GREECE'S DRAMA: THE CONSEQUENCES OF MEMORANDA

 

By Maria Negreponti-Delivanis*

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The recent interview of the Nobel Prize-winning economist Joseph Stiglitz and the related statements of the banker Sallas on the dramatic state of our economy have stirred the chronic stagnant waters around the reflection of the criminal Memoranda. And they encourage me to persist for the umpteenth time.

 

 

 

It has been 15 years since the first memorandum, followed by the other two. In that time their consequences have completely destroyed our economy, impoverished the middle and lower classes and, worst of all, encouraged and perpetuated the myths of the blue homeland.

The strange thing is not that we have come this far, as the grim results of the memoranda should have been expected from the start. On the contrary, what is puzzling is the absolute silence of the authorities on the destruction of the country and the responsibility for it. Equally inexplicable are their frequent enthusiastic statements about how well the economy is doing.

1.        HOW THE MEMORANDA ALLEGEDLY SAVED THE GREEK ECONOMY

So let's look at the rescue. In 2009, when the crisis broke out, Greece's debt was E 270 billion, while today it is estimated at E 407 billion. And as a percentage of GDP, the debt was 126% and sustainable according to the literature, while today, after 15 years of supposedly salutary measures, it is estimated at 167%. Its significant decline in recent years is mainly due to inflation. In other words, we were saved by the memoranda, but thanks to alchemical arguments, the debt that was considered catastrophic in 2009 is now considered sustainable, even though it is seriously inflated.

It is also worth asking how and why the EU was so panicked that it rushed to condemn an entire people, since the Greek debt of 270 billion euros in 2009 was a small percentage of the total debt of 2.2 trillion euros in the South, whereas now that it has been significantly inflated, everything is fine.

It should also be noted that in the case of the Greek debt there was no inviolable rule, despite the insistence of France, which tried in vain to save us. Germany, on the other hand, was opposed. I am referring to debt which, to be considered sustainable, requires the growth rate of the indebted economy to be higher than its growth rate. That is why the Greek people have bled and are still bleeding to service it. Because of deadly austerity.

The question, then, is why the EU has treated its weakest member, Greece, with such cruelty since 2009. And the answer that seems to have prevailed is that the EU was gripped by panic over the possible failure of German and French banks because they held a large amount of Greek paper. And while this debt and deficit could have been dealt with in a mild way, with a loan combined with growth measures, they ended up enslaving an entire people, seizing their public property, impoverishing and destroying them.

Some form of memorandum was necessary as long as there was debt.

I hasten to clarify that the anathema is not about the existence of Memoranda, but specifically about the following six unfulfilled and nationally suicidal commitments made by the Memorandum governments. These are:

Firstly, the renunciation of debt settlement, despite the fact that Germany owes us a sum from the occupation which far exceeds our own debt.

Secondly, the ruthless sale of public property.

Thirdly, for accepting a lethal degree of austerity that precluded the possibility of growth from the outset.

Fourth, for accepting English law to adjudicate any disputes between Greece and its creditors.

Fifth, for agreeing to a delayed debt haircut (because the creditors demanded it), which has been disastrous for our own social funds.

Sixth, for falsifying the NO vote into a YES vote in the 2015 referendum.

How and why did the Greek people not react against its death sentence?

The answer is summarised in the pages of Naomi Klein's excellent book "The Shock Doctrine", which deals with the methods imposed on peoples when harsh and unjustified measures are attempted. Let us recall, then, how a section of the German press portrayed the Greeks before the signing of the memoranda. As an irresponsible people who live richly at the expense of others, who are lazy and indulge in ouzopiasis from morning till night, and for these reasons they should be made an example of.

This is how the three memoranda of understanding were signed, with a content that is not only humiliating for a European country in the 21st century, not only criminal in view of the conditions of misery it imposes, not only destructive in the long term for the survival of the Greek economy, but also predatory for almost all our public wealth. Barack Obama, in his memoir 'The Promised Land', reveals how Schaeuble (i.e. those of us who were willing to be fooled) played us, among other things, by terrorising us with Grexit. The truth is that if we had dared, in the desperate situation in which we found ourselves (which we could possibly have been saved from, under conditions that should be investigated), the Franco-German banks would have lost around E1 trillion.

But how could our rulers of those critical years agree to sign such disastrous conditions for their country?

The answer has been awaited for 15 years. Instead, a veil of silence and absolute solidarity has been spread between them, which was not even disturbed at the recent Kathimerini conference on the 50th anniversary of independence. Although the opportunity was given for a return to the past and confessions, the discussions revolved around "winds and waters", but not a single word was said about the Memoranda of Understanding and the responsibilities of those who signed them.

