Monday, 6 June 2011

An intervention from Greece, part I

Pedi ao George Papafragkou que fizesse uma análise crítica sobre a situação que se vive actualmente na Grécia. O George é meu amigo, e está a tirar um Doutoramento em Filosofia na Universidade de Atenas. A situação na Grécia desenha paralelos com a realidade portuguesa que importa conhecer e assumir.

Having been invited to comment on the crisis in Greece I must admit that I am troubled of where to begin from. Perhaps I should start in the middle; how things are now over here. It has been now almost one and a half year since the debt crisis begun and over a year since Greece had to apply for the combined financial aid of the IMF, the ECB and the Eurozone countries.

The first pact signed in May 2010 was called a Memorandum (of Cooperation) and its details were not widely available, not even to the Socialist members of Parliament who voted for it, together with the extreme-right populist LAOS party. But as the EU-IMF loan comes in quarterly installments a combined committee of the three has to approve of the policy measures taken in order for the actual loan installment to be given.

The measures reek of neoliberalism: Increase in VAT and taxes for employees but tax cuts for big business, cuts of 15% in the salaries of the state sector employees and cuts in their pensions, deregulation of the labour market so that people can be fired with less compensation and can work for more hours with much more flexible schedule. More than 100.000 seasonal workers in the public sector did not have their contracts renewed, over a thousand schools were merged with others in rural Greece so that money could be saved, the same will happen for hospitals and universities –which actually have no funds to employ new staff to substitute those going in pension. The interesting thing with deregulation is that it is actually regulation in favour of the capital. I know that I am sounding like an old-fashioned marxist but the deregulation proposed actually imposes through legal measures lower pay for young employees (25% lower), the nullification of contracts between unions and employers and the implementation of “solitary contracts” for each firm and employee, the opening of numerus clausus markets such as the taxi and lorry drivers and pharmacists which will enable big firms to operate instead of the individual entrepreneurs, the loss of university autonomy and be subjection to changes by a committee of “the wise” which will be presided by an IMF counselor.

These measures have not proved adequate, as it was feared when they were first proposed: The growth rate plummeted which led to an increase in the dept ratio to GDP and now Greece is in the midst of recession, 2.35% drop in the GDP in 2009 to be followed by an additional 4.35% in 2010 the year where the IMF/EU-imposed austerity programme begun. At the same time the debt as percentage of the GDP is predicted according to the IMF to rise to 145.2% in 2011 and to 148.8% in 2012 , but according to the European Commission the prediction is for 157.7% and 166.1% respectively. This, combined by the actual loss in government revenue due to the recession and the fall in demand and despite the tax measures continues to give rise to market speculations that Greece will default on its debt, despite the harsh policies followed. Actually the CDS ratings have risen even further making Greece unable of even fathoming a return to the credit markets and undermining the rationale behind the acceptance by the Socialists of the EU-IMF measures, which were supposed to help Greece out of a debt default situation.