Greek crisis – Letters from Athens

Not much to be thankful for?

In Greece we do not celebrate Thanksgiving, but we’re still aware of it through foreign relations and friends. Many have been asking me if things are getting better, since Greece seems to be a lot less in the international news lately. Unfortunately, I have to report that the answer is no.

We cannot be thankful that we are saddled with an inexperienced and inefficient government. And we cannot be thankful for our ‘lenders’, whose handling of things has been a disaster. Negotiations have been going on over the summer regarding The Debt. Result: more and more taxes are to be imposed. To my mind, this only makes sense if the aim of the exercise is to make sure Greece sinks. I’m sure a lot of people would be interested in buying national and private assets dirt cheap, something which has already been going on. Airports and ports, anyone? A house on a lovely island? The list goes on.

We can't turn back now! (after all this effort...) — We can’t turn back now! (after all this effort…)

Various eminent economists from different countries have been at pains to explain what needs to be done for Greece to regenerate its economy, but their words are falling on deaf ears. It would seem self-evident: if you want to help the country out of this crisis, give incentives to investment, help small businesses, start new projects. Curb corruption and cut the public sector. Maybe this sounds simplistic as a theory, but what is happening now is a dead end. The government, coerced by the lenders to produce more money is basically robbing people who have no more to give. I say robbing, because those who are owed money by the government are lucky if they see half of it, after great delay. And yet they are fined if they don’t pay the whole of their taxes on time. More and more are being forced into the black economy (on the advice of their accountants, no less), paying with cash or even using barter (You fix my plumbing and I’ll fix your back…)

At the same time, the country has been obliged to face a terrible humanitarian crisis, which is being mismanaged to an appalling extent. People are herded like cattle into inadequate facilities, where, due to despair, loss of hope and lack of employment they are turning against each other. Fires are set, people are injured. These violent incidents will only result in turning opinion against them. I’m not saying that all refugees, or migrants, call them what you will, are the same. But I have taken the trouble to read some stories of these people’s journeys and misfortunes, of the situations they have been forced to flee, and I am horrified by what is happening.

As a nation, we still have a lot to be thankful for. Our climate, our beautiful countryside, our heritage, and most of all, our people who, as a whole, are managing to deal with their misfortunes and remain optimistic. But it will take more than optimism to get the country out of the mess it’s in.

A hailstorm of taxes

We had a deluge yesterday – unusual for this time of year, but extremely providential, as it helped control a huge forest fire. These are the bane of Greek summers, so the water, in spite of causing some damage, was appreciated. At the same time – much less appreciated – we have a deluge of taxes pouring down on us: new taxes, as well as increases in old ones. More are expected (threatened?) in September.

There is a saying ‘Ουκ αν λάβοις παρά του μη έχοντος’ (you can’t take from him who does not have) – a little like ‘You cannot get blood from a stone’. It’s a mythological reference to Charon, who was the ferryman in Hades, carrying the souls of the deceased from one bank of the river Styx to the other. His fee was one obolus, and a coin was placed under the tongues of the dead, so that they would be able to pay him. But I digress. My point is that people are at the end of their tether – they have no more money.

Fact: 20,000 businesses will close in the next six months – we are quite a small economy, and that is on top of the many thousands that have already closed since the crisis started. How come the eggheads in Brussels don’t understand that if they don’t restart the economy they’ll never get their money back? Our government doesn’t seem to get it, either.

Fact: A lot of taxpayers are getting advice from their accountants to close their books or else they’ll be forced to close up shop. This is especially true in the case of professionals and freelancers like physiotherapists, masseurs, dog trainers, hairdressers, small shop owners and the like. Many are being forced into the ‘black economy’.

Fact: the new laws that are meant to alleviate matters for the less well-off result in the following logistics:
Someone whose income is €30.000 but declares €10.000, receives child support and the right to send one child to daycare for free. His disposable income after tax is €26.657,9.
Someone whose income is €30.000 and declares €30.000, receives no child support and has to pay for daycare. His disposable income after tax is €13.543,4 i.e. half of the evader’s.

