Is Greece a Failed State?

Not yet. But it’s running out of time -- and money.

BY NICK MALKOUTZIS | MARCH 1, 2012

Two years ago, Greece's Prime Minister George Papandreou compared his country's travails to "a new Odyssey." Since then, about half a million Greeks have lost their jobs, tens of thousands of businesses have closed, the economy has shrunk by more than a tenth, Athens has witnessed several riots, and Papandreou's government has collapsed. If Greece is truly following the course of the mythical adventurer, then it's in danger of being eaten by the monster Scylla or sunk by its partner Charybdis.

Papandreou's successor, technocrat Lucas Papademos, is attempting to steer the country to calmer waters. European Union leaders are expected to give the final approval at the end of this week for a new 130-billion-euro loan package Papademos brokered to prevent the disorderly bankruptcy of Greece, which is also seeking to slash its huge debt by more than 100 billion euros through a bond swap involving private investors. Though it's the biggest sovereign bailout ever, it doesn't disguise the fact that some of its eurozone partners have accepted Greece is a lost cause, a failed state that should be cast adrift. German Finance Minister Wolfgang Schaeuble recently referred to Greece as a "bottomless pit." His Dutch counterpart, Jan Kees De Jager, expressed grave skepticism about Greece's ability to live up to expectations. "Promises are not enough, not anymore," he said. Images of a neoclassical building housing a famous cinema being burnt during rioting in downtown Athens in February and the repeated delays by coalition leaders to agree to the measures the European Union (EU) demanded for a new bailout added to the impression that Greece had gone off the rails.

How Greece ended up here has been reported ad nauseam: political corruption, economic inefficiency, and systemic failure at both a national and European level. The last two years have confirmed that Greece has trouble functioning the way one would expect of a country that has been a member of the EU since 1981 and the eurozone since 2001. Lacking a coherent crisis-busting plan of its own, special interests, partisan politics, and bureaucratic dead-ends have all held up the country's progress since it appealed to the EU and the International Monetary Fund for help in May 2010. Throw in Europe's lingering economic crisis, and there is little chance of an economic recovery for Greece any time soon.

Greece signed up in May 2010 to ambitious structural reforms as part of the first, 109-billion-euro, loan package from the EU and the IMF. While many of the lenders' demands were never met, the government proved very effective in applying austerity measures. Wave after wave of tax hikes, pension cuts, salary reductions, and drastic public spending adjustments crashed down on the crumbling Greek economy, which had been in recession since 2008. Tens of thousands of businesses closed, retail sales and industrial production plummeted, unemployment more than doubled to 21 percent, disposable income was slashed by a quarter, and the economy contracted by almost 7 percent of GDP last year alone. The lack of political will for deep reforms, the shock fiscal therapy, and the constant hounding from some of its northern European partners make Greece appear lost.

But is Greece really slipping out of the developed world, as some have suggested?

Milos Bicanski/Getty Images

 

Nick Malkoutzis is deputy editor of Kathimerini English Edition daily newspaper and a blogger at Inside Greece.

 

HELENAT

2:10 AM ET

March 2, 2012

Is Greece a Failed State?

The jobless rate is 21 per cent, and if this figure is to be believed: six out of 10 educated young people under the age of 30 are out of work. These people are Greece's leaders of the future. If they are being kneecapped at the most crucial time of their lives when they should be putting their education to good use and building careers and productive lives, then the future for Greece looks very grim indeed. Greece has long had a robust worldwide diaspora - of Greeks who migrate when the country is so dysfunctional it cannot offer a stable future. I fear a new wave of emigrants has already started.

The generation that came to power after the Junta fell is nearing retirement. Hopefully some of their corruption will retire with them.

 

ACADEMICO

5:45 AM ET

March 2, 2012

This article is Greece: all copy-paste, no research

The 'expert' author gives 3 examples for Greek recovery: a snail farm, a soup kitchen, a potato story. These 3 examples are the mantra of Greek recovery, they are rehashed by the Greek authorities and its cronies in all Greek media. The rest of the article regurgitates similar information.

The recent media campaign was, 'Give Greece a chance'. A chance for what? It had its chances in the EU, in the Euro, in fixing its statistics, in fighting corruption. In doing some real investigation. What happened? Nada, zilch.

