Greek despair over further cuts sees suicide and crime rates on the rise

By helena Smith, The Guardian

It is 11pm. A group of men and women, obviously foreign, descend from a bus that has dropped them off at the lower end of Syntagma Square, the plaza that faces the Greek parliament.

They walk past a man curled in a foetal position at the top of Ermou, a pedestrian street that leads off the square. They pass another slumped across a cardboard sheet, his head in his hands, then a tousle-haired immigrant, arms outstretched, as he murmurs: “Mr, Mr, euro, Mr.” But the men and women don’t look. They walk on cheerily chatting towards their hotel.

The group, a team of technical experts mostly from the EU, are in Greece to monitor the state of its debt-stricken economy – and after several days spent poring over ministerial figures they know how dire the situation is. They also know that on the ground things will get a lot worse when their bosses at the EU, the International Monetary Fund and the European Central Bank (the “troika”) fly into Athens on Tuesday to formally approve a new wave of recession-inducing austerity in return for aid.

Amid feverish speculation that Greece is on the brink of default, 16 months after it received the biggest bailout in western history, the country is the focus of talks at the IMF‘s annual meeting this weekend. There are few who do not believe that time is running out to solve a crisis that began beneath the Acropolis two years ago but, with markets far from appeased, now threatens the global economy.

Surviving on rescue loans from its “troika” of lenders, the beleaguered Greek government is between a rock and a hard place, under immense pressure to make radical reforms in exchange for support, but also pressured by a populace exhausted by the measures.

“Europe‘s politicians have persistently been behind the curve. They have made the situation much worse with their policy U-turns, conflicting messages, half-hearted measures and piecemeal approach” said Yannis Caloghirou, an economics professor at the National Technical University of Athens. “The lost time has produced a lot of uncertainty, which has created a lot of fear. For the first time in decades, people are really frightened. They’re afraid of the future.”

In Athens, panic is sketched not only on the faces of those who have become increasingly impoverished by the cost-cutting policies the socialist government has been forced to apply. Last week, as officials announced yet more “shock and awe” measures – job losses, tax hikes and pension cuts in a desperate bid to trim the bloated public sector and secure enough cash to cover public sector wages and pensions — panic was heard in the voices of the ruling elite.

“People, justifiably, think the crisis is what we’re going through now: cuts in wages, pensions and incomes, fewer prospects for the young,” said the Greek finance minister Evangelos Venizelos, looking visibly drained as he responded to the uproar over the measures. “Unfortunately, this isn’t the crisis. This is an attempt, a difficult attempt, to protect ourselves from crisis. Because the crisis will be [Greece following] Argentina: the complete collapse of the economy, institutions, the social fabric and the country’s productive base.”

With Athens confronting a debt load of ¤360bn [£314bn] – five times the size of Argentina’s $95bn default in 2001 – there was, he said, little choice. Faced with crippling sovereign default, the socialist government had to take an axe to the profligate public sector, whose 800,000 employees more than anyone have borne the brunt of the crisis.

The alternative, said Venizelos, was too awful to contemplate: deeper recession, political turmoil and the collapse of the banking system. And worse still, the country’s expulsion from the EU.

But after two rescue packages worth ¤210bn, and belt-tightening that has seen the income of the average household drop by 50%, the appetite of Greeks for more measures is clearly running out.

Greece’s great economic crisis has been a gradual war of attrition. Massive job losses, tax increases and galloping inflation have sapped the nation’s energy and, increasingly, Greeks no longer believe what their politicians say. With cuts instead being blamed for slashing consumption, deepening recession and missing deficit-reducing goals, austerity is seen as a pointless exercise that far from exiting the country from crisis has exacerbated its plight.

On the street the view is hardening that the medicine prescribed to rescue Greece’s economy is simply not viable.

“The belt is now at the eighth notch, it’s become so tight there are only two more left, but nothing has improved,” said Georgios Valsamis, a young taxi driver who joined a barrage of strikes that brought public transport to a halt last week. “People in power, MPs, they’re like robots, they do whatever those foreigners [the EU, ECB and IMF] say. We are no longer willing to be a laboratory for failed policies. Low-income earners, those who have been really hit, can’t endure much more.”

That ordinary Greeks, among Europe’s lowest wage earners before the crisis erupted, are being stretched to breaking point is too obvious to ignore. When austerity was first introduced, after the newly elected socialist government discovered the budget deficit to be three times higher than the outgoing conservatives claimed, families took the blow by reining in spending and tucking into savings.

But for pensioners forced to survive on less than ¤500 a month and families hit by unemployment that has reached a record 16%, there is no more room for manoeuvre. The death of faith in the future is the biggest fear.

“The worst part is perhaps psychological because there is no light at the end of the tunnel, no source of hope,” said Dr Thanos Dokos who directs Eliamep, a thinktank in Athens. “When you make sacrifices and you know they will come to something you don’t mind. But that is not the case.”

With the economy set to contract for a fourth year in 2012, Greece is not only mired in a recession not seen since the second world war but has become increasingly unhinged by the crisis. Athens, already strained by a mass influx of immigrants and home to half of the country’s 11 million-strong population, has been the worst hit amid soaring crime and lawlessness.

A new underclass has appeared: in the homeless and hungry who roam the streets; in the spiralling number of drug addicts; in the psychiatric patients ejected from institutions that can no longer offer them a place; in the thousands of shop owners forced to close and board up businesses; in those who forage through municipal rubbish bins at night; and in the pensioners who make do with rejects at fruit and vegetable markets. Suicides have also risen, with help lines reporting a deluge of calls – 5,000 in the first eight months of 2011 compared with 2,500 for all of last year. The announcement this month of a flurry of new taxes, including a draconian duty on real estate, has come as a further shock.

With the prospect of austerity for years to come, a growing number of young Greeks are either returning to their rural roots or fleeing to countries that can offer them a job in what is described as the biggest emigration wave since the 1960s.

“The measures are the blood price Greeks have to pay so that countries like Germany can convince their own constituents they are being punished for years of reckless spending,” said Dokos. “The government’s failure to implement reforms has made the situation worse, but the measures are also counter-productive. The negative impact on the economy is higher than the cash-flow the country needs.”

With desperation has come a collective sense of guilt and depression – more dangerous, say analysts, than even the social tensions that threaten to tear the country apart.

Recently hundreds of Greeks piled into a lecture hall to hear Fotini Tsalikoglou, a prominent psychology professor, speak on “the power of loss”.

“Greeks feel like they are in a bad dream,” she says. “You wake up not knowing what will be overturned today of what was overturned yesterday. A common thread that unites people is the experience of fear and desperation.”

Political chaos is also on the horizon with the latest measures rupturing the ruling Pasok party as never before. While prime minister George Papandreou appears intent on changing Greece with long-overdue structural reforms, dissidence among his own MPs has cast a shadow over the government’s survival. With politicians frequently attacked by angry voters, many socialists say they no longer have the stomach to endorse measures that are turning the nation into “a poverty house”. EU and IMF inspectors expect the new steps to be passed by parliament this week.

As the mood has darkened, so has the sense of injured pride among a people who are acutely aware of their ancient lineage and feel they are being made the scapegoat by the international community. “Kick out the Troikans. We demand respect. We are a proud nation,” proclaimed a banner held aloft by protesting policemen last week.

“Greece’s fate depends to a great degree on policy decisions made in Europe,” says Caloghirou. “EU leaders have to act quickly. They have to vote through the second rescue programme [agreed in July, but still not passed by eurozone parliaments] now. In uncertainty you never know what will happen and that is the biggest problem, the biggest fear.”