Athens (CNN) – They say a crisis can bring out the best or worst in people, a society or on a continent. Seeing the situation unfold first hand and talking to politicians, business people and those on the streets, one can witness how divided this country of 11 million people on the tip of southern Europe is becoming.
The divisiveness is multi-layered; first within the ruling, socialist Pasok party itself. On the left, party members yearn for the days of the current prime minister's father in the 1980s, Andreas Papandreou, when state ownership was the call to arms, a large public sector provided employment and...
an equally large safety net. On the right of that party, those who are aware the country is living on borrowed time and money.
Within Parliament, there is no sense of a common good. Prime Minister George Papandreou and the leader of New Democracy Antonis Samaras –despite being college room-mates in the past - cannot rally their party rank and file members to finally deliver deep, overdue reforms.
Most alarming as one who has covered this country since the 1990s is the division amongst the Greek people. On one side, members of the public sector, making up one fifth of the workforce (the largest in percentage terms in Europe) and the private sector on the other. The latest austerity plans call for a 20% reduction in pension payments for those making more than $1650, a 40% cut for those who retired before 55 and 30 thousand furloughed state workers. They will not be terminated but will see a reduction in their wages.
As part of the package, there is a new round of tax increases. Property taxes will be in place from 2011-2014, joining a handful of tax "enhancements" introduced since the crisis began. The private sector says they are bearing the brunt of the revenue burden and state workers say the wealthy have made tax evasion an art form. Finally, there is a small, but vocal camp which says it is time to exit the euro and the majority who still believe the young currency can offer stability and discipline.
One source in the ruling party described today's climate as a "frustrating mess" with nasty in-fighting and complete uncertainty about the future. That uncertainty has lead to what can be described as an austerity trap. Consumer confidence has plummeted as the country chalks up its third year of recession. The numbers are alarming. Unemployment is at a record 16.3%; it is a frightening 40% amongst those in their prime employment years between 30-44, according to the government. GDP in the 2nd quarter collapsed by 7.3%.
While Greek society is being torn apart by government debts of nearly one and half times their economy, one parliamentarian complained about being a guinea pig in the euro experiment. As one leading Greek industrialist suggested today, Greece needs to integrate more with Europe, not less. Governance is vital, EU-wide budget targets and mandatory reforms are what can keep Greece and its neighbors on the path to reform and eventually recovery. The problem is, with 17 members of the eurozone, many with very different visions of a common market and a unified Europe, that is proving difficult in the best of times and nearly impossible during a crisis.
A decade ago, Greece was enjoying the booms times of massive spending on the 2004 Olympics. EU structural funds poured in to build motorways and bridges and thanks to euro membership that brought in record low interest rates consumers went on a borrowing spree. In 2003, Greece grew nearly 6% and 4% the year after. That was the time to push through labor reforms, restructure investment laws and to have a European-wide system for budgetary controls.
It was a missed opportunity and now the Greek people are pointing fingers at each other and looking to Europe for a solution.
CNN Anchor and Correspondent, John Defterios
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