It's been already 1,5 month since the greek PM officially asked for an international bail-out. I had a rough picture in mind on how this program would work out, back then. I was guessing that the government would take a bunch of harsh measures at once (tax rises, cuts on salaries and pensions, layoffs in the public sector etc.) until the balance between the country's income and expenses evens up, enough for Greece to be able to borrow money at a reasonable rate. With this in mind, I was thinking that the people in Greece would suffer for a few months and that this would eventually bring social uprising, which could last for a few weeks – as was the case in December 2008 – and then things would get back to normal. But from what we've seen, this is not the way things work. It doesn't have to do with a single sad event – the killing of a boy from a cop / harsh measures being taken by a government.
The greek government had taken some measures even before the activation of the bail-out program. These where the increase of the sales tax from 19% to 21% (in the last year - under the old administration - another increase took place, from 18% to 19%) and cuts in bonuses in the public sector. Meanwhile, there was too much optimism that the government could get a lot of money by hunting tax evasion.
Since the EU-IMF program was activated, there have been another 2 groups of measures, a lot harder than the first ones. In short, these were: another increase of the sales tax by 2% (now it is 23%), cuts in salaries and pensions of the public sector, varying from 8-20% according to the wages, a new increase of some special taxes applying to liquor, tobacco products and gas varying from 10-20% and finally, an extra one-off taxation of all profitable businesses.
Another measure that's worth analyzing is the following: The government had announced that due to the recession, it would give a 1000 euro “solidarity benefit” to people/families living under poverty level, in 2 parts of 500 euros. The first part has already been given to those entitled. In order to reduce the state's expenses, the minister of Finance announced that the second part will not be given to all those who got the first part, but only “targeted”. What does “targeted” mean? I can explain it in 2 steps: (1) The minister means that the first part was given – among others – to people who didn't really need it. This can mean 2 things: a) that the records of the government are inaccurate or - even worse – b) that the government gave this money to people who didn't really need it on purpose. Now, step (2): If the government confesses that its records are inaccurate, how are they going to tell who's in real need of the second part and who's not? Or, if they intentionally gave the money to people who didn't need it, shouldn't there be some kind of legal action against anyone responsible for this? Because when somebody is "below poverty line, this is objective.Can you say that somebody who's just 1 euro below poverty line, doesn't need the 500 euros?
Still, the measures already taken are not final. The contract signed by the greek government, the EU and the IMF says that there will be a check of the income-expenses balance by an EU-IMF committee every trimester. If the balance is not satisfactory, there is a term saying that the greek government is obliged to take any extra measures needed so as to reach the target predicted. Today, as we are on the half of the first trimester, there's already a negative deflection of a few hundred million (!) euros.
As a result of this - and of other – facts, the scenario of Greece defaulting is becoming all the more possible. The international media talk about this scenario a lot more than the greek media do. I don't know if this is enough to tell us more, but last December, when the greek media were denying the possibility of Greece to ask for help from the IMF, at the same time, most international media were almost sure that this would turn out to become true. Now, the international media also talk about the possibility of Greece leaving the euro, but this is a story for another article.
Despite all that, people in Greece haven't yet reacted the way the most expected them to, given that Greece has a strong tradition in public uprising, demonstrations etc. It was last Saturday, at a demonstration organized by the 2 biggest workers' unions, less than 10.000 people gathered. How can we explain this?
I think that people right now have mixed feelings:
1. They still manage to get along. Each family is trying to organize its life so as to get through all this the easiest way.
2. They don't have any real hope that their reaction will bring any solution. They understand that the country's situation is desperate, but there's no political party or person that convinces them to be more appropriate to handle this.
3. Society is boiling slow and at some point will erupt, but not having any clear demands. This will be just an instinctive reaction that will cause temporary chaos.
4. At the same time there is this feeling of complicity in what the country's going through now.
- Wasn't it us who avoided to pay taxes?
- Wasn't it us who were begging politicians and officials for a public job?
- Wasn't it us who payed “something extra” at some public service in order to do our business faster/better/dirtier?
and after all,
- Wasn't it us who were voting for them for 35 years?
These are some popular questions that you hear by people in the streets.
Now, we can only wait and see which feeling(s) will be expressed first.
The PM yesterday said in his speech at the parliament: “If we do not put the country in order, if we do not create a sense of justice, if there is no respect for the law, they will chase all of us away with stones, and rightly so."
Looks like he's got the message...
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