Is Europe Demanding Too Much From Greece? (Video)
With Greeks battling police in Athens’ central Syntagma Square, the Greek Parliament or Vouli voted on Monday morning to pass another package of austerity measures in order to receive the next installment of bailout funds to avoid defaulting on its loans. While the days prior to the vote were full of impassioned debate and saw the resignation of several ministers, the final results were not close: 199 voted yes, 74 were opposed and 27 abstained or cast blank ballots. The Vouli also gave the Greek government the authority to sign a new loan agreement with foreign lenders, to reduce the amount of debt that Greece has to pay back to its creditors.
The vote brought some relief, but of a bittersweet, painful sort. Greece is in its fifth year of a recession and unemployment is hovering at 21 percent and approaching 50 percent for twentysomethings. The austerity package — not the first that the government has devised to cut Greece’s massive debt of €340 billion (about $444 billion) debt — includes a 22 percent cut in the minimum wage and 150,000 government layoffs by 2015.
As the members of the Vouli were debating and making the final vote, a Starbucks went up in flames and Athens’ central Syntagma Square convulsed with 80,000 Greeks protesting and squadrons of police armed with tear gas. Demonstrators threw rocks and, in the night, Molotov cocktails. 40 buildings were set on fire including a historic theater in downtown Athens; it was the worst violence in Greece since May of 2010 three people were killed when protesters firebombed a bank.
Protests also occurred in the north in Thessaloniki, Greece’s second-largest city.
While the prospect of a Greek default and of Greece leaving the euro zone have been seen as an unthinkable catastrophe, and while European leaders still speak of these as such, some are arguing that these scenarios would not be such a tragedy after all. Writing in Foreign Policy, Mark S. Sheetz argues that, with Greece’s debt burden of 160 percent of gross domestic product (GDP) and its economy still shrinking, default is a “virtual certainty” and questions whether the hoops officials are jumping through to get European banks to write off €340 billion (about $450 billion) in Greek debt will be all in vain.
Greeks themselves have been bristling at what is seen as a loss of their sovereignty. Not only has it been necessary to pass the austerity measures to receive the bailout funds (and please the European Commission); Greece has also had to concede its sovereignty. Germany and the Netherlands want an escrow account to be established to hold the new money lent to Greece. Creditors would be paid with the funds before the Greek government could access them: Greeks fear that these increasingly complex financial arrangements mean poverty for themselves and future generations, at the expense of the banks.
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