We are Greece's lost generation

Leading Greek journalist Vaios Papanagnou charts the rise and fall of a nation which thought it had at last hit the eurobillions jackpot
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The summer of 2004 was the last time that the Greeks felt they could not lose. As the national team was winning its way to the European football championship final, Greeks gathered in the squares and the cafes so that they could watch the matches together. When the team captain lifted the cup in his hands, the streets of Athens were filled with people celebrating, and they chanted and hugged until morning. "In the months following the Euro and the 2004 Olympics, every Greek thought he walked around with a gold medal on his chest," remembers Stelios Sophianos, 41, the editorial director at To Vima, the leading Greek daily newspaper. "And right then, even though we were feeling confident, we lost the greatest opportunity this country ever had to set a course towards real growth."

Greek confidence had been building since 2001, when the country entered the eurozone. "For the first time in 15 years, confidence in the future and in the image of the country was recorded in opinion polls. There was a sense that Greece's status in the world had changed," says Gerassimos Moschonas, 46, an associate professor of comparative politics at Panteion University. "Historically, Greece always had confidence problems, due to its history and the fact that we always felt threatened – rightly or wrongly – by our militarily superior neighbour, Turkey. The image of our country both in our own eyes and the Europeans' seemed to change for the better when we joined the euro."

Modernisation became the order of the day for the Pasok socialist government, and that word seemed to embody Greece's collective dream of entering the league of rich liberal democracies, as well as the individual aspirations of the Greeks to improve their lives and finally enjoy the same means as the rest of the Europeans. High growth rates and low interest rates, mainly because of the euro, favoured both pursuits. "Suddenly, we were no longer pariahs," says Mina Birakou, 34, the editor-in-chief of In Style magazine, "and many Greeks felt Europeanisation was about having a glamourous lifestyle. What is worse is that we finally surpassed the Europeans. I had friends in Milan, Paris and London who were surprised to see I only wore designer clothes.

"I realised at the time that maxing out my credit card was not sensible, but it was something that everybody was doing. In the lifestyle magazines we preached and lived according to the motto: have fun, spend, live your life to the fullest and don't care about tomorrow. We were invincible."

No one can pinpoint the exact time the bubble burst, and this is probably because it deflated slowly. For Petros Efthimiou, 60, Pasok MP and minister for education from 2000 to 2004, the first hit came with the Karamanlis government financial audit, whose findings artificially increased the budget deficit. "They calculated defence expenses according to the orders made and not upon actual reception," he says. "This kind of fiscal management made no sense. Public expenses jumped to €300bn from €180bn in 2004. And this was also made worse by the hiring of 100,000 public servants and an unknown number of interns. Meanwhile, the public sector was losing over €1bn a year to tax credits and from the erosion of the tax collection mechanism."

Mr Sofianos adds: "During 2008-09 alone €57bn was added to the country's debt, three times the previous average, due to the deficit – mainly because of the rise in oil prices and the rapid increase in imports, especially in luxury goods."

Disaffection towards the government is traditionally part of Greek political culture with roots in the post-civil war authoritarian regime that ruled Greece till the dissolution of the junta and the move to democracy in 1974. In the summer of 2007 the great forest fires awakened these feelings of disaffection and anger towards the authorities.

"At that time, all opinion polls indicated a lack of faith in the country's institutions, including the parliament, the parties, the unions and the police. This was a common feeling that grew worse and resulted in the riots of December 2008," says Professor Moschonas. "Currently, there are tendencies in Greece calling for total change. There is significant anti-systemism even among the supporters of the political centre, which is a first in European history. "

Antonis Kanakis, 40, the popular host of an influential satirical talk show, Radio Arvila, feels that "this deterioration started long before 2004. Politicians are to blame because they are useless and corrupt, but we should also blame ourselves for voting for those people who could secure us perks and posts in the public service. We were sending corrupt people to parliament, and complaining about the corruption. As citizens, we thought that public finances and the health of the public sector had nothing to do with us. We could steal at will. We were willing accomplices. Now we have to sober up and build a public sector that respects the citizen and vice versa, not in the hope of repaying the debt, because this can never happen, but in order not to default."

The austerity measures and the new tax laws have brought fear and insecurity to all Greeks, who for the past few months have heard only of new wage cuts, layoffs, business defaults and price rises. Their reactions, however, are divided. Some believe austerity is the only realistic option. Others, including the 150,000 people who took to the streets in a march on 3 May, feel the law is unfair to the weaker and salaried classes. Mary Kontogeorgou, 35, a member of a union aligned to the left-wing party Syriza, who took part in the march, says: "We are angry because we have no responsibility for this debt and the crisis. We want to protect the workers and the social rights achieved through years of struggle and hand them over to the next generation. The tax contribution of wage earners is disproportionate to that of businesses."

Even though no statistical data are yet available, it seems that "people with higher education in the middle and upper classes are more tolerant of the measures than the working classes and the young", says Professor Moschonas. Mr Efthimiou draws attention to measures such as imposing a 15 per cent tax on property owned via offshore companies. "This means that the public can essentially claim this property within five years. This is the most sophisticated tax law I can remember in 15 years," he says.

Professor Moschonas agrees but notes: "The problem in Greece is that the tax laws have never been fully implemented due to the lack of a mechanism capable of putting an end to tax evasion. Nearly 30 per cent of the GDP is in the black economy. The fiscal problems in Greece have to do with public sector expenses, but this is the outcome of low revenues caused by massive tax evasion and fraud. Receipts from direct taxes are about 6 per cent of GDP, lower than those from indirect taxes. This amounts to almost €15bn for this year. If one adds this sum to the revenue lost in the past 10 years from tax evasion, then Greece would not have a debt."

There is no confidence or optimism in Greece right now and, survival aside, there is no other collective vision. "We are now asking again for financial help from our parents, who earn less, but have been more prudent," says Ms Birakou. Ms Kontogeorgou adds: "I buy less food from the supermarket now, and cannot make plans for the coming months."

As for Greeks between 26 and 35 years old, an appropriate name for them would be the Lost Generation. We are culturally in 2010, but trapped in a country that is heading back to the past.

Vaios Papanagnou is editor-in-chief of 'Esquire Greece'

Eurozone response: Merkel promises to get tough with market speculators

The German Chancellor, Angela Merkel, pledged to crack down on financial market speculators in a last-gasp quest for votes before a state election today. Ms Merkel's Christian Democrats and their Free Democrat allies must win the regional vote in North Rhine-Westphalia, Germany's most populous state, to keep their majority in the upper house.

The poll is widely seen as a referendum on Ms Merkel's seven-month-old government. The campaign has been overshadowed by the government's decision to release billions of euros in loans to Greece as part of a eurozone aid package. Ms Merkel told voters in Bielefeld that eurozone countries would get tough with market speculators. "Those who created the excesses in the markets will be asked to pay up – those are in part the banks, the hedge funds that must be regulated, the short-sellers – and we agreed yesterday to implement this more quickly in Europe."