Greeks grow weary of austerity measures

Legend has it that when the ancient Athenians defeated the Persians here in 490 BC, a messenger named Pheidippides ran over 25 miles of rough and rocky plains to announce the victory in Athens.

“We have won!” he shouted. But then, exhausted, he dropped dead.

Today, deeply indebted and nearly bankrupt, Greeks fear a similar fate.

It’s not because they haven’t held up their end of the bargain, Greeks argue, enduring a punishing course of austerity measures to fix the country’s disastrous economy. It’s because the austerity measures haven’t worked.

And as they watch politicians and economists lurch from one emergency summit to another, like a Pheidippides who has lost his way, Greeks are answering with a swelling tide of black-clad workers at near-daily anti-austerity marches and splashes of graffiti reading “Help,” “No more pain” and “We won’t pay” on walls across the country.

The mood has shifted from rage over the brutal budget cuts to fear and uncertainty: When will there be good news?

“One minute we’re being told to do one thing; then, they tell us something else. Then, they modify that with something different, and in the end, it’s scrapped and replaced with something even more brutal,” grumbled Nikos Tassos, a carpet salesman in Marathon.

“It’s nerve-racking,” he said. “Does anyone really know where this is all heading?”

Greece was supposed to have pulled out of its tailspin by now. The thinking was that by the end of 2011, the rash of austerity reforms would drop the deficit to under 7.5% of the country’s total economic output, and a yard sale of $71.5 billion in state entities would help pay down the country’s crippling $500-billion debt.

But none of that happened. In fact, for all the austerity-driven pain and suffering Greeks have had to put up with, the nation’s finances and indicators of growth have drastically deteriorated. Officials in Athens and international creditors are now scrambling to map a new course of action.

In Athens last week, Greek officials resumed difficult and complex talks on a debt-swap deal with private investors to avert a catastrophic government default that could unleash a fresh frenzy in the global financial markets. Over the weekend, negotiators for the investors reported that a tentative agreement had been reached. On Monday, European leaders will meet in Brussels to take another stab at solving the Greek debt crisis.

Commonly known as the PSI, or private sector involvement plan, the complicated bond-swap proposal is the linchpin of a bigger European plan to combat a debt crisis that began in Greece two years ago but is now threatening larger economies such as Spain and Italy.

Without a deal in hand, international creditors may pull the plug on a second, $140-billion bailout for cash-starved Greece. That, in turn, would make Athens unable to pay a big bond redemption due March 20, pushing the country into default.

With the stakes set so high, a palpable nervousness and uncertainty permeate society here, stifling an already catatonic economy.

For crisis-wary Greeks such as Vassilis Goumanis, a baker in Marathon, the question is no longer whether austerity works (it clearly doesn’t in this debt crisis), but what lies ahead: “Whatever that is — bankruptcy, default, a return to the drachma or end to the euro — well, let’s just get it over with.”

“PSI, IMF, CDS, ABC,” he quipped, “all of this means nothing to me. I don’t even understand it. What I really care about is whether business will pick up, whether people buying Chinese croissants for 30 cents because they are too scared to spend, will return as customers, preferring to pay 70 cents for my homemade spanakopita [spinach pie], baklava and other homemade products instead.”

Consumers who once shopped at upscale supermarkets are turning to no-frills discounters en masse. Car owners, now taxed as much as $1,270 a year to increase state revenue, are swapping their SUVs for smaller Smarts and Skodas. Old-fashioned wooden stoves are making a comeback because the cost of heating oil has doubled in the last year alone.

Adding to the malaise, Greece’s growing uncertainty has started feeding populist, anti-austerity rhetoric.

With elections looming as early as April and the government considering additional austerity measures to make up for more than $2 billion in missed revenue, few politicians here are risking their political careers to support unpopular reforms that could prove futile.

In a glaring example of how a growing number of lawmakers are trying to disassociate themselves from the austerity measures, Development Minister Michalis Chrisochoidis recently acknowledged that he had never read, and thus was not responsible for, the stringent terms of the 2010 bailout agreement for Greece.

And in a fiery parliamentary debate last week, Georgios Karatzaferis, the leader of a minority party that belongs to the newly formed coalition government, cautioned international lenders not to push Greece too far with added austerity.

“No one should expect a signature of subservience!” Karatzaferis shouted from the back benches of Parliament. “Yes, we assume our obligations, but we will not bow to ultimate disgrace.”

Conservatives, who look poised to win the upcoming elections, are already promising a break from the strict fiscal discipline cure that Europe’s top paymaster, Germany, has been prescribing for Greece and the continent’s debt woes.

“We never said no to austerity,” said Chrysanthos Lazaridis, a senior economic advisor to the center-right New Democracy party. “But there is a limit to how much you can impose now.

“In the fifth year of an acute recession, with near-zero development,” he said, “slapping on new budget cuts will be a kiss of death for Greece.”

Carassava is a special correspondent.