Nation with a pantheon of problems

By David Gardner

Published: May 15 2010 Financial Times

Ten days after enraged protesters laid siege to Greece’s parliament, and extremist provocateurs torched a bank and killed three of its employees, the anger in Athens is more sullen than incendiary. The almost daily demonstra-tions are tightly policed and falling in numbers. Trade union leaders appear to be keeping their powder dry, to launch a wave of action beginning with a general strike next week.

«Strikes and more strikes, from here on that’s our answer», said one demonstration organiser at a march on Wednesday, as he used his megaphone to cry «Down with the junta of the markets», echoed by chants from the crowd of «Half a wage, half a pension, they shall not pass». But passing they are. So far.

With the passage of the first measures of the austerity and reform programme that the socialist government of George Papandreou has accepted as the condition for a €110bn ($136bn, £94bn) bail-out, Greece may be becoming a different place. But there is widespread scepticism as to whether the government can deliver, and a dawning perception that Greece is on the road to becoming a quasi-protectorate of the International Monetary Fund and the European Union.

Some of the old skeletons of foreign intrusion in Greece are rattling in the cupboard. Germany’s hard line on the financial rescue has revived memories of the brutal Nazi occupation during the second world war, for which Greece never received full reparations. The word philotimo , roughly self-esteem or (wounded) pride, is bandied around. Judging by the rhetoric of some politicians and newspapers, the right believes the communists are trying to reignite the 1944-49 civil war – which they lost, partly due to Anglo-American intervention – while the left is painting the IMF-EU as a sort of financial junta, after the military dictatorship that ruled Greece from 1967 to 1974. «Everybody is dipping back into the period that best suits their narrative,» says a reform-supporting political analyst.

But it is not really the corpses of Greece’s turbulent past that are being exhumed. «This is not like Cyprus or something where you can blame it all on foreigners», says the analyst. Yet even he says: «I feel profoundly that this has been a process of humiliation.»

On the streets the feeling is a mix of rage at politicians and fear for what the future holds, as Greeks face the prospect of lower wages and pensions, fewer job opportunities and the cracking open of closed shops and cartels covering 70 professions and activities – at least in theory.

At one anti-cuts demonstration outside parliament, Stella Andreadi, a primary school teacher waiting to be assigned, says: «The politicians are the robbers, they were responsible for squandering the money of the state. I’m lucky to have made it on to the list [of assigned teachers] but I don’t know when my turn will come. Maybe I won’t get assigned at all. These are very difficult times».

The problem is that, unlike Ireland and Spain, which are picking through the ruins of credit and property bubbles, Greece’s was always a public spending bubble. It centred on a bloated state payroll, accounting for 1.1m out of 5m in the workforce, where emoluments are typically double those of the average in the private sector.

«We are not so much victims of the IMF as victims of the myth of Zorba [the Greek]» says Taki Michas, a leading columnist, «who we all know taught the rest of the world how to live, without explaining where he got the money from to drink ouzo all day». Yet the consequences are profound.

«People are very angry and rightly so because they are going to pay not just for their own mistakes but those of the elites,» says Vasso Papandreou, a former socialist minister and European commissioner. «The middle class will be badly squeezed and without a strong middle class things become politically very, very dangerous», she says.

The threat of an explosion is probably small, notwithstanding a bomb exploding outside an Athens prison on Thursday night. «Greek society likes violence as a spectator sport but only up to a point», says Brady Kiesling, a former US diplomat who resigned over Iraq and has written a book about Greek terrorism. «The anarchists ruined everything for everybody by causing those three deaths,» he says, which the shrine of flowers outside the firebombed bank attests to.

The real question is whether the Papandreou government will lead. And whether New Democracy, the rightwing opposition that in government cooked the books and inflated the payroll, will offer support. «Politicians don’t lead here, they reinforce what they think people want in order to nurture their clientele,» says Stefanos Manos, a reforming finance minister in the early 1990s who would be boringly mainstream in the rest of Europe but in Greece is a maverick. «It shouldn’t be a difficult argument to make that you can’t go on having four times as many teachers as Finland in the state school system, but doing such a bad job that parents have to pay for private tuition, but I don’t see the government having the guts to go through with this».

Such consensus as existed in Greece is collapsing and Mr Papandreou must forge a new one. It is not just the unions he faces but vested interests of the old order, not just the obvious closed shops of port workers or truckers, the cartels of lawyers and doctors, but, say, 11,000 pharmacists who are by law allowed a mark-up of 35 per cent.

Mr Papandreou not only needs to reshuffle his government to bring in competent ministers, he needs to be a gifted theatrical producer. Every Greek tragedy requires a catharsis. «People want to see somebody punished for what we are living through today,» says a senior socialist official. And then there is the ruling socialist party, Pasok.

«Pasok is really two parties», says the socialist official. «You have the modernisers and then you have the ‘deep state’. This deep Pasok depends on the clientele around which they have built their careers. They have to be kept in check. But it seems to me Papandreou is determined to make it work, because this is now about the survival of the country and his own political survival».

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