People wait to withdraw cash from an ATM in downtown Athens. Photo: Iakovos Hatzistavrou/AFP/Getty
Show Hide image

From taxi drivers to surgeons, everyone in Greece is now an expert on the country’s debt

The strange thing has been how few Greeks, whether politicians, business people, journalists or whoever, took the idea that their country might leave the euro seriously.

Greece is at the centre of the economic crisis: the worst-hit and longest-suffering part of the dev­eloped world. Five (or, depending on how you count it, seven) years of crisis have produced a country inured to grim financial news and plugged in to repercussions in the eurozone.

Social media – and especially Twitter – is everywhere. Hour by hour over the past few weeks, people have been following the latest developments in Brussels and Frankfurt in real time. Recently, I interviewed a neurosurgeon just after he’d removed a benign tumour. In between operations, he and his colleagues chatted about what the blogs were saying and showed each other tweets from eastern European finance ministers. A taxi driver, in broken English and with no prompting, recommended that I follow the FT’s Brussels bureau chief, Peter Spiegel, on Twitter. “He points out [Jean-Claude] Juncker’s lies,” he told me.

I could very happily make a Newsnight film in Athens speaking only to local taxi drivers. I’ve met former centre-right New Democracy voters who went for Syriza – “They promised ten things but if they do only two, I’ll be happy” – and taxi drivers with a better understanding of debt dynamics (the relationship between debt, interest rates and growth) than many politicians. I have also been reminded of the scale of the disaster that has hit the country. When someone tells you that they’re just glad they don’t have any children growing up in Greece, it’s hard to know how to respond.

 

Protest politics

Protests, demonstrations and marches have been near-nightly events in central Athens. I’ve seen Syntagma Square filled with anti-austerity campaigners, communists and pro-Europeans.

The last of these aren’t your usual demo-going suspects. Better-dressed and slightly older, they occasionally seem at a loss what to do with their hours in the square. Some of them choose to fill the time by offering “helpful” advice on the piece to camera I’ve just recorded, in order to “better reflect” what has been happening.

The crowds got very big some nights in the week, enough to overwhelm the mobile-phone networks. But they were never large enough to pass a good friend’s definition of a “huge” Greek rally: the McDonald’s in Syntagma has always stayed open.

 

Interesting times

While I’ve been here, I have spoken to a lot of Greek businesses, large and small. I’ve heard a huge list of everything that is wrong with the economy, from broken, illiquid (and now closed) banks, to over-regulation, plus the shortage of demand and spending power. Not a single business has mentioned the issue the government has made its main red line – the level of government debt.

That sort of makes sense. The level of Greece’s government debt is very high, yet the burden of servicing it is very low. Interest payments as a share of GDP are among the lowest in Europe. The debt has already been rescheduled, restructured and reduced. It’s still far too high and another write-down will be needed in the future, but on the ground it doesn’t feel like a pressing short-term problem.

 

The final countdown

Each day after filming and editing, the finished package had to be sent back to London before I headed to the BBC “live point” to appear on the show. The broadcast packages are sent via the internet and the BBC’s system provides a helpful timer showing how long it will take to send each file.

I noticed over this past week that the timer has an unhelpful habit of resetting itself. It will say there are four minutes to go – and then suddenly jump back up to nine. That is what this crisis has felt like over these few months: a timetable that keeps getting reset, with “final” deadlines that keep slipping.

As long as both sides are talking, a way will always be found to keep the clock running. Most of the supposed “hard” deadlines have been based around dates when payment is due on Greece’s debts, but to take that seriously is to impose a financial logic on a political problem. The debt is now almost entirely to “official creditors” – the IMF, the ECB, and other eurozone governments – so missing a payment is as much about international relations as economics.

 

Wolf at the door

The strange thing has been how few Greeks, whether politicians, business people, journalists or whoever, took the idea that their country might leave the euro seriously. Most seemed to expect a deal at some point and thought that any talk of a Grexit was scaremongering. The Yes campaign argued that a No vote could lead to exit, but many No voters just didn’t believe them. Perhaps this is because they’ve been here before. There is an element of “the boy who cried wolf” at play. But it is often forgotten that the fable did end with the arrival of a wolf.

