Cuts take Greece to the edge of anarchy as people cry for change

Anti-austerity protests that began a year ago still rage in the Greek capital, amid pleas to modernise the economy and tackle tax evasion. Roxane McMeeken reports from Athens

Christos Anastasiou describes his café on Athens's Syntagma Square as "the heart of the war zone". On a quiet day like this, as his customers nurse cold coffees in long glasses in the sunshine, it sounds absurd.

But the previous day this pleasant café, directly opposite parliament, was boarded up while masked protesters against the government's austerity measures clashed with riot police in a black fog of tear gas and smoke. The incident on 23 February, accompanied by a 24-hour general strike, was the 10th since the measures began a year ago and was made gruesomely memorable by a policeman being set alight.

Anastasiou, 42, says the financial crisis and fear of disturbances in Syntagma have cut customer numbers by 50 per cent. His café can take only six more months of these trading conditions before it will have to close, he says. "I am worried for my business but, worse than that, I feel this country is in a hospital and ready to die."

A year after Greece began its tough austerity drive on 3 March 2010, which was swiftly followed by a ¤110bn (£94bn) bailout from the EU, the European Central Bank and the International Monetary Fund, how is Greece coping? As Athens appears to be only the first of a string of European governments needing bailouts, with Portugal the latest on the brink, the mood in Greece now is a test of rescue mechanisms and severe austerity policies.

The austerity programme of Greece's ruling Pasok socialist party under Prime Minister George Papandreou, much of which has been stipulated as loan conditions by Europe and the IMF, is hitting everyday life hard. Civil servants have had pay freezes or cuts – mainly through losing bonuses – of up to 30 per cent; VAT has risen to 21 per cent and state-funded pensions are being reduced to reflect average lifetime earnings rather than final salaries.

The low spending power has put the Greek economy in a severe recession: it contracted 4.5 per cent in 2010 and the government is forecasting it will shrink a further 3 per cent this year. Inflation is hurting at 5.2 per cent, while unemployment has hit 13.9 per cent. A generation faces a bleak future, with youth unemployment at 35 per cent.

At first glance, it might seem the cuts are destroying the country. Anastasiou certainly thinks so. He says: "We are close to the limit of what people can bear, and if the government tries to take more from us I believe there will be a revolution." Even a policeman guarding Syntagma Square has sympathy for the protesters. "I understand why they are angry. Our salaries have been cut too. The violence is too much but everybody has the right to protest."

Beneath Syntagma Square, the metro station was recently hit by anti-austerity activists behind the so-called "I Won't Pay" campaign. They covered ticket machines to prevent payment after fares increased from ¤1 to ¤1.40. The action was part of a civil disobedience campaign launched in response to road toll increases, which began with blockades of motorway toll booths at Christmas. One of the movement's leaders, Giorgos Karatsioubanis, 27, says: "We are angry that transport prices have gone up at a time when people's income is going down and prices are rising. We won't stop until the government lowers fares and tolls."

Other Greeks openly admit to taking part in the violence. Aphrodite, 22, a law student, is one of them. She says her mother has lost her job; her father's salary has been cut 20 per cent, and she will soon have to pay for her studies. "This is violence from the state against me, so if I throw something at a policeman I am defending myself," she says.

One of the unions behind the strikes, the civil servants' ADEDU, is planning the next walkout, likely to be on 25 March. Its general secretary, Ilias Iliopoulos, says: "We want to show that the government is wrong about everything it is doing. Poor people are paying the debts of rich tax evaders and corrupt politicians and thousands will become homeless or turn to crime."

But Kostas Panagopoulos, the co-head of Greek polling agency Alco, says the demonstrations must be seen in the context of a well-established tradition of protesting and entrenched mistrust of the state ever since the popular uprising that overthrew the military dictatorship of 1967-74. "There have been big strikes and rallies in Greece every year for the past 10 years, so what we see now is not unusual."

The current protests, the most recent of which had between 30,000 and 100,000 participants, are dwarfed by the great demonstrations of 1990-93, he says. Interestingly, these were also against financial belt-tightening measures and right-wing prime minister Constantine Mitsotakis's plans to privatise state entities.

