Utrikespolitiska Föreningen – the Association of Foreign Affairs in Lund – is a student organization promoting interest on international issues and debate on foreign politics. Every year, the travel committee organizes two trips to countries that are of current political or economic interest. This fall, a group of 10 eager students went to Athens, Greece to explore two main issues: The economic crisis that has erupted after having been concealed by the government for almost a decade; and the country’s refugee problem that became significant after the EU Dublin Declaration was signed and agreed upon.
We began our trip with a visit at the Swedish Embassy, where Ambassador Håkan Malmqvist, the embassy's deputy head of mission Mr. Kaarlo Laakso, press, information and cultural officer Ms. Sofia Keramid and an intern from the University of Stockholm, gave us a basic understanding of the Greek society, politics and economics. Besides representing Sweden in Greece and work to encourage the relationship between the two nations, they observe and report from the political and economic developments in Greece. At ELIAMEP, a forum for debate and dialogue on European integration and foreign policy, we met with Dr. Dokos and Mr. Katsikas, who impressed us with their knowledge of the Greek crisis.
At our meeting with Mr. John Psaropoulos, we received a detailed account of what has happened, as well as suggestions of what could have been done in order to reduce the severity of the crisis. Mr Psaropoulos is the director of development for AKTO School in Athens and freelance journalist for Al Jazeera, PBS and National Public Radio in Washington and the former editor in chief for the English-language newspaper Athens news. Lastly, at PASOK Youth party we had the opportunity to reflect on life within politics, in particular during a deep political and economic crisis. PASOK was at the time of our visit still the government party and experienced a very difficult situation. After our return to Sweden, the government was decomposed and a new Prime Minister selected.
Visiting the Greek Council for Refugees was an eye-opening encounter that helped us grasp the refuge problem from various aspects. Ms Nadina Christopoulou and Mr. Kenneth Brant Hansen shared their account of both the Greek and the EU perspectives in a very informative and friendly manner, and showed us around in Pyxida, which is a cultural and social centre where refugees have the opportunity to meet each other, play games and relax, and receive housing- and job-seeking assistance.
Together, the visits composed a multifaceted and diverse view of the crisis and of what went wrong. We also gained understanding of the refugee problem that the country faces, subordinated in these difficult times, but nevertheless present. The trip to Greece increased our knowledge and interest in Greece – the current situation as well as history – and we will with curiosity continue to follow the events.
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The economic crisis
For the relevance of this report we feel that it could be of value for the reader to get some background information on the economic situation in Greece and some of the factors leading up to the current economic crisis. The two main macroeconomic factors contributing to the crisis was a high budget deficit and a public debt. Entering the European Monetary Union, Greece got access to the same cheap loans as other EMU countries such as Germany. Credit rating agencies and other states overestimated the Greek economy. The bubble that was the Greek economy eventually burst in 2009 and the market reaction was severe, resulting in an abnormally high interest rate for Greek bonds on the market. At last Greece could no longer pay the higher interest rates and had to turn to the Troika (EMU, ECB and IMF) for a first loan package in May 2010 and a second in July 2011. To receive the loans from the Troika Greece had to agree to an austerity plan involving the reduction of the public services, higher taxes, privatization, cutting of public jobs and wages. Unfortunately the austerity measures did not have the effect the government had hoped for. When writing this report the Greek public debt has risen to175% of GDP and the budget deficit to 10% and we are waiting for the Greek Parliament to pass a third bail-out involving a write-down of the Greek debt of approximately 50% and an even stricter austerity plan.
The contributing factors to the Greek crisis are many. Mr. Psaropoulos, Mr. Katsakis, Dr. Dokos, Ambassador Malmqvist and Ms Keramid all agree that these are not just economic factors such as low economic growth, the lack of a functioning tax system and the entering into the Euro Zone, but also profound social and political factors such as the lack of faith in the state, corruption, clientelism, nepotism, ineffective bureaucracy and subjective and incompetent media culture.
