Global Issues
ECONOMY: Greece Melts More than Most
The financial meltdown has finally visited Greece. European Commission figures leave no space for political manoeuvring by the Greek government, the usual way to deal with EC control and counsel.
The European Commission, the executive arm of the European Union, foresees zero growth accompanying a sharp increase of public debt and unemployment, expected to add 40,000 to the jobless 350,000. These figures do not take into account the thousands of irregular migrants in the vast informal market.
Disappearance of foreign investment will march hand in hand with that nightmare of the market - a serious drop in private and public consumption. Not least, the already frustrating import-export 'balance' will mean little in a country that practically produces nothing desired by international markets while importing almost everything available in them.
The stark prediction comes amidst a period of intense social upheaval in Greece, marked by widespread rioting in December. This was seen by other European countries as an expression of economic frustration, and a taste of what recession may bring.
Some reports in Greek media suggesting that Joaquin Almunia, the commissioner responsible for economic and monetary affairs, may push for a 20 percent cut in national public spending has caused anxiety in government circles.
Such a move is hardly expected to deal with the recession that is hitting some of the most important sectors of the Greek economy. Any economic improvement appears unlikely in the first half of this year.
Diminishing economic growth rates coupled with a severe slowdown in the tourism, shipping and construction industries - the so-called pillars of the Greek economy - may increase the burden on the low-income sections of society, affecting social cohesion and race relations through extensive job losses.
Shipping income from dry cargo has fallen sharply; Greek shipping tycoons maintain the largest commercial fleet in the world. Furthermore, the fall of the British pound and the Russian rouble is expected to deter British and Russian tourists.
Gikas Hardouvelis, professor of financial and banking administration at the University of Piraeus based in the Greek capital says, however, that the relatively closed nature of the Greek economy may also limit the threat to it. The bigger danger may be the political after-effects.
'What is expected from politicians is a mature set of proposals and a sober administrative strategy which sets priorities and defines how they will be concluded, instead of promising announcements,' he told IPS. Hardouvelis believes that the government will struggle to bring the situation under control. And fast developments might mean that the situation spins out of its grasp.
'They will have to stay the course anyway; early elections at the moment would push the country into long-term political turmoil. Many things depend on whether they will manage to gather the political capital in order to face challenges that lie ahead.'
Everyone expects unrest provoked by deterioration of economic and living conditions to continue. After the student riots of December, farmers have taken to the roads, blocking the national highway network with tractors.
Farmers from Creta, the biggest Greek island, headed for Athens last weekend to protest. They were stopped at the harbour where they clashed with riot police for two consequent days. Farmers are demanding support for production and fixed subsidies to avoid ruin in an increasingly competitive market.
The government offered a package of 500 million euros to them, emphasising that it is unable to add another euro. Meanwhile, the surfacing of a 4.209 billion euros deal in military spending provoked cynical comments.
Under growing pressure the government appears increasingly out of touch with society and its priorities. A government lawsuit against an announced strike by ADEDI, the general union of private employees for welfare and pension matters, has drawn harsh criticism.
'The announcement of this strike action has followed all legal procedures,' Despoina Spanou, member of the executive committee of ADEDI told IPS. 'The administrative and political deficits of this government are leading it deeper into autocratic positions in a period that it should look for consent.'
© Inter Press Service (2009) — All Rights Reserved. Original source: Inter Press Service