Tuesday, August 03, 2010

Papandreou's perfect storm gains strength

Reading some of the foreign media accounts you could be forgiven for thinking that the Greece's embattled prime minister, Giorgos Papandreou has weathered the worst of the storm caused by his attempts to bring in the country's ballooning public debt under control. The mass public protests that rocked Athens and other Greek cities throughout May have stopped, the truck drivers' unions have called off their strike and the PASOK government is rapidly pushing through the changes being demanded by the IMF/EU/ECB troika in return for the next installment of its bailout package.

However, such apparent signs of calm are deceiving, especially if you happen to know anything about how politics in Greece work. Unlike many other countries political conflicts rarely take place during the country's broiling summer when people prefer the beach or countryside to sweating it out in the cities. The drop off in anti-government protests owes more to soaring temperatures than any acceptance on the part of Greeks to the constant round of wage cuts and tax rises.

Come September the beaches will grow quiet as people return from their holidays to deal with the new economic realities being imposed. According to local media reports the troika is demanding still more cuts in public services and is unhappy with government revenue promises which despite two increases in VAT have failed to live up to expectations. Asa result Athens is in the process of raising yet more income from higher VAT surcharges on a raft of items and is drafting more tax increases for the New Year.

In addition tens of thousands of public employees in ailing state owned rail network and the public power provider face prospect of losing their jobs as privatisation becomes more and more likely and across the whole civil service new salary structures are likely to see yet more cuts in public sector pay in the very near future.

Local authority employees are also faced with the prospect of not being paid as more and more town and local councils struggle to service their own massive debt payments which in some cases amount to more 60% of revenue raised.

Given the fact that unemployment is at a ten year high is hardly surprising that consumer confidence is lower than at any point in decade so further adding to the private sector's severe contraction as thousands of small businesses close down, further adding yet more people to the jobless figures.

As the summer ends and autumn begins Greeks have very little to cheer about and this will be reflected in what will be an inevitable wave of strikes and social unrest over the coming months with public sector unions joining trucker, taxi drivers, lawyers and many others as they fight to oppose legislation which will directly affect their livelihoods.

The fact that the two major parties have yet to resolve long running finance and influence peddling scandals just serves to reinforce the impression amongst many that those in power have lost legitimacy and cannot be trusted to run the country properly. Despite Papandreou's claims that he was unaware of how dire the country's public finances really were few believe his claims and feel that his PASOK party is also responsible for letting Greece drift into economic chaos during its two decade stint in power.

With local authority elections looming both the conservative New Democracy and left of centre PASOK parties are at the nadir of their popularity, a point that is likely to rock both organisations which rely as much on the ability to get members elected to public office as ideology to keep supporters in line. With an electorate so negative and a poll debacle imminent its very had to see how Papandreou can keep his party from demanding that IMF/EU/ECB economic reforms be challenged or at least revised to stop what might be the begining of the end for the current political set up.

With so many storm clouds gathering on the horizon Giorgos Papandreou must be wondering if his predecessor, the now reviled Konstantinos Karamanlis had, in fact proffered him a poisoned chalice rather than the reins of power


Passmore Peas said...

Alternatively, you could accept that the closed shops operated by truckers, lawyers, pharmacists, et cetera, cost the millions of ordinary Greeks for whom you claim to speak THOUSANDS OF EUROS A YEAR. They're just as parasitical as the politicians, the IMF, or anyone else you care to rail against, they just oppose them, so you like them.

a poor crying citizen said...

This is amazing. But, that’s Greece... The people, the citizens, have no responsability. It’s always the politicians, who, as everyone knows, came from Mars to rule the poor greeks. And there is the IMF, creepy creatures from Hell, who came to destroy Greece. When do greeks grow?