The reality of Greece’s “recovery”
1 June 2013
The Greek ruling elite and its media have declared that the Greek economy is now in full “recovery” mode. On this basis, years of savage austerity that condemned millions to poverty and destitution are now described as a “success”.
The reality behind what has been termed a “Grecovery” is that only the financial aristocracy have seen their fortunes restored. For the rest of the population of around 11 million, there has been a drastic reversal in the living standards; a situation worsening by the day.
Immediately after last month’s decision by European Union finance ministers to grant Greece the first 4.2 billion euros of a $9.6 billion loan to pay off debts, the Fitch Ratings agency upgraded Greece to B- from CCC. While still six levels below investment grade, it led to Greek sovereign-bond market rallies, fuelling an overall stock market hike.
The upturn in the profits of the banks and corporations and the rising share prices of the Athens stock market are not based on any real strengthening of the Greek economy. It has been predicated on the near complete recapitalisation of the banks and the driving down of labour costs in Greece to historically low levels. Alongside this have been massive cuts in social spending with public health care, education slashed to the bone and pension rights decimated.
These policies have been imposed at the behest of the “troika” of the European Commission, International Monetary Fund and European Central Bank. Troika officials are due to return to Athens this month to monitor the progress of the austerity package agreed in April with the New Democracy (ND), PASOK and Democratic Left government.
During their last inspection, officials demanded that a previously agreed €50 billion privatisation programme be accelerated. A draft report from the EU and IMF May 3 warned, “While progress has been made in preparing assets for privatisation, the overall speed of the privatisation process remains unsatisfactory.”
Under its terms, vast portions of the nation’s infrastructure and land are being handed over at rock bottom prices to global conglomerates.
ND Prime Minister Antonis Samaras undertook a trip to China in May alongside representatives from 87 Greek companies. Speaking to a business forum he said, “The Greek economy is becoming extroverted and we are planning our export strategy. In parallel a program of 28 big privatisations is in progress. We change Greece and we put it in the international map of attractive investment destinations.”
In a reference to the profits ready to be reaped as a result of the lowering of labour and production costs, Stephanos Issaias, chief executive of Invest in Greece SA said, “Greece is a developed country but possesses the potential of an emerging one.”
In Beijing a total of 271 private meetings were held between the Greek delegation and Chinese investors, with Samaras meeting with eight Chinese firms looking to make a killing from Greece’s former international airport, regional airports, ports, railways, tourism, real estate and metal production.
China is seeking to vastly extend its economic interests in Greece, with the aim of establishing its own central hub for access to European markets. In 2010 the container terminals at Greece’s largest port, Piraeus, were handed over for a pittance to the China Ocean Shipping Company (COSCO) on a 35-year lease. Piraeus is Europe’s biggest passenger harbour, the largest container port in the Eastern Mediterranean and one of the top 10 in the world.
Concluding his trip, Samaras stated, “We are leaving with the news that the Chinese Railways and COSCO will participate in the privatisation of the Greek Railway Company. We have confirmed the interest of Chinese companies in Athens airport, but this should be discussed with Hochtief and the Canadians, since they will buy their share.”
The trip ended with the signing of 11 bilateral trade and cooperation agreements with the Chinese regime.
Greek national energy resources are also being sold off with Gazprom, Russia’s biggest gas producer, on the verge of buying DEPA, Greece’s natural gas corporation. Gazprom already supplies 90 percent of Greece’s natural gas through a pipeline from Bulgaria and is expected to take over DEPA for a cut-price €750 million.
Gazprom’s expected takeover of DEPA illustrates Greece’s increasingly pivotal geopolitical importance. The United States and the EU have raised concerns about Russia establishing a stranglehold over the energy sector in the region. Such is Greece’s desperation to sell DEPA that it has agreed that Gazprom need only put down a 10 percent deposit on the purchase price. Greece has also guaranteed that Gazprom will not lose any of its deposit if the EU blocks the DEPA acquisition.
Also reportedly being sold off is Desfa, the natural gas network’s operator, to Azerbaijan’s state oil company, Socar. The Guardian noted this week that Socar is “believed to be backed by US interests,” with government officials saying it would be sold to them “for the sake of equilibrium.”
There is almost nothing owned by the state that is not being privatised. The profitable large state gambling company Opap was recently privatised for a lowly 652 million euros provided by Greek-Czech investors. The government has asked for bids for the takeover of numerous lucrative marinas. Diplomatic residences in London, Brussels, Belgrade and a land plot in Nicosia were sold off this year for a total of 41 million euros. While the wealth of the richest skyrockets, the social position of workers continues to plunge. Over the past five years of continual recession, in which 28 percent of GDP has been wiped out, more than a million private-sector jobs have gone. In addition, 150,000 public sector jobs are to go by 2015.
Unemployment stands at a record official level of 27 percent (1.3 million), and at over 60 percent for youth. In Western Macedonia, a staggering 72.5 percent of 16 to 24 year olds were unemployed in 2012, up from 52.8 percent in 2011. Four hundred thousand families in Greece have nobody earning an income and about 300,000 employed workers have not been paid for months.
A tragic result of this social counter-revolution is the doubling of the suicide rate in three years, to the highest level in 50 years. Prior to the unleashing of mass austerity, Greece had the lowest rate of suicide in Europe. The national statistics agency, Elstat, reported this month that 477 suicides were recorded in 2011 compared to 377 a year before. The rate of suicides is most probably a lot higher according to Klimaka, a non-governmental organisation. They point out that there is no available statistic on the number of failed attempts, estimated to be 15 to 20 times higher than the registered suicide rate.
After falling by 6.4 percent in 2012, the economy is set to contract by another 4.2 percent this year, according to the Bank of Greece’s annual report. In the first quarter of this year, the economy contracted by 5.3 percent compared with a year earlier. The bank’s report was followed Wednesday by an Organisation for Economic Co-operation and Development survey, which poured cold water on troika and European Commission claims that the economy will begin to grow in 2014. The OECD predicts a seventh consecutive year of economic contraction in 2014, with a further 1.2 percent decline.