It is official: Greece is exiting the third bailout program and Prime Minister Alexis Tsipras is calling on all citizens to celebrate the end of borrowing and applaud the country’s ability to stand on its own feet after eight years of recession.
If it wasn’t for the catastrophic East Attica fires of July 23 that cost at least 96 lives and saw mass destruction of property, the Greek government was preparing a “clean exit” fiesta for the end of the third rescue program.
Now, due to the state of mourning Greece is in, the celebration will be a quiet one.
Facing a plunge in popularity after the disastrous handling of the East Attica disaster, the Tsipras administration will try to turn the focus on the good fiscal figures at the end of the bailout program.
The record number of tourist arrivals in 2018, the drop of unemployment from 20 to 19.5 percent in July and the higher-than-projected primary surplus are presented as government successes and proof that the economy is recovering and Greece is on the path of growth.
And how did those “growth figures” come up? It was simply by squeezing professionals, businesses and salaried public sector employees dry. Business revenues are taxed 29 percent, so are the salaries of professionals who also saw security contributions go up too.
As for public sector employees, they saw their salaries shrink because next to the income tax is another tax cleverly named the “solidarity contribution”. Businesses closed, only some replaced by coffee shops and small souvlaki eateries.
This is why Greeks are numb to the “clean exit” fanfare. In the past three years — the years of the third rescue program — they saw taxes go sky-high, prices of goods and services soar, saw their salaries and pensions cut while unemployment remains the highest in EU. They watched public services deteriorate and living standards approach those of developing countries.
Greek crisis far from over
The ugly truth is that Greeks are not recovering from the economic crisis; it is that Greeks have surrendered to the crisis. They became accustomed to the idea that from now on, for the vast majority, their lives will be a struggle to survive.
Fifteen years ago Greek banks were advertising and practically giving away credit cards for “a leisure trip to New York City”. Today banks advertise that you can “pay off your taxes in 12 convenient installments” with a credit card … if you are one of the lucky ones who had one before the crisis and it is not maxed out.
And assuming you do have a credit card with enough credit to pay off your taxes in 12 installments, once you pay off one year’s tax dues, you immediately start paying off next year’s taxes. And so on, like the myth of Sisyphus, you will be borrowing to pay off your debts. This is what has become the Greek Nightmare, to paraphrase the American Dream.
According to the Independent Authority for Public Revenue (AADE), Greek taxpayers owe over €100 billion to the State, while more than half of financially active Greeks (54 percent, or a little over 4,000,000) have outstanding debts to the State.
The law says that if you have overdue debts of over €500, the State can seize your assets. If you don’t have bank deposits, they can confiscate your car, for instance, or even your home.
At the same time, with a minimum wage of €586, salaries frozen, capital controls, pensions slashed — with new pension cuts coming on January 1st, 2019 and low incomes taxed as of January 1st, 2020 — and the cost of living going steadily up due to new taxes and levies, what can the average Greek expect from the future?
At the time the much heralded “clean exit” from the bailout program — the “end of the memoranda era” as Tsipras and his administration call it — 10-year Greek bond yields are at around 4.3 percent while in June the State debt was at €345 billion. This means that, practically, during the three-year bailout program that was full of harsh austerity measures, Greece managed to pay off the interest while the colossal capital remains intact.
The end of the third rescue program finds Greece at the state it was during the second bailout. Educated Greeks continue to emigrate, with 80 percent of them refusing to return at least for the next five years. Businesses continue to close or move to other, tax-friendly countries, unemployment remains at 20 percent while one in three employed works part time, consumer spending continues to shrink and the majority of Greeks remain in a state of quiet desperation.
The EU partly to blame for Greece’s woes
At the end of the third bailout program, EU and International Monetary Fund officials began to admit that the cruel austerity imposed on Greece was a mix of bad policy and a rather sloppy effort to protect the eurozone. Their projections of the country’s recovery proved to be wildly optimistic, if not wishful thinking.
Instead of pressing the Greek government to proceed with growth reforms — like eliminating crippling bureaucracy in regards to entrepreneurship or expediting major privatization projects as is the case of the Ellinikon airport site — the EU allowed the leftist government to overtax the middle class and businesses instead. These austerity measures deepened Greece’s recession and made its debts ever harder to pay off. And, worse, left public services in a pitiful state.
Case in point: the recent deadly fires in East Attica found the Fire Department short of firefighting aircraft, vehicles and manpower, while firefighters and police could hardly communicate with an antiquated communication system. All this due to cuts in public services. Greece’s national health system is also a victim of austerity, with literally all public hospitals understaffed and lacking even basic supplies like gauzes and plastic gloves.
Yet Greek people had to be “sacrificed” in order for the country to remain in the eurozone and keep the common currency strong. The alternative given to them was bankruptcy and a bloody Grexit, the full implications of which we would never know.
For all their sacrifices to keep the euro strong, the EU gave Greeks only a pat in the back and optimistic statements for an economic recovery, return to normalcy and growth. It will keep Greece under strict surveillance until 75 percent of the State debt is paid off, with its sustainability still remaining a big question mark.