Perilous Times
Revolution from Greece's ruins as financial crisis deepens
As Greeks face changing their way of life, rioters in Athens clash with
police at the start of a very long, painful summer for the country.
By Harry de Quetteville and Paul Anast in Athens
Published: 8:15PM BST 01 May 2010
The Telegraph UK
Hundreds of youths rioted in Athens on Saturday, throwing Molotov
cocktails and stones at police who responded with tear gas
Protesters clash with riot police during a demonstration in Athens
Police made at least nine arrests, including six people suspected of
looting a shop. Seven officers were injured along with two demonstrators
The week was already going badly enough for mild-mannered Greek prime
minister George Papandreou. After months of insisting that his country
would be able to claw its own way out of decades of mismanagement and
corruption, his belated SOS to the International Monetary Fund (IMF)
ensured that Greece's world famous ruins are now financial, not
archaeological.
But then things got worse. Even as Mr Papandreou likened himself to
Homer's great survivor, Odysseus, his country's fortunes were being
sunk between a modern Scylla and Charybdis: German intransigence over a
financial bailout on one side, and market jitters that downgraded Greek
bonds to junk status on the other.
On Sunday, however, as the details of an economic life raft from the EU
and IMF are due to be announced, Mr Papandreou will be forced to survey
not simply the wreckage of the Greek economy, but the beginnings of
"cultural revolution" that analysts say his homeland's crisis is set to
unleash across the continent of Europe.
Saturday's riots on the streets of Athens, in which police fired tear
gas cannisters after being pelted with stones and petrol bombs by
crowds protesting at the proposed new austerity measures, may prove to
be the start of a long, hot summer. And for Greece, the pain is sure to
be immediate, intense and enduring.
Cherished aspects of Greek life, from widespread tax evasion to the
bonuses which transform Easter holidays, are set to be swept away by
the flood of financial aid, and the preconditions accompanying it.
"The extent of tax evasion is not exaggerated," said Irini Skouzou, who
runs Company Set Up, a consultancy helping businesses with tax and
legal affairs in Greece. "And the bureaucracy is so bad that even
companies that want to pay tax have found it very difficult. They have
been unable to register with local tax authorities."
Many take-home salaries will be effectively halved overnight by
severely increased taxes, rising in some cases from less than 10 per
cent to 38 per cent, and by the fact that those taxes will now have to
be paid. Workers who had looked forward to a comfortable retirement in
their mid-50s on up to 80 per cent of their final salaries now face the
prospect of working on for more than another decade, for less at the
end.
That medicine is proving too strong for many. London estate agents are
reporting record business from Greeks, who, like Italians last year,
are seeking to pre-empt a tax crackdown by investing in bricks and
mortar abroad.
For those assets which can't be shifted, other help is at hand.
Vangelis Vasilopoulos is the chief engineer for a company which builds
swimming pools in the wealthy northern suburbs of Athens, home to
ship-owners and tycoons like Spyros Latsis, one of the richest men in
the world, who hosts Prince Charles on his travels to Greece.
Industrialist Theodore Angelopoulos and his wife Gianna, who led the
organising committee for the Athens Olympic Games (only six years ago,
when Greece was heralded a "little nation miracle") are installed there
too, as is Mr Papandreou himself.
Mr Vasilopoulos says his company has been "inundated with calls" from
residents of such elite residential neighbourhoods as to how to
camouflage their swimming pools. At first blush, the requests seem
bizarre.
In fact, they stem from the revelation that the Greek finance ministry
is using Google Earth software to track down the owners of the pools,
which tax inspectors consider an indicator of wealth, and which have
often been built illegally.
"There are therefore two reasons to hide one's swimming pool," said a
pool-owner who confessed guilt on both counts and, not surprisingly,
asked not to be named.
Fortunately for him, however, there is a ingenious solution.
"The formula is simple," said Mr Vasilopoulos. "All you need is a
green-coloured cover and then the pool cannot be spotted from above.
But if the water is visible, or the netting or cover is blue, then
you've had it".
Despite such inventiveness, even the most determined tax-dodger
recognises that a new era is at hand. And for a country which prides
itself on being the seat of European civilisation, a nation which
claims to have exported the continent's values of democracy, the
prospect of having a different way of life dictated to it is a
devastating and humiliating reversal of fortune.
There is little option however: in return for up to 120 billion euros
over the next three years, Greece is being asked to make a further 24
billion euros, almost precisely 10 percent of its GDP, in budget
reductions on top of swingeing cuts already made.
