilities in the whole story.
The second misconception about Greece is that the bailout is in fact an act of "solidarity" and "partnership" among European states; while the money that Greece receives are ostensibly used to pay wages and pensions. In both occasions reality is quite different. The lion's share of the money Greece receives is used to pay back older debts, in other words it is directed to the creditors of Greece, private banks in the Greek interior and other major European banks. Once one understands how the majority of money goes back to creditors, it becomes crystal-clear that the rhetoric about "solidarity" is a bunch of non-sense. The only reason Greece has been receiving support, is to indirectly bail out private banks, who would otherwise collapse, dragging down with them the broader economy. Last but not least, the money coming from the troika's bailout, is added to the public debt, which means that Greek taxpayers will be called to pay for it. The people at the Economic portal "Zerohedge" have done an excellent job to produce the following chart which depicts what I was just arguing for.
The third fallacy, is that the Greek people were not working enough. The accusations against the "lazy" Greeks reached extreme points of using racist stereotypes. The acronym "PIIGS" which stands for Portugal, Ireland, Italy, Greece, Spain, was not chosen coincidentally. It was/is a way of dehumanizing the people in these countries so as to make draconian austerity subconsciously acceptable to the people in the other European countries. The actual facts prove that this narrative is completely groundless since according to official OECD data, the people in Greece are actually working much more than their counterparts in other countries who are not "lazy". Economist Kash Mansori has done an excellent job in using that data to decompose this myth in his article titled "Where Exactly Are Those Lazy Southern Europeans, Anyway?". Regarding working hours he produces the following chart, which shows how Greeks are in fact working much more than the rest. The reason some speak about competitiveness, is because of the capital stock (the amount of infrastructure, technology, etc.) that is concentrated in Greece, which is indeed less than in other more advanced European economies.
The fourth and final misconception is directly related to current events. The belief that a different government can prevent Greece from imploding, when it is crystal-clear that technocrats cannot save any country, due to the structural flaws of the euro. The elected ex-prime minister of the country, George Papandreou has resigned from his position and has been replaced, by ex-banker Loukas Papademos, who leads an "interim" coalition government, composed by socialist PASOK, conservatice ND and far-right LAOS. Let alone the blasphemy that the ideological heirs of the Greek military junta (LAOS) are now in power; the task of this new "interim" government is to sign a new multi-annual memorandum with the troika that will bind the futures of every single individual citizen and all political parties. A greater share of national sovereignty will be transferred to unelected agencies, who will in fact run the country until necessary. In a previous article of mine, titled "Democracy in Greece is sacrificed to service an odious debt" I wrote the following:
....the Greek debt is odious; first because the loans that were taken in the name of the Greek people were not used for the common good, second the burdens that accompany this debt are disproportional, in many cases inhumane and increasingly undemocratic. Greek people are forced to pay considerably higher taxes, with an exponentially diminishing income, deprived from vital services. Their contributions are not utilized for the social good, to fund public works, or to improve education, health care, or to stimulate the economy. All of their taxes are used in unproductive expenditures with the lion's share going to the payment of interest on older debts that where taken without popular consent, for which the Greek people did not benefit...
...Yes Greece must change. Yes the economy must be liberalized, the tax collection mechanisms be enhanced, political corruption be combated. No sensible person has any objection to the above, for as long as the burdens are proportional and will eventually be for the public good. However none has the right to impose disproportional measures, nor to intervene in the internal affairs of the country in the name of servicing an odious debt. Human dignity, individual liberty, democracy are always above any kind of debt and cannot be violated by any creditor or partner who asks for money with interest, backed by threats.
With all of the above in mind, I may say that European politicians have been hiding behind their Greek finger, all these years, trying to convince public opinion that the crisis is purely Greek, when it is systemic; that the bailouts are an act of solidarity, when in fact the lion's share is used to pay banks, writing the bill on the "ever-generous" Greek taxpayer; that Greeks are lazy, when they work much more than others; and finally that the new Greek government was necessary to save the country from collapse, when it is clear that no country has the policy tools at its disposal to tackle the crisis on its own, since the catastrophic power of the beast we are facing is reinforced by the structural flaws of the euro. In the midst of all this human suffering is immense, the people who are unemployed increase dramatically, the humanitarian crisis in the heart of the Greek capital is getting worse, resembling that of under-developed countries; while democracy is being given away to unelected bodies that become ever more powerful as time passes. All this is caused by the denial of the powers of the European (and local) establishment, to accept that the crisis is fundamentally caused by quasi-bankrupt banks and by a single currency that should have never been created, but was produced to satisfy the arrogance of its architects, who thought that they could design an economic project to achieve political ends.
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