May 9, 2010
International speculators bent on creating an eurozone debt crisis where there wasn’t one could now rejoice. One of their earlier bets, a no-brainer at that, was that when austerity measures would finally be adopted by the Greek government, mass protests will ensue. On the 5th of May, protest actions which started peacefully a week earlier but paralysed the transport of tourists to their island destinations turned deadly. A few well-targeted Molotov cocktails led to the death of three bank employees in Athens, whilst other anarchists and communists attacked police with clubs in front of the parliament, hoping to do the same to the parliamentarians inside.
The protesters felt empowered by the irresponsible 4th of May performance of the opposition leader, Antonio Samaras, who declared himself against the austerity measures. As his ND Party bears the lion’s share of the responsibility for the current debt quagmire, he should have been much more supportive of the Papandreou government’s efforts to reassure holders of Greek debt and international money markets.
The speculators’ current objective is to further destabilise the eurozone. For a few weeks now, television channels like Bloomberg, some rating agencies and their obedient financial press are stepping up pressure on Spain and Portugal, thus bringing the eurozone’s finance ministers to the brink of exhaustion. Despite their efforts to put together a 110 billion euro- rescue package for Greece, the pressure on this country has not diminished in any significant way. In hindsight, the question that should be asked is whether Greece was used as a Trojan horse by financial circles opposed to the introduction of the euro, from the moment the country was “offered” its first off-the-books loan and accounting “expertise” in hiding the real size of its deficit.
Unlike other EU member states, Greece’s economy does not have strong primary or secondary sectors, specialising on services (tourism, shipping, banking). Protesters affecting tourism and banking are therefore shooting themselves in the foot. Greece needs its tourism and banking to survive and prosper. This is why EU member states coming to rescue Athens should also consider measures aimed at increasing the number of tourists from 13 million today to 20 million annually. German mammoth travel operators, especially, could play a key role in helping Greece along this path, but so could companies from other EU countries.
As far as banking goes, Greece has already established a significant presence in less-developed credit markets from Albania, Serbia, Bulgaria and Romania. The Greek banks’ ability to borrow cheaply from the ECB could truly assist economic development in all these countries, through more aggressive lending policies and by merging their rather small banks into a few better-capitalised competitors.
For now, the austerity measures and expected tax increases have opened a Pandora’s box for the Greek society as a whole. Communists and anarchists are resorting to violent actions, religious nationalism is on the rise. In the current climate, it is hard for the government to prioritise and follow through with its fiscal reform package. When the ministry responsible for implementing the measures is set on fire, it is easy for outsiders to understand why the tasks of reforming Greece’s tax code and of reducing the size of its deficit are enormously difficult.