Spring is already in the air across Greece. Even in the bleakest of times, nature’s renaissance renders hope irrepressible. But this one is proving a cruel spring for a people caught up in a decade-old crisis yielding one ritual humiliation after another.
Yanis Varoufakis, a former finance minister of Greece, is leader of the MeRA25 party and Professor of Economics at the University of Athens.
Cross-posted from Yanis Varoufakis’s blog
Costas runs a small bookshop in my central Athens neighbourhood. Although jovial by constitution, he finds it difficult to hide the worry lines multiplying on his face. Fifteen years ago he put his flat up as collateral for a business loan to spruce up the bookshop. When the Greek debt crisis wreaked its havoc, it was impossible to service that loan.
Today, Costas is one of hundreds of thousands facing foreclosures by funds that have purchased debt like his from the banks at bargain basement prices. The bailiff and the auctioneer are circling above distressed homeowners and small business people such as Costas.
Intriguingly, he talks little about this, caught up in the media frenzy over the 30,000 or so refugees whom President Recep Tayyip Erdoğan of Turkey released from the camps in which they had been held and allowed them to attempt crossing into Greece. “We can barely feed ourselves. How can we help these wretched souls?” Costas laments. His predicament captures nicely how Greece’s crisis has spawned a rule of fear: the muted fear of the bailiff and the brash fear of the “other”.
Readers of the international press, which for two years has been celebrating Greece’s alleged economic recovery, will be tempted to dismiss Costas’s story as unrepresentative. They will retort that investors who bought Greek debt or shares a few years ago have banked returns that no other market has provided. What’s more, Greece’s government has been borrowing for 10 years at less than 1% interest rates. Surely being able to refinance its debt at such low interest rates is evidence of recovery?
Paradox is a Greek word for good reason: today’s Greece proves that it is perfectly possible for the state and for the majority of citizens to be sinking deeper into insolvency while the oligarchy makes a mint from trading in their assets. But why would investors lend to the Greek government cheaply if it remains bankrupt?
The reason is that the troika of Greece’s creditors – the EU, European Central Bank and the IMF – have taken 85% of government debt out of the money markets and placed it squarely on the shoulders of Europe’s taxpayers. They also deferred all repayments until after 2032 and extended another €30bn (£26bn) of official loans to the Greek government to cover its repayments to privateers. So why not lend to the Greek government at a small, yet positive, interest rate when the alternative is to lend to the German or the Dutch governments at the current negative interest rates? As long as the Greek government remains the troika’s model prisoner, lending to Greece’s insolvent state at minuscule rates is lucrative. Paradox solved!
Turning to Greece’s private sector, how can investors profit from it if it too is bankrupt? With great ease is the answer, as Costas’s case illustrates. His loan of €100,000 was sold on by his bank to a hedge fund for €8,000. If the fund auctions off his flat for €20,000, its profit rate will hit an astonishing 250%. The fact that Costas will lose both his home and his bookshop, with detrimental effects on the state’s taxes and outlays (as he begins to draw unemployment benefit), does not even appear on the radar of the hedge fund or the international media.
During the first phase of Greece’s crisis, all social classes, with the exception of the top 0.1%, found themselves in dire straits. But, from 2018, three social groups fared differently. By far the largest group, to which Costa belongs, continue to languish in debtor’s prison and to sink deeper in hopelessness. A middle group has bottomed out, living in terribly diminished albeit more stable circumstances. Finally, a small group is doing incredibly well: buoyed up by fire sales of public assets, connected to the hedge funds profiting from trades in loans like Costas’s, and linked to EU-sourced funding.
Greece’s new government, led by Kyriakos Mitsotakis, is an interesting coalition of figures from within his New Democracy party. One faction, close to the prime minister’s circle, represents the interests of the neoliberally-minded oligarchy determined to continue with the troika’s austerity and fire sales policies from which they have benefited so magnificently. A second ultra-rightist, fully xenophobic nationalist faction is the local branch of what I refer to as the nationalist international (which includes Donald Trump, Matteo Salvini, Viktor Orbán, Marine Le Pen, Narendra Modi, Jair Bolsonaro).
This fragile coalition of neoliberals and racist conservatives is kept together by a combination of free-marketeer “solutions” favouring the oligarchy (for instance, the sale of Costas’s loan and the privatisation of public assets), a domestic authoritarian drive (armed police entering universities to confront protesting students), and a Trumpian approach to migrants. The Nazi Golden Dawn party was, mercifully, kicked out of parliament, but tragically its racist narrative is now in government.
When, sooner or later, the narrative of economic recovery is exposed as a cruel lie, this government will exploit the little people’s concerns over migration to keep those like Costas placid while, for good measure, deploying the authoritarian apparatus currently under construction to liquidate their few remaining assets.
Most recently, television screens relayed a scene that reveals the continuing capacity of the Greek crisis to symbolise Europe’s conundrum: a visit to the Greek-Turkish border by a Greek prime minister who, like his predecessors, had previously surrendered fully to Chancellor Angela Merkel accompanied by Ursula von der Leyen – who was promoted by Merkel as the European commission’s new president, but who would not have been elected without Orbán’s support in the European parliament.
What were they doing? They were defending the policy, pioneered by Orbán, of violating the right that international law affords refugees to enter one’s territory to apply for asylum. In essence, they were sealing the demise of Merkel’s project of keeping the xenophobic hard right at bay. Additionally, they were unwittingly proving that Greece remains the canary in the mine.