Austerity and Greek Debts

By Naveed Qazi | Editor, Glove Upfront

There is clamour in Greece about Tsipras administration doing a mere lip service on economic changes which they loathed in election rallies, after their mandate win. In July, 2015, the bailout programme was defended by Tspiras and it has to go well with the hopes of the Greek public.

But, there has been no real enthusiasm shown for tax reforms. Rather, there has been a tax surge. 

More than 60,000 Greek farmers have been asked to pay additional taxes and pre-pay at least fifty percent of next years tax. Some 70,000 businesses have to pay hundred percent tax for next year in advance. Every service employee in government service will have pension cutbacks.

The Greek leaders don't only need a credible strategy which will drive them out of debt, but they also got to have an eye on their public expenditure. Most of the Greek bonds have been sold off by international banks and foreign investors, which means, that these institutions are no longer responsible regarding what happens in the Greek economy.

Greece came into crises after the Wall Street had a slump in 2008. There was a hue and cry about the soundness of the Greek finances in 2009, and with the result, Greece was thrown out of the lending business. By the end of 2010, it had announced bankruptcy. 

To avert the economic dangers, the so-called troika, the International Monetary Fund,  the European Central Bank, and European Commission issued bailouts for about 240 billion Euros. However, these bailouts came at a price, which forced the leaders to impose harsh austerity measures, requiring budget cuts and tax increases. 

There also have been stories of tax evasions, corruption, and oligarchic habits plummeting Greek economic system. However, the mockery by the banks and investors has been to get something in return, under punitive conditions, thereby showing the pawns of vicious capitalism the world has been plunged into.

But as observers, one might ask: why is Greece suffering even after the release of bailout funds? The truth actually lies elsewhere. Most of the finances which the country received have gone into paying off its loans, rather making its way into the economy. Healthcare is one of the worst hit public sectors in the country. There have been cases where even cancer patients have been denied treatment. There are harsh capital controls with long queues on the automated teller cash machines with a limit of sixty Euros a day. With the result, the country still has a huge debt load and unemployment has risen up to twenty-five percent.

Dozens of Alexis Tsipras’s own elected members of his left-wing Syriza party have refused to back Greece’s third bailout package, and about twenty-five per cent of far left dissidents in his party have formed the third biggest group called the ‘Popular Unity.’ 

Greeks even have shown their further mistrust in politics by presenting a low voter turnout, which was below 57%, even one polling station in Athens reporting only twenty-five voters during a three hour period. Migrant crises from the middle east was another problem that had affected the voting in the last election. About three people had died in anti-austerity protests in Syntagma Square in April 2010, when a petrol bomb was thrown into a nearby bank. In April 2012,  a retired pharmacist living on pension had shot and killed himself and blamed the act on the government.

Recent problems associated with the Euro currency have also implied certain economists to raise questions about its membership with the Euro Zone. The main problem with the Euro has been the recent ease of the Growth and Stability pact, which has left the currency with an uncertain management structure made up of the European Bank, the Commission, and individual governments all having an independent influence. If there are no productive formal relations between these institutions, then what is the point of power autonomy in the first place? 

So if by any chance, Greece left the Eurozone, which is known as ‘Grexit’, many policy thinkers believe that it would not be such a catastrophe.  Many still believe that if the country pulls out, it would fare much better. 

Greeks have taken to social media to express their foment on the crises. According to them, these deals have no social conscience. Many citizens have voted against these bailouts, which they believe, will have dire consequences on the common man.