Fact: in spite of the increase in taxation, the total of taxes collected keeps decreasing. Does this have anything at all to do with the above?(duh…)

Those who, for reasons of honesty or because they can’t do otherwise, pay their taxes, end up also paying for the rest. At the same time, the state is happily robbing a good part of the population, by not paying what it owes them while refusing to offset what they owe with what they are owed.

Fact: A lot of Greeks cannot afford to go on holiday once again this year, as seen by hotel bookings. So it is left to foreign tourists to enjoy the island life…

PS. I made a cheerful drawing, since my subject matter is so depressing…

Landscapes

Is this the country that is crumbling about our ears?
Looking at this prosperous, well-ordered landscape, it seems hard to believe.

And yet. Tractors are blocking the main roads at great cost to our stricken economy. Farmers are in endless dispute with the government who are finding it hard to negotiate with them, seeing as they were the ones who encouraged them in the first place.

As for the refugee situation, what is there to say? Everyone has seen the news. Our European ‘allies’ are in panic mode – the order of the day is sauve qui peut. Countries are looking to their own interests and repeated conferences and summits fail to come to any sort of agreement. Even measures that were supposedly ratified have not been implemented. Greece is making huge efforts but, unfortunately, it is too little, too late.

My friend Christina took these photographs on a road trip to Pelasgia, in Central Greece.

Battered by the daily news

The morning news make for grim reading at the moment. I take a quick glance through the headlines, my stomach knotting. It’s all a big mess, worldwide. Violence. Terrorism. Domestic murders. Killers on a rampage. Scandals. Corruption. Fighting. Destruction. Climate change. Of course it’s all fact, but sometimes the press seems to enjoy wallowing in it as well. After a summer spent stuck in front of various screens, I avoid turning on the television as much as possible.

In Greece things are still looking bleak. The private sector has mostly borne the weight of the crisis so far, the public sector being traditionally regarded by every government as an untouchable holy cow. It is enough to note that salary reduction in the private sector has reached 20-23%, whereas in the public sector it is barely 12,5% – without even mentioning the fact that most public offices are still employing a large number of people, many of whom do nothing. The increase in unemployment is also much higher in the private sector. Capital controls are still in place, and every new law passed seems to contradict the one before.

While being unemployed is horrible whatever your job, surely having a vibrant market would benefit everyone in the long run. This policy has created a downward spiral: international competitiveness is at an all-time low and every means of getting out of the crisis has been scuppered. A increasingly large number of firms, including shipping companies, are getting out and basing themselves elsewhere, mostly in the Balkan countries and Cyprus. There is also a huge loss of human capital as individuals are emigrating as fast as they can get a job abroad.

Not only are people given zero incentives to stay, but often special opportunities are lost as well. For example, a few weeks ago I read that Jason Bourne’s next adventure, set against the backdrop of the Greek financial crisis, is being shot in the Canary Islands rather than Athens. Why? Because the film’s makers were put off by red tape and a lack of tax breaks.
Last year culture minister Nikos Xydakis had proudly announced that the Bourne film would be made in Athens — claiming the effect on local jobs and trade would be akin to setting up a “small factory”. But afterwards the government failed to make good on promises of tax breaks offered in most countries. So now Spanish advertisements and street signs in Santa Cruz de Tenerife have been covered over with ones in Greek, while a local plaza is doubling as Syntagma, Athens’s central square. Walls have been daubed with graffiti in Greek and locals signed up to stage anti-austerity rallies.
It makes you want to pull your hair out.

And who is doing something about all this? Not our politicians, that’s for sure. As has always been the case in our long and troubled history, they are busy squabbling (still).The government is in above its head – rumors abound they’re not going to last long – and often does not even get the support of its own party; and as for the opposition, they’re having a ridiculous and costly fight over electing a new leader.

Christmas is approaching. I wonder how we will be able to conjure up a seasonal festive spirit this year.

Not everyone wants to cheat on their taxes

Irini* is an esthetician. She lost her job at an upmarket salon when it closed down abruptly. The owner, a shady entrepreneur with fingers in a lot of pies, had declared bankruptcy and was subsequently arrested for tax evasion. That was three years ago, and she is still owed a few months salary. Irini found another job immediately, but only part-time. She supplements her meager salary by offering facials at home. She gets paid in cash. She would dearly love to start a little business with a friend, but has yet to find a way to make it affordable.

