Greece vs. the Rest

by John Lanchester

New Yorker
June 18, 2012

The world’s biggest game of chicken comes to a climax this week, in the run-up to the Greek elections, on June 17th. Hurtling toward the cliff in one lane is the electorate, with the threat that it will vote for parties who refuse the austere terms of the bailout agreed on by the “troika” of the European Union, the European Central Bank, and the International Monetary Fund. Gunning alongside it is the troika, the other E.U. governments, President Obama, and just about every mainstream economist alive, all of them warning that a vote against the bailout would involve a Greek exit from the euro zone, and subsequent economic calamity.

Greek polls show that voters hate the bailout terms, and also hate the idea of leaving the euro. But people speak out against the mnimonio, the memorandum attached to the bailout money, rather than the bailout per se. The memorandum contains the loathed austerity terms: pay cuts, job losses, tax hikes—all of which have helped to cause the Greek economy to shrink by sixteen per cent, the sharpest decline in any developed country since the Great Depression. Previously comfortable middle-class Greeks are rummaging through garbage cans for food—often after nightfall, when the neighbors can’t see. It’s easy to understand why they want the bailout without the mnimonio. The one thing in Greece’s favor is that it would be much, much cheaper for the E.U. governments to bail it out again than to pay for the consequences of an exit.

The economic powers, especially Germany, the most powerful and richest country in the E.U., are keen to see that the Greek refuseniks don’t get their way. Christine Lagarde, the head of the International Monetary Fund, let some of her irritation show last month in an interview with the Guardian, in which she complained about “all these people in Greece who are trying to escape tax.” That was seen as a fair charge, even though Lagarde’s own salary of close to half a million dollars comes tax free. Tax collection from the better-off sectors of the Greek population—those who take the Leona Helmsley view that taxes are for “the little people”—remains weak, and tax revenues over all fell by a third last year. Even Alexis Tsipras, the young, charismatic leader of the far-left anti-bailout Syriza coalition, implicitly endorsed Lagarde’s words, in the course of denouncing her. “Greek workers pay their taxes, which are unbearable,” he said, adding, “For tax evaders, she should turn to Pasok and New Democracy”—the two pro-mnimonio parties that have run Greece for decades—“to explain to her why they haven’t touched the big money and have been chasing the simple worker for two years.” But that’s the point. An unsustainable burden is being loaded on those sectors of the population who were already paying.

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