 

Wrong call

The referendum was a huge moment for Greece, for the eurozone and for the EU. But there is still some debate, in Greece and outside, over why it happened and what it represents. Was it a strategic masterstroke from Syriza which united the Greek people and bought concessions from Europe? Or a desperate gamble by a government that had run out of options?

Syriza’s negotiating strategy with Europe since January had sought to win concessions based on three assumptions: that a Greek threat to leave the euro would cause severe market jitters and pressure Europe into a deal; that the Greek economy was in a strong enough position to weather uncertainty while the European Central Bank would keep funding the banks; and that left-leaning governments in Italy and France would provide support.

All three of these assumptions were reasonable. All three turned out to be wrong.

Duncan Weldon is economics correspondent for BBC2’s “Newsnight”. @DuncanWeldon

Duncan Weldon is a senior policy officer at the Trades Union Congress. He blogs for them at Touchstone.

This article first appeared in the 09 July 2015 issue of the New Statesman, The austerity war

GETTY
Show Hide image

Cabinet audit: what does the appointment of Andrea Leadsom as Environment Secretary mean for policy?

The political and policy-based implications of the new Secretary of State for Environment, Food and Rural Affairs.

A little over a week into Andrea Leadsom’s new role as Secretary of State for Environment, Food and Rural Affairs (Defra), and senior industry figures are already questioning her credentials. A growing list of campaigners have called for her resignation, and even the Cabinet Office implied that her department's responsibilities will be downgraded.

So far, so bad.

The appointment would appear to be something of a consolation prize, coming just days after Leadsom pulled out of the Conservative leadership race and allowed Theresa May to enter No 10 unopposed.

Yet while Leadsom may have been able to twist the truth on her CV in the City, no amount of tampering will improve the agriculture-related side to her record: one barely exists. In fact, recent statements made on the subject have only added to her reputation for vacuous opinion: “It would make so much more sense if those with the big fields do the sheep, and those with the hill farms do the butterflies,” she told an audience assembled for a referendum debate. No matter the livelihoods of thousands of the UK’s hilltop sheep farmers, then? No need for butterflies outside of national parks?

Normally such a lack of experience is unsurprising. The department has gained a reputation as something of a ministerial backwater; a useful place to send problematic colleagues for some sobering time-out.

But these are not normal times.

As Brexit negotiations unfold, Defra will be central to establishing new, domestic policies for UK food and farming; sectors worth around £108bn to the economy and responsible for employing one in eight of the population.

In this context, Leadsom’s appointment seems, at best, a misguided attempt to make the architects of Brexit either live up to their promises or be seen to fail in the attempt.

At worst, May might actually think she is a good fit for the job. Leadsom’s one, water-tight credential – her commitment to opposing restraints on industry – certainly has its upsides for a Prime Minister in need of an alternative to the EU’s Common Agricultural Policy (CAP); a policy responsible for around 40 per cent the entire EU budget.

Why not leave such a daunting task in the hands of someone with an instinct for “abolishing” subsidies  thus freeing up money to spend elsewhere?

As with most things to do with the EU, CAP has some major cons and some equally compelling pros. Take the fact that 80 per cent of CAP aid is paid out to the richest 25 per cent of farmers (most of whom are either landed gentry or vast, industrialised, mega-farmers). But then offset this against the provision of vital lifelines for some of the UK’s most conscientious, local and insecure of food producers.

The NFU told the New Statesman that there are many issues in need of urgent attention; from an improved Basic Payment Scheme, to guarantees for agri-environment funding, and a commitment to the 25-year TB eradication strategy. But that they also hope, above all, “that Mrs Leadsom will champion British food and farming. Our industry has a great story to tell”.

The construction of a new domestic agricultural policy is a once-in-a-generation opportunity for Britain to truly decide where its priorities for food and environment lie, as well as to which kind of farmers (as well as which countries) it wants to delegate their delivery.

In the context of so much uncertainty and such great opportunity, Leadsom has a tough job ahead of her. And no amount of “speaking as a mother” will change that.

India Bourke is the New Statesman's editorial assistant.