Roula* is a masseuse, earning good money making house calls (as much as €1,000/week, on good weeks.) She has tried many times to start a proper business, because she wants to be able to declare a steady income so that she can ask for a bank loan in order to buy an apartment. This is unaffordable with the present laws, since she would need to invest a large sum to set up her own space. A sum she does not have. She is a single mother with a son to support, so she has been forced to take a part-time job where she is paid a lot less per hour, just so that she can qualify for some social security.

Myrna* opened a tiny cake shop in an affluent Athens suburb, investing a lot of her own money. Three years later, and although she has acquired a loyal clientèle and as much work as she can manage, if not more, she is still not making a profit. And yet she has to pay a lot of taxes. She might have to close down.

If people like these were given incentives in starting and running small businesses, they could each pay a few thousand in taxes yearly. One million people times one thousand in tax a year? Do the math. The state would get a cool billion, where now it gets nothing. In France, for example, if you have a ‘micro-enterprise’ declaring up to €23,000, you pay around €5,000 in tax. Again, do the math.
There are A LOT of such people in Greece. Proper laws would help with tax evasion, and with unemployment. Instead, thousands of small companies have been forced out of business, and the black economy is thriving. The capital controls, which – despite promises – are still enforced, are not helping the situation.

And another thing, it’s not very easy to make a budget when the laws change every two minutes, and some taxes are applied retroactively.

In another surreal twist, Manolis*, who is a farrier, was preparing his tax declaration form, when he was astonished to discover that the profession of farrier had been struck off the list! Unable to decide how to fill in the form, he went to the tax office where a harassed employee had no idea what he was talking about. He asked to see the person in charge, and was directed to an office where a man lounged behind a desk, drinking coffee.
‘Well, just put the profession closest to yours,’ the man told him, totally uninterested.
‘I shoe horses! So, what shall I put? Cobbler? Ironmonger?’ Manolis was both sarcastic and indignant.
The man looked at him.
‘Did we summon you here?’ he asked.
‘No. I came because I need to know what to do with my tax form.’
‘Oh, for god’s sake, man, what’s your problem? Just put what you like, don’t waste my time.’

Anestis* is a physiotherapist. A lot of his patients are covered by social security, which means they don’t pay him directly – he subsequently gets paid by the state. However, a law came out reducing the price of each treatment retroactively from €15 to €12 (effective since 2012.) In May, he was paid for 2014 – but, of €45,000 he was owed, he only got €15,000. He still has not received the rest, and has no idea when and if he will get any of it. He seems resigned to the fact that it will certainly not be the whole amount. Meanwhile, he’s had to pay €30,000 in taxes – the tax people having refused to offset his credit against his debt.

Now for the flip side of the coin. Something Greeks seem unable to understand is that ‘the State’ is not an abstract entity that gets its money from a higher deity. Cheating the government is cheating your family and neighbors, those who do pay. But people still admire a friend or colleague who’s found a clever way of getting around some taxes, refusing to understand that it’s their own taxes that will pay for the shortfall.

Nobody likes paying taxes. But paying taxes is more painful if you feel the government is robbing you, or if you feel you’re not getting anything in return (roads, schools, etc.). A change in mentality is desperately needed – on both sides.

* All names have been changed

Back to the Ballot Box

In order to resolve the problems in his party – the Left Platform faction has defected, depleting his majority – Greek PM Alexis Tsipras has decided to hold elections in September. Yet again, we are forced to choose the lesser evil. This, at least, is how I see it – but, judging from readers’ commentary in the papers, I’m not the only one. Comments range from mocking, to cynical, to downright outraged. Political satire, in the form of comic strips and caricature, is rampant.

Here’s an example from one of our leading comics artists, Arkas:

Translation: A leader is someone who can avert a catastrophe, which never would have happened had he not been leading in the first place.

