The Greek mirror
The IMF’s admission that it erred on austerity’s impact has not been accompanied by any change in economic policy
Greece has just assumed the presidency of the European Union (EU), which it will hold until the month of July. While this is not the first time that a bailed-out country has been in the post (Ireland was the presiding state of the EU in the first half of last year), it is of some interest that it is now the turn of Greece, the country that has suffered most from the results of the management of the so-called troika (European Commission, European Central Bank and International Monetary Fund) since its financial system was bailed out for the first time, three-and-a-half years ago. And it is the country where the general standard of living has been most degraded.
The results of the economic policy imposed on it are well known: 21 quarters running of harsh recession (long before the circumstances described below); an unemployment rate that's even greater than Spain's, affecting more than 27 percent of the active population (and 52 percent among those under 24 years of age); almost 40 percent of Greeks living in a state of poverty; 350,000 households going without electricity due to their inability to pay the bill; more than 30 percent of the population without access to public healthcare (among other reasons, for having had to stop contributing to the system, or because their entitlement to unemployment benefits has run out); and so on.
Keep in mind, please, that Greece is not officially considered to belong to the Third World. It is a European state that belongs to the exclusive club of the euro. A few years ago it hosted the Olympic Games, for which it gained international recognition; and it has served as a bastion of the EU's policy in the Balkan conflicts.
Many Greeks are spending the winter without central heating. The forests located around urban areas are suffering a huge environmental impact
In a study by two of its top economists, Olivier Blanchard and Daniel Leigh, the IMF acknowledged the "error" of underestimating the effects of the measures implemented in Greece on the contraction of its GDP, with disastrous consequences (the "error" has been even greater in another bailed-out country, Portugal). But this admission has been accompanied by no change in economic policy, as common sense might seem to indicate.
Now the presidency of the EU may cause those responsible for this policy to face what they have done. In the first instance, to confront what has happened in Greece in recent years. For example, what has happened with the hike in the tax on diesel fuel, a rise that the troika forced upon the Greek government.
The consumption of this product plunged, and many Greeks are now spending the winter without central heating. The forests located around urban areas are suffering a huge environmental impact, having been invaded by desperate people in search of wood to burn to keep their families warm, and the atmospheric conditions in the cities have quickly deteriorated due to the input of fumes from inferior combustible materials, since many people have been burning anything they can find for fuel. In terms of cost-benefit analysis, "questionable" is an insufficient word for the measure: what was gained in revenue due to the tax is much less than what was lost — that is, the real cost. Yet the story of the tax hike on diesel fuel is only one example in the wider story of that mechanism of pain that has been set in motion, apparently in a spirit of punishment and dissuasive warning to other nations, and which, as could only have been expected of it, has generated all this suffering.
If you are interested in learning more about the troika's treatment of Greece, its extreme negative effects on the people and its disappointing results in producing any positive effects on the national debt, a revealing discussion of the matter will be found in a recent book, Save the Greeks from their Saviors, by Alain Badiou, Jacques Rancière and others.
