For Prime Minister Antonis Samaras, the tangible signs
of Greece’s recovery are the tourists pouring into Athens from cruise ships and
airplanes. Olympia Angeli says she’s lucky those tourists keep her employed.
The 28-year-old is clinging to the security of working
as a waitress even as her wages have fallen by half in three years. Nor does
she know when she can return to her studies in tourism management: She can’t
afford to lose her 500-euro ($652) monthly take-home salary, needed to support
her aging parents.
“A lot of people moved back home because of the crisis
so their parents could support them,” she said in the historical neighborhood
of Plaka at the foot of the Acropolis. “But I’m an only child and I never moved
out. I support my parents, help pay the rent, help look after them.”
Not becoming one of the 1.3 million people out of work
is an abiding concern for the 3.6 million Greeks still holding a job in the
sixth year of the slump, now being called one of the deepest peacetime
recessions of any industrialized economy. Gross domestic product has dropped 22
percent since 2008.
The ancient marble streets and squares of Athens, many
now inhabited by beggars and once thronged by angry protesters, show the price
citizens are paying for their leaders’ policy mistakes. Even as exports rise in
Italy, Portugal and Spain and investment by U.S. companies returns to Ireland,
Greece remains the poster child for the euro’s three-year existential struggle.
No Investment
“Greece has the holy trinity of crises,” said Andreas
Koutras, an adviser at the Lucerne, Switzerland-based investment company
SteppenWolf Capital LLC, an investment fund that holds Greek debt. “It has a
public debt crisis, a bank crisis and a cultural-political crisis. These are
self-feeding. Greece has become the lighthouse of Europe: Steer well clear of
that area.”
While wage and pension cuts have slimmed the country’s
deficit, a slump in consumer confidence, a failure to tackle tax collection and
a 2013 debt burden the International Monetary Fund says will hit 175 percent of
GDP are keeping up the pressure.
Special Report: Hope Dawns for Europe's Recovery
A state-asset sales plan underpinning 240 billion
euros in pledged aid has been repeatedly overhauled as buyers fail to appear,
even after German Chancellor Angela Merkel vowed to prevent a euro exit.
The International Monetary Fund and European Union program
for Greece has left the country on a different trajectory than those of Ireland
or Portugal, Bruegel, a Brussels-based research institute, said in a May
report. It compared the effectiveness of the loans-for-austerity policies
imposed on the three euro-area nations.
‘Uncertain’ Outcome
“The Greek program may still achieve its ultimate goal
of keeping Greece in the euro area and of making it able to recover and grow,”
the report said. The IMF and the EU “have had to commit many more resources and
for a much longer period than initially envisaged and results remain deeply
disappointing and the ultimate outcome uncertain.”
The unemployment rate of 27.4 percent is more than double
that when Greece started receiving the first installments of its international
bailout in May 2010, jeopardizing the gains made retooling an economy that
plunged Europe into the debt crisis. The rate will still be 21 percent by 2016,
according to an IMF forecast published June 5.
Angeli said she stuck with waiting tables to avoid
joining the people who ended up leaving the country to find work.
“I could have left two years ago with a friend who
went to the U.K.,” Angeli said as she sipped coffee in Plaka. “She abandoned
her studies here. She saw only darkness, darkness, darkness and said ‘I’m not
going to drown in this.’”
The friend got a job working in a pub on her first day
in London and is planning to buy an apartment, Angeli said.
More Stable
Signs of progress were visible as recently as last
April, when Samaras, 62, persuaded the troika of the IMF, EU and European
Central Bank to release more loans. The premier declared Greece was on the road
to recovery.
“Many say that it is darkest before the dawn,” he said
April 16, a day after the accord. “Today we believe, more than at any other
time, that it is starting to dawn.”
Borrowing costs dropped to their lowest since they
were part of the biggest restructuring in history in March last year and the
Athens Stock Exchange (ASE) soared 142 percent from its June 2012 low to a high
of 1,152.60 on May 17.
Then everything unraveled. In June, the country failed
to draw any bids for the sale of national gas company Depa SA, punching a new
hole in finances. Samaras’s decision to shut the national broadcaster to reduce
the state payroll backfired when coalition partner Democratic Left quit the
government in protest. That raised the specter of early elections that polls
show would be as inconclusive as last year’s.
Golden Dawn
The party that continues to make inroads is the
anti-immigrant Golden Dawn, with its red, white and black flags reminiscent of
Nazi swastikas and food parcels only for those of Greek blood.
Even an agreement by European governments to parcel
out funds, including 2.5 billion euros in July, hasn’t kept the stock index
from becoming the worst performer year-to-date among 18 western European
markets. Greece’s benchmark 10-year bond yield, while it has decreased from a
2013 high of 13.04 percent on March 27 and was as low as 8.10 percent on May
22, was 10.67 percent on July 12.
Unions have signaled they’ll fight plans to put 25,000
public servants in line for possible dismissal by calling a general strike for
tomorrow. Samaras’s reduced majority of 155 lawmakers will be asked the next
day to vote through the legislation needed to receive the funds.
Tourism Taxes
The government is still struggling to make everyone
pay their fair share in taxes.
The tax crimes squad conducted 841 checks on June
21-24 on companies in tourist areas including Santorini, Mykonos, Rhodes and
Skopelos. Of that number, 381 were found to be breaking tax rules for a total
of 822 infringements, such as not issuing receipts, not paying sales tax, not
registering visitors at hotels or not registering employees.
Even after restructuring, Greece’s debt will only fall
to 124 percent of GDP in 2020, according to the IMF June report. The country
owes 318 billion euros, mostly to the IMF and euro-area taxpayers, Alternate
Finance Minister Christos Staikouras said on July 3.
Only Debt
“I don’t see any change at all in the sheer size of
the debt,” said Bruce Stout, manager of the 1.5 billion-pound ($2.3 billion)
Murray International Trust at Aberdeen Asset Management in Edinburgh and a
visitor to Crete this year. “For a generation it’s all they’ve ever known:
debt.”
That’s not obvious to the Germans, Italians, Americans
and Australians milling around the New Acropolis Museum, across the street from
where Angeli works. On a recent day, street entertainers in shorts and beanies
breakdanced on the walkway.
Just a few minutes’ away there are graffiti-scrawled
neighborhoods, where Greeks and others sleep in the doorways of banks and
stores. Similarly, the airport buses disgorging tourists onto the streets of
the main Syntagma Square opposite parliament are often greeted by beggars
crouched on the edge of sidewalks, hands outstretched.
Angeli, who lives in a rented apartment with her
parents, age 77 and 65, says she turned down her first offer of a university
place studying history at Ionian University because “history doesn’t put food
on the table.”
She was accepted into an Athenian technical institute
that teaches how to run companies in tourism, an industry accounting for 16
percent of GDP and one in five jobs, according to the World Travel and Tourism
Council.
Angeli considers herself lucky because she’s managed
to support herself throughout the crisis even “as businesses shut down one
after the other.” She is hopeful that she can return to finish her degree so
she can open her own business or at least move up to managing one.
“It’s not total darkness; there’s a dawn maybe,” she
said before heading back to work. “But it’s still really far in the distance.
It’s taking a long time.”
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