Truth and artifice. It is normal that a number of MEPs and other figures have expressed support for a more comprehensive and generous attitude towards the budgetary difficulties and other problems being experienced by Greece. This is because solidarity is one of the basic tenets of the Community project. Nonetheless, support and assistance do not rule out three fundamental observations: (a) several authorities and observers consider (and they do not hide this fact) that worthy efforts made by the government in Athens will not be enough to turn round the Greek budgetary situation; (b) certain requirements at a national level and responses by the public in Greece will not be able to evolve rapidly; (c) the European and international authorities are doing their best to define a way that will help suspend Greek participation in the eurozone, without compromising the future or provoking repercussions in other eurozone countries. Explanations and positions taken by the Greek finance minister, Evangelos Venizelos, particularly his speech and his press conference on Sunday in Washington, are part of this vast operation - the modalities and development of which are continually being discussed in the eurozone and at an international level.
The three observations highlighted above underpin the enormous difficulties and problems in Greece itself and for the eurozone. The new measures announced in Athens are drastic, as is the cautiousness of the reaction from Brussels (EUROPE 10458). A significant reduction in pensions, layoffs for 30,000 civil servants, liberalisation of many professional occupations, and so on and so forth: this is a bold programme, sharply contested in Greece and the source of much social tension in the country. The reaction from Brussels has been extremely cautious and it is leaving all assessment up to the ECB (European Central Bank) and the IMF, whilst confirming the support of Community instruments.
Staring reality in the face. Why such distance between certain heated declarations from MEPs and caution from the Commission and Eurogroup? The response can be found in the objective analyses of the situation on the ground by economists, experts and journalists. One of the latter, Jean Quatremer, chose to spend his holidays in Greece this summer. He both loves this country and realises that it is responsible for what is happening to it: Greece “has for all these years been living off Europe and the people are not aware of the situation… The European funds (up to 4% of GDP, around €240 billion since the country's accession to the EU) have mainly been used to pay civil servants, prop up the state and boost overconsumption.”
Other more technical analyses indicate that civil servants account for a quarter of the working population and that thousands of them continue to receive a pension after they have died. These analyses point out that there are also a large number of quasi-state bodies and that wages in the public sector are much higher than in the private sector. In addition to all this, there is a high level of corruption and between 30 and 40% of the economy is on the black market (which, according to Transparency International, leads to tax evasion of around $20 billion a year). This figure could very quickly cover public debt. According to Mr Quatremer the state needs rebuilding.
Rejection of reforms. Why has the current government, which would like to see this reconstruction, not succeeded in obtaining it? In brief, because the people do not want it and most of them reject the reforms. Society is organised into corporate bodies and each one of them intends to keep its own respective privileges. Strikes continue among taxi drivers, chemists, customs and tax officials; and general strikes have been announced for 5 and 19 October. As for the yacht owners and those owning luxury cars and houses, they continue to completely avoid paying tax and defend their privileges from the shadows. In order to tax the ship owners, the Constitution would need amending …
Lack of awareness and the weight of history. When the country joined the eurozone (in 2001 by falsifying the figures for respecting the conditions), the financial markets applied more or less the same rates for all eurozone countries and Greece was able to get into debt in euros at very favourable conditions. The country abused the situation. The quality of life in the country radically improved. Wages in Athens increased by 50% between 1999 and 2000 (as opposed to 10% in Germany) and public spending rose to absurd levels. When repayments were due, without there being any increase in industrial production and alongside a scandalously high level of tax evasion, everything kicked off, and all the more so as: the ship-owners are largely exempt from paying taxes; the largest property owner in the country, the Orthodox Church, doesn't pay any taxes at all; military spending is the highest percentage in Europe, standing at around 5% of GDP. The history of the country partly explains this situation. The Greek people have distrusted tax since Ottoman colonisation because tax revenue was stolen by the occupier. The French essayist, Caroline Fourest, thus explains that “the Greeks have to accept the principle of taxes as a responsibility of citizens and not as an act of submission… a duty of each person making a contribution, in just proportions, as much for civil servants as for those selling boats and arms.”
The level of urgency. Obviously, the last point mentioned applies to a greater or lesser extent in a number of other member states. In Greece, however, it is extremely urgent. Without support from citizens, from representatives of the different economic and social communities, the government will be unable to act efficiently and will not be able to convince its interlocutors from Brussels or those at the IMF and the ECB. On two different occasions, the troika left Athens explaining that it did not consider the measures envisaged as being sufficient. Announcing privatisation and liberalisation of the different professional occupations was one thing, putting this into practice was another. Let's not forget that austerity measures have reduced tax revenue and have made public debt worse. For example, pensions in Greece corresponded to 96% of former salaries (as opposed to an OECD average of 59%) and the volume of these pensions was equal to 11.5% of GDP (7.2% for the OECD average). Alignment with the OECD average will gradually have a positive effect on the state budget but initially it will be translated into a reduction in consumption levels in Greece.
Difficult but unavoidable choices. Ultimately, courage and frankness are required to recognise that the fundamental question is to what point the Greek people will themselves be prepared to accept and respect eurozone rules, or whether they prefer to remain on the sidelines and have a certain room for manoeuvre in the way they behave, in accordance with their traditions and mindset. The euro is not a straitjacket: countries such as the United Kingdom, Sweden and Denmark have proved this by remaining outside. Nonetheless, if one wants to participate in it, one has to accept the rules.
PUTTING A HALT TO INAPPROPRIATE BEHAVIOUR BY BANKERS AND FINANCIAL PLAYERS
The fact that bankers and financial players should not always be the winners in difficult times like now is a recognised fact. Our publication has provided a number of reports on the subject and this column has underlined this fact on a number of occasions but a brief reminder is appropriate. The banks that purchased, or are purchasing, Greek Treasury bonds, since they are considered rather unreliable, have applied and are applying particularly high interest rates. Such rates would previously have been considered as usury and would have been condemned by Christians (Dante threw the usurers into hell) and by Muslims alike. Today, there is only one justification for them: the risk for those who have bought them of not being paid back. I insist that this risk represents the only alibi for the current rates practised. Those applying such rates have already been paid back due to the level of these rates and cannot claim back the entire repayment.
Measures going in this direction have already been agreed. They have been presented as participation by financial bodies in Greece's possible inability to meet all its commitments. I believe that the explanation should be more overt: the banks are from the outset being paid back above what is normal and the risk that they are running is implicit in the rates of interest they demand.
EU PLAYING ITS SUPPORT ROLE TO THE GREEK ECONOMY AND ITS CITIZENS
Accusations levelled at the EU of playing the role of policeman and ignoring its duty to support member states in difficulty are unjustified. Greece has received many benefits. The European Commission (in agreement with the Council if necessary) is currently releasing all possible funding for Greece. This is being done through abolishing rules demanding that European funding be accompanied by parallel funding from the member state in question, or by making this rule more flexible. In the past, Greece never contributed its national quota, although no projects should have been funded by the EU. The EU is now not calling on Greece to provide its part of the funding, which means the Commission will provide the country with €15 billion. This corresponds to the amount that Greece has been unable to use since 2007.
The Greek authorities, in liaison with Community services, have established a considerable number of projects for funding from the different European funds concerned. Commissioner Johannes Hahn went to Athens on 21 September and the Greek authorities submitted around 100 projects to him. They indicated that the inventory of project commitments up to 2013 was being prepared in areas such as transport, energy and the digital field. The two parties also agreed to reduce the administrative deadlines and update current texts. A group of Commission civil servants is helping the Greek authorities to choose and bring the respective projects up to speed. (FR/transl.fl)