Greece entering the Euro Zone in 2001 was and is essentially good for Greece, in the sense that it is a stable currency and an easy, cheap way to borrow money. However Mr. Katsakas explains, these positive factors were not used wisely, neither by the public sector nor by the private sector. Investments were made in mainly domestic projects not internationally competitive ones; the hosting of the Olympic Games as the prime example of a bad investment. Greece’s cheap loans were in fact too cheap. The market treated Greece and Germany as if they had basically the same economy, which in reality is far from the truth. Entering the Euro Zone means giving up one’s ability for national monetary policy, which means that a single country in the Euro Zone cannot use the change of the interest rate or devaluation of the currency in order to compensate for the economic fluctuations. Instead the Euro Zone uses a stability pact with a financial framework for every country to keep within or else face economic sanctions. This framework stated that a country must keep their public debt under 60 % of their GDP and the budget deficit cannot rise above 3 %. Mr. Katsikas criticises the stability pact in the sense that hardly anyone kept within the framework and received no sanctions for violating it. In fact the key countries Germany and France, who are now setting the agenda for the economic policies within the euro zone, were the first ones to break the pact. This is why Greece and other countries were allowed to reach this level of financial instability.
Moving on to the structural issues. The representatives of the Swedish Embassy stressed that overcoming the structural problems is one of the most important tasks for the Greek parliament to focus on. There are huge gaps in the judicial system and especially the tax system, where tax evasion is a widespread problem. This is due to an ineffective law enforcement system but also to low social capital, where people have a lack of faith in the governmental capacity to channel the taxes back through public services without it falling into the wrong pockets. This has led to the Greek tax authorities receiving more or less no tax revenues in 10 years, which corresponds to an tremendous amount has resulted in holes in the treasury.
Turing to the political factors contributing to the crisis Mr. Psaropoulos mentioned three strategic errors on the part of the current government and more specifically the errors of George Papandreou himself. The first error was in the way the message of economic crisis was delivered. By completely denouncing his predecessor, Papandreou had the aim of scoring a number of political points. However, by going to the EU and exposing the financial catastrophe that was the Greek fiscal budget, he awoke the sleeping dragon. From that point on, he was at the mercy of the European politicians, who refused to accept a simple austerity package and an apology on the lines of "I’m sorry, we will try better next time". Rather, the Union took control over the austerity plans, demanding a much greater restructuring of Greek society than Papandreou had expected.
The second error by the Greek government was regarding the form of taxes. The raised taxes and tightening of the budget came at a time when the economy could least afford it. Instead of adopting reforms to encourage growth, the entire system was strangled, the new measures effectively slowing growth down to a halt. The third error came soon after, with the announcement by both the Union and the Greek government of the most ambitious privatization plan in history. This decision completely stunned the population. No one understood how it was to be implemented and it was at the same time a measure of how lowly the Troika regarded the ability of Greece to save itself. According to Mr. Psaropoulos, Prime Minister Papandreou should have delivered the message of crisis in a less negative manner, thereby lessening the reaction of the political leaders of Europe. After this, he should have had a plan on how to move forward, instead of simply taxing a dying economy. Third, the Troika should have been less heavy handed in their handling of the Greek debt restructuring; instead they made the crisis much worse than it already was.
This is the story of our lives, says Dr. Dokos when addressing the lack of a long term plan for Greek politics. “Politicians in every country have a four-year perspective up to the next election, but in this country we have a lacking mechanism for strategic planning”. He explains that this government knew more or less what the problem was when they were elected and he agrees with Mr. Psaropoulos that if they had somewhat of a national plan, the situation would have been different; the relation with the rest of Europe would have been different, the terms of lending money would also be different and the negotiating capacity of the government would have been very different. He also point out the lack of support by the major opposition party, who continuously prevented new economic decisions, presenting the coalition in Spain as the counter example. “All of this is weakening Greece’s position and it is making the market even more nervous when it comes to Greece.”
