July 29, 2010
As the summer holiday season gets under way in a Greece slumped in recession, striking truck drivers this week paralysed the country, cutting off fuel and food supplies. Air traffic controllers have been working to rule. Picketing seamen have scared off cruise liners. Public sector unions this month staged their sixth general strike of the year, enraged by serial tax increases, steep wage and pension cuts and looming job losses. Added to all that, the troika is in town.
The institutional trio made up of the International Monetary Fund, the European Commission and the European Central Bank is in Athens to measure progress on the severe austerity and reform package to which the socialist government of George Papandreou signed up as the condition for a €110bn ($144bn, £92bn) loan from the IMF and the eurozone to prevent sovereign debt default. As the 30-strong team shuffles between hotels and government departments in their quarterly round of forensic monitoring, Greece, with its long and unhappy history of foreign intrusion from the Ottomans to the Nazis, could be confused with a country being run as a quasi-protectorate.
And yet there is a scent of confidence in the air. Greece, which has earned a reputation for public spending binges and cooking the books, rampant corruption and lethargic inefficiency, may just be starting to become a different place.
That matters not just for Greece. Contagion from the Greek public spending bubble added menace to the credit and property bubbles in Ireland and Spain, and spread across the weaker periphery of the eurozone to an extent that has called into question the very viability of the euro.
In Greece, wrenching fiscal consolidation is on track. Some major reforms, such as to the pensions system, have been voted through parliament. By Friday, a census to establish how many are on the state payroll will be completed. “The mystery will be solved, finally,” George Papaconstantinou, the finance minister, observes wryly. The government is taking early steps to open up an essentially closed economy, distorted by battalions of vested interests.
“In the last six months the Greeks grew up by one century,” says Elena Panaritis, an MP from the ruling Panhellenic Socialist Movement (Pasok) and former World Bank economist. “Before that they didn’t understand the word market.”
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