Such adversity is being met with a bitter humour by many. While tourist
shops in Athens exploit the bad news to sell visitors masks made famous
by Greek tragedies of old, locals laugh at Mr Papandreou's Homeric
imitation. After the Odyssey, they recall, there was only one survivor.
"To cut a long story short, the party is over for most Greeks", said
Christos Alexopoulos, a 55-year old financial consultant who lives in
the wealthy northern Athens suburb of Kifissia. "Even though I am
considered to be in the upper middle class bracket and to live in a
nice area, my income has dropped dramatically and we are living in real
anxiety as to what the future holds. We have to think carefully now
before going out to a restaurant or deciding to buy something. We have
become very price sensitive and are looking for bargains, more value
for money. At the lower end of the scale, what we will see is a much
larger number of Greeks actually living beneath the poverty level."
National humiliation is sharpened by the fact that the chief architects
of Greece's bailout, and thus of conditions attached that will shape
the Mediterranean country's future way of life, are Germany and the IMF.
For many Greeks, the IMF is closely linked with America, a nation they
widely distrust for backing the colonels' junta of the 1970s, and whose
embassy is still regularly pelted with stones during street
demonstrations in Athens. For a people who already instinctively
associate America with "cultural imperialism", the IMF intervention is
likely to be highly unwelcome.
"We find ourselves before the most savage, unprovoked and unjust
attack," Spyros Papaspyros, head of a civil servants union, said after
learning some of the details of the aid package this week. "The answer
will be given in the street."
The first signs of that came on Saturday, with May Day protests that
mixed a traditional anti-capitalist message with the threat of violent
rejection of any imposed austerity measures.
Police fired tear gas cannisters after being pelted with stones and
petrol bombs by crowds protesting at new austerity measures, in what
may prove to be the start of a long, hot summer. And for Greece, the
pain is sure to be immediate, intense and enduring.
But it is the prospect of a lesson in living from Germany, which will
provide almost 10 billion euros of aid, that most threatens the Greek
way of doing things, as longer working hours, lower pensions, and fewer
strikes become the norm.
According to Wolfgang Nowak, chief economic advisor to Gerhard
Schroeder, the German chancellor who himself implemented painful
economic and welfare reforms at the beginning of this century, Germans
will demand that Greece shapes up.
"Germans just don't like to pay for people to retire early, to claim
several holiday bonuses," he said. "We hear that Greeks are not ready
to accept change in these things and are blaming Germany, but the
reality is that Germany is already having to adapt to keep up with the
economies of Brazil, Russia, India and China. Greece must adapt too."
Such is the disillusionment within Germany about what is perceived as a
Mediterranean work ethic in direct contrast to the discipline at home
that a cultural chasm has opened up between northern and southern
Europe.
The EU must take the opportunity to bridge that chasm by imposing a
fresh, northern-European rigour on Portugal, Italy, Greece and Spain
(the so-called PIGS), said Mr Nowak.
"It's cultural," he said. "These [southern European] states must adapt.
If we help Greece we must help Portugal and Spain too. It's a chain
reaction.
Like the mythical Cretan labyrinth of old, Greece has come up with a
modern labyrinth, and all the EU states are lost inside." Finding a way
out of that labyrinth has proved particularly tricky because of the
hazards of the German electoral calendar. A crucial election in the
country's most populated state, North Rhine Westphalia, on May 9, could
see the balance of power ebb away from Chancellor Angela Merkel's
ruling coalition in the country's upper house.
Desperate not to appear a soft touch to Germans angry at the prospect
of a bailout for what they consider lazy Greeks, Mrs Merkel has been
forced to tread an increasingly uncertain middle ground demanding
tough reforms from Mr Papandreou but without fatally undermining the
aid package.
But if she is hoping for a display of sackcloth and ashes from penitent
Greeks, the signs so far are mixed.
On the one hand, drastic punishments are being meted out to the most
corrupt, pour encourager les autres. On Thursday this week, for
example, four Greek tax inspectors were given jail terms of between
seven and 15 years for issuing businessmen with 60 million euros-worth
of fake VAT rebates.
And public demonstrations, while noisy and attracting police tear gas
and television cameras in equal measure, have been relatively small,
and led by the Communist party. Beyond the picket lines in Greece lies
a gloomy acceptance of the mammoth task ahead a task that Mr
Papandreou has called every citizen's "patriotic duty".
But Mr Papandreou is sure to know that as with the country's
traditional national service this "patriotic duty" will be an
obligation that many Greeks, and particularly the well-off and
well-connected, will do their utmost to avoid.
"People understand the gravity of the situation," said Ms Skouzou, "but
unfortunately in Greece we have this mentality of thinking only of
ourselves."