And here, in FP, a so-called Greek specialist simply copy-pastes what has been written ad infinitum. There is a huge difference between marketing the Greek disaster zone for personal promotion like these gentlemen seem to be doing (no problem, people have to make a living), and getting your hands dirty in digging your way out of this disaster zone. It's called work. But in Greek, 'doulia' (work) means servitude. And Greece is the land of the free (of work).

 

PATRICKA

8:06 AM ET

March 2, 2012

Greece

I would like to think that Greece can turn a corner. Unfortunately we have been given false hope and mirages so many times now that it is hard to believe.

I read a good article earlier today by the economist Shaun Richards who posed this question. Are the Greeks now worse off than before they joined the Euro? Here is his analysis.

"I decided to look for some perspective as to how Greece now stands over the whole Euro period and found it in her latest Household Budget Survey. Back in 1993/94 average monthly household expenditure was 1554.14 Euros per month which rose to 1887.24 Euros in 1998/99. So before the Euro it was growing. However the latest number for 2009 showed a decline to 2065 Euros from 2008?s 2143. Are you thinking what I am thinking?

It looks if we project Greece’s decline since then that average monthly household expenditure levels in Greece may have got near to Euro entry levels last year and may well drop below them this. Now the survey was not carried out every year in the past so I cannot be definite but it looks as though we have now entered a phase where Greeks are worse off than they were at the time of Euro entry on this measure. Not exactly what it said on the tin was it? (All the numbers are at 2009 prices).

It is by no means conclusive proof but it cannot be rejected out of hand either."

Hard to dismiss isn't it?

 

AEGEUS

10:35 AM ET

March 2, 2012

What brought Greece to its present-day status

The OP states:

QUOTE
How Greece ended up here has been reported ad nauseam: political corruption, economic inefficiency, and systemic failure
UNQUOTE

Sorry, I don't agree. The causes of Greece's predicament, in my educated opinion, are the following:

a. More than two decades of Socialist rule, during which, the Socialist Party (PASOK) borrowed money without limit from foreign investors, in order to secure for its voters employment in the Government sector as paid civil servants, or military specialists.

In Greece, we have got over one million Government & Public Sector Employees/Civil Servants/Military specialists, maybe more, nobody knows for certain, as the State is still not sure how many people they actually pay for each month.

I estimate that about 80% of those one mllion or more Government & Public Sector Employees/Civil Servants/Military specialists, are voters of the Socialist, Communist and other Leftist parties. This is due to the fact that, the Socialist Party (PASOK) took great care to staff the Military and Civil Administration with their own (Socialist) and other leftist voters. They have had over two decades to do that.

b. About 40 years of social and ideological dominance of various extreme leftist political ideologies.

Suffice to say that you can find many people here who have never heard of ancient philosophers like Plato or Aristotle, but who are very familiar with, and even can quote verbatim parts from the writings of, the likes of Piotr Kropotkin, Mikhail Bakunin, Vladimir Ilic Lenin and so on.

This is because the Educational system of the country is dominated by the Left, and has been so since 1974. Universities here are like ghettos, wherein one can find every drug imaginable, junkies, and several different Leftist and Extreme Leftist groups, some of which form their own gangs.

University professors get regularly beaten up by Anarchists/Leftists and /or "Leftist Activists". The same, regularly practice either arson (burning down university buildings) or theft (stealing mutli-million euro equipment).

To sum it up, the dominant ideology and national product in Greece during the past fourty years or so has been the so-called "Ethno-nihilism" or "Natio-nihilism", i.e. the idea that the Greek nation and nation-state as such is evil, and must be destroyed.

Contrast that with the Israeli National Motto of the last decades, "Am Y'israel Chai", "Israel lives and will live", and you will understand why Greece has ultimately failed and Israel has ultimately prospered, although both nations emerged completely destroyed from WWII.

As an endnote, imho, Socialism, Communism and the Left have achieved, in a mere 37 years, what Turkey has failed to do in 191 years.

 

MARVA CAGNON

9:25 PM ET

March 28, 2012

Greece is failing

How Greece finish economic crisis, political corruption, economic inefficiency, and systemic failure at both a national and European level. What should Greece government do to change everything " about half a million Greeks have lost their jobs, tens of thousands of businesses have closed, the economy has shrunk by more than a tenth". In my opinion, Greece's Prime Minister George Papandreou as well as Greece government are responsible for this. Greece need to have right policies to improve the economy.