Mr. Katsikas adds that every new government treats the political system as their own back yard, appointing relatives and friends to public servants and advisors; always thinking about winning the next election and not about what is good for Greece in the long term. He calls this “the lack of an independent, operational, meritocratic public sector”. Sofia Keramida at the Swedish Embassy also agrees that the Greek politicians seem not capable of long-term planning in their policies. She also describes what seems to be a lack of collective consciousness in the Greek society. “Greece suffers from a low social capital without any traditional beliefs based on policy. One trust only one’s family and closest circle, and lacks confidence in the state and society. This mentality has a great impact on the children where they in an early age to work independently in school and unusual to work in groups and collaborative exercises”.
Moving on to what lies ahead for Greece, Dr. Dokos means that there is an increasing number of people agreeing on what needs to be done. Measures include increasing taxes, cutting pensions and salaries and foremost reducing and restructuring the ineffective public sector, which means tens of thousands of people will lose their jobs. These measures are very painful in the short term for the people affected and the problem is that these measures all need to be implemented within a short period of time and considering the current vast economic recession it becomes even harder. “If we had started this process a few of years ago, things would have been much smoother and much less painful”, says Dr. Dokos.
Greece needs to increase growth instead of further austerities, says Ambassador Malmqvist. These are facts that the politicians are aware of but have enormous difficulties to solve. Mr Katsikas argues that the austerity plan is too ambitious and there is a huge risk that it will only bring more and more recession, which will stagnate the economic growth; the plan will therefore be impossible to follow through and in turn create even worse problems in the long term.
Dr. Dokos adds that the instability, uncertainty and social tension make investors very reluctant to come to Greece. “They are waiting for the dust to settle”. Furthermore, ambassador Malmqvist mentions other deficiencies that must be addressed to get Greece back on its feet again, such as the abolition of the still existing guild system, building a system for mandatory reporting, accounting, and compilation of statistics and engagement in follow-ups. "They also need to increase transparency and cooperation between different authorities".
Quoting Dr. Thanos Dokos in his figurative picture describing the Greek situation: “You have a major rock blocking the road. And a large number of people that would like to push it out of the way. If they all concentrate their efforts at the right spot they could to it. But for the time being we are pushing in different directions.”
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We ended our stay in Greece by visiting the PASOK youth, which is the youth organisation for one of Greece’s main political parties. At the time of our interview the PASOK youth- representatives’ mobile phones were ringing as their office was bombarded with questions from around the world regarding the turbulence caused as the Prime Minister Georgios Papandreou had announced the day before that Greece was to put the austerity package designed by the Troika to a referendum, or popular vote. This resulted in what can be described as a shock to the economical as well as political system, not only in Greece but in Europe as a whole and, subsequently, in the global marketplace. PASOK was also experiencing difficulties to retain a majority in the parliament as ministers were stepping down in protest to Papandreou’s administration.
With little time to prepare questions about the unexpected referendum we asked what the practical implications would be if the referendum would be held and whether a re-election was to be held, and if the Greek State realistically could afford to wait for the democratic processes in this time of unparalleled economic crisis. The answer was that the current turbulence in national affairs was too great to speculate on election outcomes, but that the outcome of such a re-election was by no means certain. And they did not know whether a referendum about the austerity package would be financially viable. When we asked about what Greece needed in the current situations and what the Troika could do in order to alleviate the economic and social tension within Greece, the PASOK representatives stated, more than once, that Greece needed to “create the conditions for development”. These measures could include investments in education, green energy, hydrocarbon energy, revising the taxation system, and the promotion of equity. However, the question that all Greeks are facing today is a question of “how” rather than “what”.
How “the conditions of development” were to be implemented in practical terms was not addressed directly by the PASOK youth representatives, but the economic and social situation in Greece was described in general as “very difficult”, nor was the economic crisis described in terms of a Greek problem per se, but rather as a European problem caused by neoliberal fervour; however, it was not considered an option to leave the EMU or the EU as a whole. But there was a real sense of disappointment with how the international institutions implemented austerity packages upon the Greek people, and understandably so, many Greeks are today being forced to pay a debt which is not recognized as their own.