The process of elections is bound to slow progress down – AGAIN. Greek ministers are not known for taking matters in hand rapidly once they are installed in their new position. The economy will continue to stagnate. Recovery will be delayed. However, the Europeans’ response to the news (especially Mrs. Merkel’s) has been positive – which has to be a good thing.

So, for the third time in eight months, we shall wend our way to the local school and stand in line to cast our vote for something we are not enthusiastic about. Of course, some people might be enthusiastic, but I have yet to meet them. At the moment, Tsipras is expected to win. Let’s hope that if he does, the result will put him in the position to govern more efficiently.

White Smoke

After a long and episodic night (beats me why the session couldn’t start at 9.30 a.m. instead of 9.30 p.m.) the Greek parliament voted in favor of the rescue package.
However, in the process, P.M. Alexis Tsipras lost the majority in his own party (32 of his own ministers voted against him) so has now to decide whether and when to hold elections. Elections are obviously the last thing Greece needs right now. But what is certain is that he cannot implement the very difficult measures contained in this package with the present government.
The Eurozone approved a Greek bailout of up to €86bn in loans over the next three years, in return for far-reaching reforms, essentially tax rises and spending cuts.

“Together, we have looked into the abyss. But today, I am glad to say that all sides have respected their commitments. Greece is living up to its ambitious reform commitments,” Juncker said in a statement. “The message of today’s (meeting) is loud and clear: on this basis, Greece is and will irreversibly remain a member of the euro area.”

Following the approval of the new deal, the International Monetary Fund has called on eurozone ministers to offer Greece debt relief.

Should we Greeks feel relieved? Happy? Are we safe? Hard to tell. Readers’ comments in the papers show anger, anxiety, and general disgust with and mistrust of the politicians involved.

Jokes as usual, are proliferating. Most are untranslatable, but I offer the following two:
😆 In the end, the exact question asked at the referendum was: Are the austerity measures proposed enough for you or would you like more?
YES meant ‘They’re enough for us,’ and
NO meant ‘No, we want more!’

😅 Phew! Thank God, Greece will not go bankrupt now. Only the Greeks will.

Capital controls: 15 ways in which they’ve changed our life

1. We have to wait in long lines at ATMs to get our daily cash allowance (€60 which has become €50 since the banks have run out of €10 and €20 notes.) Many people have acquired a ‘secret’ or ‘favourite’ machine – one that is more reliable/less crowded that others.

2. Public Transport is – temporarily – free, only a lot less buses are running. A friend arrived at work late yesterday because she had to wait one hour and two minutes for her bus (usually there’s one every ten minutes.)

3. Any subscriptions to foreign sites (such as extra iCloud storage) are frozen, since Greek credit cards cannot pay money abroad. Same goes for Amazon or other online shopping.

4. Venues booked for weddings or christenings – there are a lot of those at this time of year- ask for part of the money in advance, preferably in cash, so they can pay for the food, etc. People are being creative about their ‘big day’: flowers from the garden, a cousin will do the bride’s hair, sister takes the photos etc.

5. Funerals can be paid for in installments.

6. Amongst my friends, the only people who have gone on holiday are those who have houses on the islands, or those who had prepaid for a trip somewhere. People trying to book rooms are asked for money in advance, in many cases in cash. Sometimes a friend on the spot can lend a hand.
However, tourists are OK since ATMs still seem to disburse money to foreign credit cards.

7. Some flights have been cancelled and many airlines are not accepting bookings from Greek tourist companies. However, around 15.000 internal flights will be available for around €10.

8. Businesses that deal in cash pay their employees in cash and get praise. Those that don’t can’t pay at all and get complaints. A lot of people have been asked to take unpaid vacation until the banks open (and are hoping that by the time this happens, their companies will still be operational.)

9. Dentists report cancellations for cosmetic appointments such as teeth cleaning or whitening.

10. Pharmacies report a rise in sales for medications used in chronic diseases such as diabetes as patients stock up, fearing a future lack.

11. People are paying with credit cards wherever possible in order to save what little cash they have. But some retailers are already refusing plastic.