 

 

2. THE CONSEQUENCES OF THE MEMORANDA

This is not about triumphalism. On the contrary, we need to realise the deplorable situation we are in, because only then will we react. The following figures illustrate the Greek reality

Development

Growth, which averaged over 4% a year in the seven years before the crisis, has been negative since 2009. Our pre-memorandum GDP, which in principle fell by 27% as a result of the criminal memoranda, has not yet reached the level of 2024. In other words, in the last 15 years the country has been permanently and significantly poorer than it was in 2009. Moreover, according to IMF and ELSTAT estimates, our real GDP in 2024 will be 15.6% lower than in 2007. For the Greek economy to return to pre-debt crisis levels of real GDP in 2037, it will have to grow steadily at an average annual rate of 2.2%. As the past few years have shown, our even insignificant growth rates are not sustainable, but merely ad hoc.

Investment

Our investment is 9 points below the European average and our productivity is only 55% of the euro area average. So how can we dream of growth in this reality? Needless to say, the Greek economy does not have the necessary potential for stable and balanced growth, unless there are significant changes, which unfortunately are not foreseen. Hence the constant anxiety of the authorities to attract foreign capital. When it does come in, it is directed towards the acquisition of public assets or land and property, which are obviously not investments, without any prior checks on the origin of the buyers.

Consumption

Consumption has always been the main driver of growth in Greece. In fact, one of the obstacles to growth in our country is the very low level of consumption. According to a survey by the LEVY Institute, consumption is now 14% lower than it was before the memorandum. Moreover, according to the OECD, Greek wage earners lost a full salary in purchasing power last year due to inflation (the second highest in Europe for food).

Among the reasons for the lack of consumer demand, we should not forget the long-standing dominant one, namely the fact that wage-earners in our country have the lowest nominal wage in Europe, which is also 17% lower than before the Memoranda. Before the invasion of the Memoranda, the average Greek wage was 86.4% of the European average, while in 2022 it was 56.9%, the lowest in the euro zone. Moreover, according to the same Eurobank analysis, wages in Greece are currently 23.9% lower than the historical peak recorded in 2009, before the effects of the debt crisis were felt. It should be noted that in terms of real wages, the recent increases in the minimum wage are unlikely to have brought improvements, mainly due to inflation and, in particular, their high impact on basic goods. These negative factors are confirmed by recent surveys which show that the purchasing power of Greek workers is the lowest in Europe, even though they work more hours than the rest of Europeans.

Unemployment

Unemployment reached an unimaginable level of 26% of the labour force immediately after the introduction of the memoranda. Its recent slight decline is due in no small part to:

-firstly, the massive emigration of young people, mostly educated, who left Greece during the memorandum years in search of a better life abroad, and who continue to do so; and

secondly, the increase in the percentage of long-term unemployed who stop looking for work after a certain period of time.

Potential growth

To continue with the negative effects on a country's potential development:

-Non-maintenance and non-renewal of production facilities, as is the case in Greece under the Memorandum,

-the abandonment of infrastructure projects

-The deterioration of public health and education,

- the maintenance of pessimistic consumer and business forecasts,

- and, above all, the disgusting sale of public property, above, below and under water.

So where is the hope for growth? After all, in the two years when we have had positive growth, it has not been much more than 1%.

Just as the IMF predicts for Greece until 2060 - growth of around 1%.

So the debt, which started out as mild and perfectly sustainable, has become a beast, even though those in charge inside and outside the country chatter that it is supposedly sustainable in the medium term.

The reality is that it is unsustainable! Because our independence will only be restored once we have paid off 85% of our debt.

Let us not forget that the memoranda did not allow all these black years, the defensive fortification of the country, and encouraged the fairy tales of the blue homeland with all its sad consequences in the Aegean, Cyprus and Thrace.

Social consequences

The memoranda also led to impoverishment and social misery. According to Eurostat, one in four Greek citizens is poor and six in ten are at risk of poverty. Greece has also experienced a long-term decline in educational attainment, according to the PIZA global survey. It has the highest proportion of people with low educational attainment (i.e. with only a secondary school qualification) in the EU (81.6%) who are considered poor. Less than one in three Europeans with a low level of education will be subjectively poor in 2022, compared to four in five Greeks.

Public health, as we all know, is deteriorating. Moreover, recent research shows that the number of suicides per 100,000 inhabitants in Greece has been rising alarmingly since 2019, while it has been falling in the rest of Europe. Moreover, Greeks appear to be the third most stressed people in Europe, with those living in occupied Cyprus and Malta leading the way.

Let's not forget that the Memoranda of Understanding have not allowed the country to be defended for at least 11 years and have encouraged the fairy tales of the blue homeland with all its sad consequences, in the Aegean, in Cyprus and in Thrace.

Our place in the EU

And as far as Greece's place in Europe is concerned, the picture of despair is completed by the downward slide of our international position. Before the memoranda, Greece was the 14th largest economy in the EU and its per capita income was 84.3% of the European average. Today, Greece's GDP is only 66.4% of the European average and is at the bottom of the league table, overtaken even by Bulgaria.

CONCLUSION

Under these circumstances, how can it be said that "the memoranda have saved us"? But also that we are growing? However, the question of how and why our governments are dealing positively with the consequences of the memoranda, but also seeing growth where there is collapse, still remains unanswered.

*Docteur d'Etat es Sciences Economiques (Sorbonne)

Former Rector and Professor at the University of Macedonia