Tellingly, in local elections in November, the government won the most seats, albeit narrowly, and two surveys in February showed it remains the most popular party. One poll for the Ethnos newspaper showed Pasok was ahead with 26.1 per cent against 21.5 for the main conservative opposition, the New Democracy party. The European Commission's Eurobarometer poll in February found that 93 per cent of Greeks felt reforms were needed in their country. Indeed, the mood among many in Athens is one of acceptance. Eva Papadionysiou, 34, works for a quango and has had more than 20 per cent cut from her salary, while her husband has not had a pay rise since 2008. "We had to forget our plan to buy an apartment and I'm really worried about whether we can have children," she says. However, Papadionysiou believes "the government has no other option than to make these cuts".

For people outside the public sector, the austerity drive is hitting their tax payments, both through higher rates and state efforts to clamp down on evasion, which is widely thought to be one the main causes of the gigantic hole in the government's finances. At least a third of tax revenues due are not collected.

Shop manager Mina Christopolou, 57, says: "The government is doing what is necessary. You can't take money from trees. Everyone should pay more tax to help. We are used to not paying taxes and not getting receipts but now people understand it can't be this way."

What could shatter the fragile pro-government consensus, though, is how it addresses tax evasion. Papandreou is making moves in this direction. Last month a draft bill proposing to jail anyone failing to pay a tax bill over €75,000 was introduced to parliament. And when people eat out in Athens, it is not uncommon to see police conducting surprise receipt inspections. But there is a strong sense more must be done. Official figures show that revenues rose by a mere 5.5 per cent last year against the target of 13.8 per cent.

Papadionysiou says: "I am willing to make my sacrifice but I expect to see people who have been stealing from the state put behind bars." She tells a depressingly familiar story about visiting a dermatologist. "He charged me €100 without giving me a receipt and he had nine people in his waiting room, so he probably made €1,000 in two hours, tax free."

Student John Arvanitis, 21, is among those arguing that the government must do more to stimulate the economy. "We also need to exploit our resources more. We could develop a solar-power energy industry. We could export more of our agricultural products and tourism could be expanded."

Undoubtedly, the Greek government's best hope is to counterbalance the cuts with modernising the economy, including making a serious effort to tackle tax evasion. But no one knows whether this will be enough to prevent Greece from defaulting on its debt, with all the consequences for the eurozone that go with it.

The lenders' view

Economists applaud austerity measures

The Greek economy is responding reasonably well to the austerity measures, with the headline success being a reduction of the budget deficit from 15.4 per cent in 2009 to 9.4 per cent last year, but more action is likely to be needed.

In mid February, Greece's three lenders, the International Monetary Fund, European Central Bank and European Union, which send regular delegations to examine the economy, said in a joint statement that the deficit reduction was "an impressive achievement". The delegation, known in Greece as the "troika", said more progress was required, however, in the areas of revenue collection and spending controls.

It applauded new Greek legislation covering aspects of the labour market, the liberalisation of closed professions, healthcare reform, licensing and the competition authority, which has been passed or is pending, but stressed that "focus must now be on implementing these laws". Unions and others protesting against austerity measures have already voiced opposition to this legislation.

Economist Jan-Egbert Sturm, the director of the KOF Swiss Economic Institute and European Economic Advisory Group, recommends increasing value-added tax. "Greece is going in the right direction but it must do more, particularly to encourage growth."

Life and Style
tech

Sales of the tablet are set to fall again say analysts

News
A Brazilian wandering spider
news

World's most lethal spider found under a bunch of bananas

Life and Style
fashion

British supermodel and hitmaker join forces to launch a 'huge song'

Life and Style
gaming

I Am Bread could actually a challenging and nuanced title

PROMOTED VIDEO
Sport
Mario Balotelli pictured in the win over QPR
footballInternet reacts to miss shocker for Liverpool striker
News
people
Voices
Sol Campbell near his home in Chelsea
voices
News
i100
News
Kimi the fox cub
newsBurberry under fire from animal rights group - and their star, Kimi
Sport
Fans of Palmeiras looks dejected during the match between Palmeiras and Santos
footballPalmeiras fan killed trying to 'ambush' bus full of opposition supporters
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
filmsIt's nearly a wrap on Star Wars: Episode 7, producer reveals
Life and Style
fashion
News
i100
News
<p>Jonathan Ross</p>
<p>Jonathan Ross (or Wossy, as he’s affectionately known) has been on television and radio for an extraordinarily long time, working on a seat in the pantheon of British presenters. Hosting Friday Night with Jonathan Ross for nine years, Ross has been in everything from the video game Fable to Phineas and Ferb. So it’s probably not so surprising that Ross studied at Southampton College of Art (since rebranded Southampton Solent), a university known nowadays for its media production courses.</p>
<p>However, after leaving Solent, Ross studied History at the School of Slavonic and East European Studies, now part of the UCL, a move that was somewhat out of keeping with the rest of his career. Ross was made a fellow of the school in 2006 in recognition of his services to broadcasting.</p>
TV