12. Meanwhile, people who had money in the bank are trying desperately to spend it, fearing future haircuts. They’re buying up things they consider to have a resale value, such as jewels, cars, and electronic gadgets. To take advantage of this trend, luxury clothing retailers have started early and generous discounts (summer sales in Greece normally start in August.)

13. Generally people are trying to spend any money they have, so bills and taxes are paid promptly!

14. Imports and exports have become very complicated.

15. A lot of shows, especially those with expensive tickets, have been cancelled.

The big picture

“It is never too late to be what you might have been.”
― George Eliot

A sigh of relief? An all-night marathon ended in ‘white smoke,’ as Greece and its creditors managed to reach an agreement that secures the country’s place in the Eurozone. From Grexit to ‘Greekment’, as Donald Tusk, head of the European Council, dubbed it.

Of course, a lot of work remains to be done, since Greece has an obligation to immediately implement draconian reforms. There is political uncertainty because this implementation depends on the cooperation of all parties. For the Greek people, more hard times are ahead.

There is a feeling, abroad as well as in Greece, that the terms of the deal are punitively harsh. Nobody is celebrating. However, I think one must remain positive. Catastrophe has been averted, given that it appears the government had no plan B in case of a return to the drachma.
I hope Greece will take this chance to put its affairs in order, something which is long overdue. It’s sad and humiliating to accept, but maybe the political system will finally be obliged to break out of the vicious circle they’ve been in for so long, and bring about a real change in mentality.
Let’s hope this will be the making of a modern, self-sufficient new Greece.

At the same time, this crisis has shaken the foundations of Europe considerably, and exposed its flaws. There is an immediate need to look at the bigger picture. Today Europe is faced with huge problems, starting with its failure to alleviate the poverty of many of its citizens.
Amongst other things, it has to cope with wave upon wave of immigrants seeking a better life within its borders. It has to deal with the threat of terrorism. And it has to compete with emerging markets where labor is still both cheaper and willing to work much longer hours.
Europe has shown it is not united, nor has it found a way to accommodate the differences, cultural or other, between its members. Changes are needed; rifts must be healed and hard questions answered if the European machinery is to keep moving forward smoothly in future.

It ain’t over yet…

How better to start the day than with an ironic take on events by one of my favourite cartoonists, Matt.

On to the news:

In a turbulent all-night session, Greek PM Mr. Tsipras managed to get Parliament to ratify austerity terms previously rejected by his government, in a desperate bid to secure the country’s future in the Eurozone.

Mr. Tsipras explained his about-face by saying he did not get a mandate from the people to take Greece out of the Eurozone, confirming his pre-referendum assertion that a NO vote was not a vote against Europe. He has recognized that the pain of capital controls and economic collapse is too much to bear. Mr. Tsipras had promised voters a miracle which he was unable to deliver – the only way he can now redeem himself is if at least he achieves some restructuring (or what Mrs. Merkel calls re-profiling) of the debt.
He got 251 votes, bolstered by opposition parties, but lost the majority within his own party. The left faction of SYRIZA voted against, which is understandable from their point of view. They have been against all along. They accuse the ECB of using ‘liquidity asphyxiation’ to bring a rebel democracy to its knees. And they accuse the PM for not having a Plan B if Europe did not give in to his demands.

Major architect of the whole fiasco, ex Finance Minister Varoufakis, did not vote. He left for his holiday home on the island of Aegina, citing ‘personal reasons’ – a bizarre turn of events that was widely condemned by all parties. Readers’ comments in the press have vilified him as a rat leaving a sinking ship which he himself helped scuttle.

New Finance Minister Mr. Tsakalotos admitted that the measures proposed will reinforce austerity, but insisted we had to look at the big picture and promised to aid the weaker members of society.

However, Mr. Tsipras warned that the battle is not won yet, since it is far from certain the new proposals will be accepted by the lenders.

Conclusion: We will – should? – be happy if we manage to achieve a new agreement which will be similar to, and tougher than, the one we nearly got before the referendum.

To end on a lighter note, yesterday farmers in Thessaloniki rolled up
with truckloads of watermelons which they proceeded to distribute to the pensioners waiting in line in the heat outside banks to get their money. They thought they could do with some refreshment.