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European Debt Colony: Austerity Bites Hard in a Greece Shackled to its Lenders

A new agreement between cash-strapped Greece and its eurozone lenders is bad for the Greek people and bad for democracy.

A Greek flag is waved in front of the Greek Parliament while strikers march by during a protest march in Athens marking the 24-hours general strike.


The Greek government has hailed the eurozone finance ministers' latest  decision on Greece, requiring the country to lower its debt in return for bailout funds, as yet another political victory. This was not surprising at all to Greeks, who have often seen their government celebrating decisions that have made life miserable for its citizens.

But this time, Greek Prime Minister Antonis Samaras went so far as to call the agreement a "landmark for the country's rebirth", releasing a video on YouTube entitled "Greece starts now".

Viewers of the video pointed out the irony of propagating national unity and hope to Greeks, who have meanwhile been devastated by the government's harsh austerity measures. This simplistic piece of propaganda elicited comments reflecting the genuine bitterness and disenchantment of the Greek people.

A boy aged 14 wrote: "The present is uncertain, the future looks nonexistent. When a country dies, so do its inhabitants." A low-income woman then asked: "What will you do for those who have to live on 5,000 and 10,000 euro per year? Thank you for your valuable time and your earnest contribution in the common affairs of our occupied land".

Dazed and confused

Greeks know well that calls for "national unity" are nothing but dust in the eyes of a dazed and confused people. They are represented by a weak government that has endorsed all its lenders' claims, leaving its population practically undefended at the negotiating table. 

According to the latest  data from Eurostat, the EU's statistics agency, about 30 percent of the Greek population now lives below the poverty line - with 15 percent living in conditions of extreme poverty. These figures are for the first time comparable to those of former Soviet-bloc countries such as Bulgaria, Romania and Latvia.

Austerity is shredding the social fabric of Greece. About 1,000 more people lose their jobs every day, and long-term poverty is knocking at the door of a new class of low-paid workers. According to Greece's Institute of Labour, the average salary in the country is just 74 percent of the European average - and, what's more, Greeks' purchasing power has fallen by half since 2010. Many workers now have to live on as little as 4,500 euro per year, while the poverty line is set at 7,100 euro per year.

Although wages and pensions have been slashed, the public healthcare system is being destroyed and spending on public education has fallen to levels last seen in the 1980s, the cost of living in the country remains high - confirming the words of one Greek housewife who  said that Greeks are "going to have to live on a Bulgarian salary with London prices".

But there is no such thing as "national unity" in despair. According to a recent bank report, despite the recession (25 percent of Greek GDP has vanished since 2009), the wealthiest 500 Greek companies saw their profits  increase by 18.2 percent in 2011. Several  reports have found that Greece's shipping industry, traditionally part of the country's political and economic elite, who hold 16 percent of the world's maritime fleet, pay  very little in taxes.

'Death spiral'

But Greece's problems are not only economic in nature. Political malfunctions have reinforced the country's economic woes, which in turn have exacerbated social decay. Greeks term it a death spiral.

At the latest meeting of European finance ministers in Brussels, the interest rates Greece has to pay on its debt were lowered, the maturities of these loans were extended, and a plan was made for Greece to buy back some of its discounted bonds. If Greece follows this path consistently, then by 2020 public debt will be about 124 percent of its GDP, which the troika says is a sustainable figure.

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