Greece, Still Paying for Europe’s Spite By YANIS VAROUFAKIS
ATHENS — After last summer, when the clash between Greece’s Syriza government and the insolvent state’s creditors ended, the world’s media moved on. Greece’s rebellion against the austerity measures imposed on it was snuffed out in July 2015 when Prime Minister Alexis Tsipras folded.
Greece’s disappearance from the financial headlines since then has been seen as a sign that its economy has stabilized. Sadly, it has not.
Lest we forget, Greece had by 2015 already endured years of austerity. By 2013, more than a third of Greeks were living below the poverty line. By 2014, government wages and pensions had been cut 12 times in four years.
In comparative terms, by the proportion of national income diverted to reducing budget deficits, Greece had absorbed austerity measures almost nine times the magnitude of those imposed in Italy and about three times Portugal’s. The result? Between 2009 and 2014, Italy’s economy grew by a paltry 2 percent and Portugal’s contracted by 1 percent; in the same period, Greece’s national income dwindled by a catastrophic 26.6 percent — about the same as for America in the depths of the Great Depression. The result was a humanitarian disaster only a 21st-century John Steinbeck could adequately describe.
Against this background, Greek voters elected my then party, Syriza, in January 2015 to negotiate an end to self-defeating austerity in exchange for serious reforms. With the state now living within its means, I strove, as the country’s new finance minister, to convince our European and institutional lenders that their interest and ours would best be served by reducing tax rates and avoiding further cuts to already much reduced pensions. As a compromise, I even promised a “deficit brake” — automatic tax hikes that would kick in if government revenues did not pick up within an agreed period.
My pleas fell on deaf ears, and I resigned. Greece’s creditors insisted instead on even higher sales taxes, as well as new cuts in pensions and wages. The Greek government’s capitulation to the creditors even involved a preposterous obligation that all Greek companies should pay, immediately and in full, their estimated tax for the next year. The cruel screw of austerity turned again.'>>>
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