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Greece on the Brink


There’s a story circulating in Athens lately about George Papandreou, the Greek prime minister. Arriving with his retinue at a popular taverna just outside the city, and noting that many of its patrons were smoking — a practice banned inside eating places in Greece, as in the rest of the European Union, for some years — he wheeled around and went outside, to give people time to put out their cigarettes. When he reentered, several minutes later, everyone was still smoking.

The anecdote is meant to illustrate the ineffectiveness of the Greek leader (“You see how hopeless he is?” a Greek friend asked, after telling me the story), but it also says a great deal about the Greeks themselves. Often accused of being anarchists, they take a certain pride in their unruliness. “The Greeks have never learned to be citizens, to see themselves as part of the state,” another friend explained. “Myself also. If my courtyard is clean, I really don’t mind if there is rubbish in the square.”

For the past few days, there has instead been rioting in the square. As the financial press waxes gloomy about the prospect of a Greek default (calling it a “Lehman moment”), and the International Monetary Fund pressures the reluctant Germans to agree to a second bailout, protesters from across the political spectrum have rallied in opposition to the strict austerity measures proposed by the hapless Papandreou, who has been forced to promise the Germans further drastic cuts in seeking the loans his country desperately needs.

Some of the protesters are angry that their generous pensions have been cut; some, that the bloated Greek civil service is going to eliminate more jobs. Others are concerned that the proposed measures will cut into tax revenues, making it less likely than before that the Greek government will ever be able to repay its debt, and potentially sinking the economy further into recession. Still others feel they are being punished for sins the rest of the world is still getting away with. Greeks — and Greece — may have lived beyond their means for decades, but as they point out, so did many others, including Americans. And what about the American bankers of Goldman Sachs, who colluded in 2000 with a corrupt right-wing government to hide the true levels of Greek debt so that the country could join the Eurozone? They made a fortune off the deal, but no German is insisting they pay it back or surrender their birthright (as two German ministers did in March when they suggested Greece sell off its islands, or even the Acropolis).

There will be an emergency meeting of European finance ministers in Brussels this weekend — the second such gathering in less than a week. To protect the Euro and prevent potentially catastrophic defaults, the Eurogroup will almost certainly issue further loans. France and the European Central Bank have finally managed to persuade Germany that such a step is necessary. Papandreou, after failing to form a coalition government, has now appointed a new finance minister, who has pledged to wage war on the country’s economic problems. The financial press reports that “the markets” have been calmed by his promises. Whether the Greek people will also be calmed is still an open question.

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March 2009

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