It seemed the hope for the future or near solutions of the situation had already left the minds of the Greek population and the decision for a referendum did not make matters better. The prime minister’s inability in unite the country, the politicians and the people to head towards the same things. Maybe because of the loss of hope, the representatives said that the people no longer showed interest. People in general were not aware of what the problems and the consequences really indicated, and media did not make the situation easier neither since they did not to a bigger extent illustrate the negative parts of the situation for the people. Eight days after our meeting with the PASOK youth representatives the Greek Prime minister Giorgios Papandreou and his government resigned, his referendum was cancelled and the next day Lucas Papademos was sworn in as the new Prime minister and a coalition government was formed. Will the new government agree to the terms of the new bail-out from the Troika? Can Greece be saved? At the moment no agreement has yet been made and there is no way be be sure in what condition Greece will come out of this crisis.
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Immigrants and Refugees Greece faces several immigration-related issues, especially given their geographical position as the main country of entrance for immigrants seeking an improved life in Europe. Estimates say that some 100 000 illegal immigrants cross the Greek border each year. Most of these immigrants do not seek to stay in Greece, but wish to continue on to Northern Europe. According to the Dublin Regulation within EU, a country receiving an asylum-seeker has the right to send this person back to his or her country of entrance. This means a great liability for the Greek economy. Today, Greece has a back-log of about 55 000 asylum-applications that still have not been addressed. While waiting for an answer, the asylum-seekers have only minimal civil rights, such as general health-care and employment.
One of the major problems with the asylum-seeking process in Greece is that it is being handled by the police, who lack both education on the subject and time to handle the cases. Asylum-investigations are usually more focused on how the refugee managed to get into the country than on his/her reasons for leaving the home-country. Interviews are often maid very briefly and without an interpreter. Generally seekers get a no after the first investigation. The decision is appealable, but this right is seldom communicated to the immigrants and instead they are deported. However, there is no real enforcement of these deportations and the illegal immigrants stay in Greece, living outside society under difficult conditions.
When entering Greece, many immigrants are put in detention, while waiting for the investigation to begin. In these detentions horrible, inhumane situations have been reported. Immigrants are crammed into small cells with no heating, too few beds and sometimes the toilet as the only source of fresh-water. The Greek Coast Guard has been heavily criticized by human rights-organizations for their treatment of refugees arriving to Greece in boats, crossing the Mediterranean Sea. There have been reports of torture, abuse and even boats being deliberately sunken by Coast Guard-officials. (GUNILLA VON HALL, Tortyranklagelser mot den grekiska kustbevakningen, Svenska Dagsbladet, 5/11 2007) UNHCR, Amnesty and ECRE (European Council of Refugees and Exiles) have also heavily criticized the Greek government for their handling of immigrants and refugees. They have advised other European countries not to send asylum-seekers back to Greece under the Dublin Regulation, until the situation has improved. One important reason as to why this is not happening is a lack of political will to do so. This has further decreased with the economic crisis.
The Greek Council for Refugees is one of few organizations in Greece helping immigrants with the asylum-seeking process. The Greek Council for Refugees was founded in 1989 and has 60 employees, which includes mainly lawyers and social workers. They offer legal and psychological counselling, provide interpreters for the police-interviews and have built up Pyxida; a multicultural centre where young immigrants can meet to socialize and get basic education in e.g. computer skills. Pyxida is a centre for integration and socialization for the often quite marginalized immigrants in Athens. However, the Greek Council for Refugees are also suffering from the crisis. Most of their financing comes from EU, but today their funding is decreasing and they are five months behind on their salaries.
However, some measures have been taken to improve the asylum-seeking process. Before the crisis broke out, The Greek Action Plan was implemented. It is to be an independent asylum- authority, made up by educated officials who will handle the investigations more efficiently. Unfortunately, the plan is now halted by the crisis, and only the director has been appointed. The situation for immigrants and refugees in Greece is undoubtedly an unpleasant one and will probably continue to be so for a foreseeable future, if economic priorities and political mentality is not changed dramatically.
In November 2011, a group of 10 eager students travelled to Athens, Greece to find out more about two main issues: The economic crisis and the country’s refugee situation. Before leaving Sweden, the group tried to learn as much as possible about Greece and its situation, among other things, by meeting a Professor of Economics at Lund University. This previous knowledge was definitely necessary to try to understand the complexity of the crisis.