Rumours that the star wants to move on to pastures new

News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Customer Service Executive / Inbound Customer Service Agent

£18 - 23k + Benefits: Guru Careers: We are seeking a Customer Service Executiv...

ASP.NET Web Developer / .NET Developer

£60 - 65k + Benefits: Guru Careers: We are seeking a ASP.NET Web Developer / ....

Operational Risk Manager - Asset Management

£60,000 - £80,000: Saxton Leigh: Our client is an leading Asset Manager based...

Project Coordinator - 12 month contract

£27000 - £32000 Per Annum: Clearwater People Solutions Ltd: Our large charity ...

Day In a Page

Oscar Pistorius sentencing: The athlete's wealth and notoriety have provoked a long overdue debate on South African prisons

'They poured water on, then electrified me...'

If Oscar Pistorius is sent to jail, his experience will not be that of other inmates
James Wharton: The former Guard now fighting discrimination against gay soldiers

The former Guard now fighting discrimination against gay soldiers

Life after the Army has brought new battles for the LGBT activist James Wharton
Ebola in the US: Panic over the virus threatens to infect President Obama's midterms

Panic over Ebola threatens to infect the midterms

Just one person has died, yet November's elections may be affected by what Republicans call 'Obama's Katrina', says Rupert Cornwell
Premier League coaches join the RSC to swap the tricks of their trades

Darling, you were fabulous! But offside...

Premier League coaches are joining the RSC to learn acting skills, and in turn they will teach its actors to play football. Nick Clark finds out why
How to dress with authority: Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear

How to dress with authority

Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear
New book on Joy Division's Ian Curtis sheds new light on the life of the late singer

New book on Ian Curtis sheds fresh light on the life of the late singer

'Joy Division were making art... Ian was for real' says author Jon Savage
Sean Harris: A rare interview with British acting's secret weapon

Sean Harris: A rare interview with British acting's secret weapon

The Bafta-winner talks Hollywood, being branded a psycho, and how Barbra Streisand is his true inspiration
Tim Minchin, interview: The musician, comedian and world's favourite ginger is on scorching form

Tim Minchin interview

For a no-holds-barred comedian who is scathing about woolly thinking and oppressive religiosity, he is surprisingly gentle in person
Boris Johnson's boozing won't win the puritan vote

Boris's boozing won't win the puritan vote

Many of us Brits still disapprove of conspicuous consumption – it's the way we were raised, says DJ Taylor
Ash frontman Tim Wheeler reveals how he came to terms with his father's dementia

Tim Wheeler: Alzheimer's, memories and my dad

Wheeler's dad suffered from Alzheimer's for three years. When he died, there was only one way the Ash frontman knew how to respond: with a heartfelt solo album
Hugh Bonneville & Peter James: 'Peter loves his classic cars; I've always pootled along fine with a Mini Metro. I think I lack his panache'

How We Met: Hugh Bonneville & Peter James

'Peter loves his classic cars; I've always pootled along fine with a Mini Metro. I think I lack his panache'
Bill Granger recipes: Our chef's heavenly crab dishes don't need hours of preparation

Bill Granger's heavenly crab recipes

Scared off by the strain of shelling a crab? Let a fishmonger do the hard work so you can focus on getting the flavours right
Radamel Falcao: How faith and love drive the Colombian to glory

Radamel Falcao: How faith and love drive the Colombian to glory

After a remarkable conversion from reckless defender to prolific striker, Monaco's ace says he wants to make his loan deal at Old Trafford permanent
Terry Venables: Premier League managers must not be allowed to dictate who plays and who does not play for England

Terry Venables column

Premier League managers must not be allowed to dictate who plays and who does not play for England
The Inside Word: Brendan Rodgers looks to the future while Roy Hodgson is ghost of seasons past

Michael Calvin's Inside Word

Brendan Rodgers looks to the future while Roy Hodgson is ghost of seasons past