/ 12 February 2010

Greeks wake up to their tsunami

From empty shops to half-full theatres, restaurants, concert halls and hotels, the signs are everywhere: economic crisis has come to Greece.

Greece’s financial tsunami has been unexpectedly swift. Despite the concern abroad over the perilous state of its public finances, it has taken much longer for the alarm to be sounded in Athens.

“Our politicians like to cover things up,” said Gerasimos Papafloratos, an Athens tourist shop owner. “The last [centre-right] government went out of their way to hide the scale of our debt and deficit.”

Following revelations that the deficit stood at 12.7% of GDP last year, more than four times the permissible EU level, the severity of the situation is not lost on many Greeks.

Proud eurozoners, they know that devaluation and printing their way out of the crisis is ruled out.

Last week, under intense pressure from markets and the EU and citing soaring borrowing costs, Prime Minister George Papandreou announced a raft of “painful but necessary” fiscal reforms, broadening a belt-tightening rescue plan put before the EU.

The measures, which focused on cuts to the bloated public sector and tax hikes, broke almost every pledge Papandreou made before being elected last October.

However, he has not shrunk from publicly airing Greek society’s darkest ills — endemic corruption, cronyism and a culture of deceit.

This week polls showed most Greeks agreed that sacrifices must be made. One poll indicated that 67.1% also disagreed with trade unions and public sector employees, who vowed to oppose the policies.

Papandreou, poised to announce social security reforms and tax increases, has found help from an unlikely quarter – conservative opposition leaders.

Papandreou has pledged that Athens will reduce the deficit below 9% by year-end, below 5% in 2012 and reach the European Central Bank’s target of 3% in 2013. —