Can Europe Make It?

Of course Greece will need a third bailout. But it won't be for the people.

By now, a clear picture of what sort of behaviour the two previous bail-outs have supported ought to have emerged. Further aid, which will definitely be accompanied by further cuts and “reforms”, will only add to the burden imposed on Greek people. 

Yiannis Baboulias
2 September 2013

Anti-austerity protests in Thessaloniki, Greece. Flickr/Apostolos. Some rights reserved.

In the past few months, the Greek minister of Finance, Yannis Stournaras, has repeated time and time again the same phrase: “everything is going well, Greece won’t need further cuts, we’re almost out of the woods”. This, it must be pointed out, didn’t happen once or twice, or in some very specific context. This was his, and the government’s, overall stance. In the past few months, they did everything within their powers to support this spin, including the announcement of an unexpected primary surplus in July, that didn’t include the budgets of municipalities and pension funds, and a debt of €6.6 billion to the private sector (Greek statistics anyone?).

The German government was pretty happy to play along, with its officials mirroring the statements of the Greek side. It all changed when, faced with the reality of the situation, Wolfgang Schäuble admitted, through his teeth, that Greece will need further aid, since it’s bail-out package runs out in March 2014. "There will have to be another program for Greece." he said.

What led the austere German to break what seemed to be an absolute taboo before the September 22nd elections? Stournaras’ immediate reaction was to label the extra funding, thought to be around ten billion euros, as just that: extra funding, with no further need for measures and cuts. Is this the whole truth, or was the German government’s hand forced, in light of the opposition SPD party's announcement that Greece will need a further €77 billion in the next 3 years?

Truth is, the story of the Greek bail-outs leaves little room for questioning as to what their effects, and their effectiveness, truly are. The country is now seeing a mind-boggling 180% of public debt, standing at €321 billion, with no prospects of reducing it if a drastic restructuring doesn’t take place sooner, rather than later. When the crisis broke out in 2009, public debt stood at €299.7 billion, or 130% of GDP. Not only has the debt increased since, but the country’s GDP has plummeted by one quarter. Who has benefited from this? Definitely not the Greek people, as has been documented extensively in the press, since.

Greek banks on the other hand, have enjoyed a bonanza, receiving billions in funding on the tax-payers expense. €218 billion has been provided in guarantees and liquidity. Just last week, Piraeus Bank, which has been on the receiving end of billions in tax-funded rescue funds, recorded a 3.5 billion net profit. A large chunk of this, comes after the scandalous absorption of assets originally belonging to Cypriot banks in Greece. Assets that as Faisal Islam confirms in his new book Default Line, the EU officials handling the country’s financial disaster, were too keen to give away as a freebie to Greek bankers, essentially allowing them to rob Cyprus in the worst of manners, as the country was suffering a covert bank-run.

For this to go down well with the public, the Greek media have been absolutely complicit, especially the TV station MEGA. For it’s loyalty, the station has been granted immunity from foreclosures that might result from its more than €100 million in bad loans. The same won’t go for ordinary Greeks, who, come January, will see even their primary residences confiscated.

Greek oligarchs have done well for themselves too. The privatisation of the state lottery company OPAP, the first major privatisation to take place in Greece, has seen the value of its assets drop by 5 times in the last 6 years. The privatisation, signed off by the oil-tycoon Dimitris Melissanidis and TAIPED head Stelios Stavridis, will see a profitable company enjoying an almost four billion euro turnover, sold to a Czecho-Greek alliance for €652 million.

The issue here, is that Melissanidis on the one hand employs Failos Kranidiotis, a lawyer, who is a close friend and unofficial advisor to the Greek PM Antonis Samaras, and on the other has been under scrutiny for several other issues in his past, including a debt of millions to the Greek state, haunting him since his last company had to shut down in the 90’s, over allegations of oil-smuggling. One of OPAP’s last acts as a public company, was to award AEK (a third division football team) €2.5 million in sponsorship. AEK, is also run by Melissanidis. Days after the deal was signed off, Stavridis was forced to quit his position, after being caught enjoying a joy-ride in the businessman's learjet on the Greek island of Kefalonia.

And the political class? Well they’ve just been doing what they always have, the very same things that brought Greece to its knees. Only now, with sponsorship from (and in full knowledge of) the EU. Just as more reforms are enacted, and 118 schools are about to be shut down or merged, in order to save €228,000, we hear that Evangelos Venizelos, the deputy PM, just got himself a new office that will cost €700,000 in the next two years. Stournaras (the Finance Minister) awarded his wife’s company an almost €500,000 contract. But the worst may yet to come as, after the appointment of Adonis Georgiadis, a TV book-seller and former spokesman for the far-right party LAOS, as Minister of Health.

One breath away from leaving the country without safe blood transfussions over technicalities in the purchase of the necessary test gear, Georgiadis is also closing a major hospital in down-town Athens, because it’s used only by “old people and junkies” as a Greek pundit said. While talking with the hospital’s representatives on a news show, he declared “I represent the private sector”. When I put the question to him, reminding him he is an elected official, and he represents the people of Greece, he replied “I meant: I come from, and work in, the private sector. Away from the security the public sector provides.”

Maybe this particular misunderstanding of his role as a minister is why he issued an ultimatum to the authorities Santorini, a world-famous tourist destination, to find funds for the local hospital, or he’ll shut it down (thus allowing private companies to move in and accommodate tourists and visitors).

By now, a clear picture of what sort of behaviour the two previous bail-outs have supported ought to have emerged. Further aid, which will definitely be accompanied by further cuts and “reforms”, will only add to the burden imposed on Greek people. Privatisation of water, gas and now health, is looming. The state is now spinning a rising terrorist threat to continue imposing a constant state of emergency, in order to justify police crackdowns on anarchists and activists, and divert public opinion from the financial disaster the Greek program has been.

On the way to the German elections, with Merkel giving us a crescendo of populism by claiming that “Greece should have never been allowed to join the Euro”, while at the same time maintaing we need to suffer in order to remain in the Eurozone, this is only to be expected. The need for further debt-restructure will be swept under the rug for now. The massive budget gaps Greece will be facing in the next few years, will suffer the same fate.

The only thing we can be certain of, is the same tango we’ve witnessed in the past, will play out again, whereby “Greece definitely doesn’t need more aid”, but then it does. At first it “will only be small”, but it will soon emerge a large bulk of funds is required. All the while, both German and Greek politicians will insist that “no further cuts are required”. And in the end, guess who’ll pay the bill.

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