The Guardian, Thursday 8 November 2012
In the heart of Europe, a democracy now teeters on the edge
In spring 2010, as Athens wrangled with the IMF and the rest of Europe for what would turn out to be a €110bn emergency loan, a revealing, chilling phrase slipped out. When Greece's then-premier, George Papandreou, begged for easier borrowing terms, he was told by Angela Merkel that the deal had to hurt. According to a well-sourced report in the Wall Street Journal, the German chancellor said: "We want to make sure nobody else will want this."
She certainly made good on her side of the deal: Greece has spent the past two years on a financial life-support that has kept its government ticking over, but which has destroyed its economy and pushed its entire democracy to the brink of collapse. This week, Athens re-enacted what has become a traditional ritual. Under duress from its troika of creditors (the IMF, the European commission and the European Central Bank), the government identified more areas for cuts and deregulation: another 8,000 civil servants to be sacked by next Christmas, yet more slashing of pensions and wages and of the minimum wage. Meanwhile, the country went on a general strike and petrol bombs were lobbed at the Vouli, the parliament, even as MPs voted through the package. If the government also passes its 2013 budget this Sunday, it will get another chunk of cash to keep paying salaries and other bills.
The price of the severest austerity programme ever imposed on postwar western Europe has been severe. Greece's economy is in severe depression: this year its annual national income is projected to be 23% below what it was in 2009, that is to say that nearly a quarter of everything the economy used to produce has disappeared over three years. Partly as a result, the debt burden will soon be three times GDP. Unemployment has skyrocketed, with one in two young people out of work.
Extreme policies in; extremist politics out. From being a rump just three years ago, the neo-Nazi Golden Dawn now effectively polices parts of Athens and has infiltrated the official police force. The centre has collapsed: after acceding to Mrs Merkel's terms, Mr Papandreou's Pasok has gone from being a reliable centre-left party of government to a husk of its former self. Journalists who threaten to show any independence of mind, such as the admirable Kostas Vaxevanis are hounded by officials.
In the heart of Europe, a democracy now teeters on the edge. True, most of the blame for this is that of a corrupt Greek elite that has dominated politics, business and media for many decades. But the rest of the eurozone is also guilty: first for enforcing impossible austerity, then for turning a blind eye to the predictable results. Mrs Merkel was surely right: no other country – in Europe or elsewhere – would want this.