Greece: Any more austerity pressure, and we're looking at a "social explosion"

Greece has been stuck in an economic recession for going on six years now and is currently the seat of the highest unemployment rate among the 17-member euro bloc, with a jaw-dropping 27 percent of its eleven million population out of work (including a sixty percent unemployment rate for young people!) — part of the reason the country’s two biggest unions staged a major midweek protest. The debt-wracked nation has been relying on bailout loans from the EU and the IMF to make ends meet, in exchange for implementing a bunch of fiscal reforms meant to help the government get its finances in order and get the economy back on its feet, but that’s not going at all well, via the AP:

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Looking out across a room full of reporters gathered to welcome French President Francois Hollande on Tuesday, Greece’s President Karolos Papoulias gave a stark warning about the state of the country after three harsh years of government spending cuts, joblessness and tax hikes.

“We are faced with a societal explosion if any more pressure is put on society,” he said. …

To continue receiving these loans, the Greek coalition government has had to agree to harsh spending cuts and tax hikes to try and lower public debt. …

“The government is thus caught between a rock and a hard place, trying to balance the demands of its domestic and foreign audiences,” said Martin Koehring, Greece Analyst at The Economist Intelligence Unit.

“We expect political risk – social unrest and the instability of the fragile three-party government coalition – to remain a major focal point in Greece this year.”

(Sidebar: Do you ever notice that the word “harsh” gets thrown around a lot, as if these countries have some other miraculous source from which they could be getting cash infusions if only their international rescuers weren’t so meanly requiring them to make bold fiscal changes? All of these difficult austerity measures are only as “harsh” as the many corresponding policies and programs that led to this debt crisis were fiscally insane.)

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The Greek president’s comments came ahead of a visit from France’s Socialist president, who promised to convince his country’s businesses to direct some investment toward Greece’s starved economy, via the NYT:

During a quick visit to the Greek capital on Tuesday, President François Hollande of France expressed support for Greece’s efforts to revive its economy and called on French companies to invest in the debt-racked country. …

“Our message is one of friendship, support, trust and growth” for Greece, Mr. Hollande said after talks with Prime Minister Antonis Samaras. …

Mr. Hollande said he would push French companies to “actively support investments” and to participate in bids for the privatization of Greece’s state water and rail companies as well as other projects. …

Mr. Samaras, for his part, heralded “a new chapter” in bilateral ties, describing the French leader’s visit as “a vote of confidence that proved Greece is no longer the weak link of Europe.”

Except that recession is now officially a EU-wide phenomenon. Every member of the currency bloc experienced some level of economic contraction in the last quarter, including the two largest economies, Germany and France. France is in enough trouble with Berlin and Brussels for neglecting to abide by their own austerity requirements, and while encouraging the type of business and private-sector growth that leads to productive job creation is getting closer to the right idea, more central planning is hardly a recipe for the robust prosperity that leads to more revenue and less government dependence — none of this will really stop until the spending does.

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David Strom 3:20 PM | November 15, 2024
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David Strom 12:40 PM | November 15, 2024
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