Greek Tragedy
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World Policy Journal ESSAY Greek Tragedy IOANNIS N. GRIGORIADIS NKARA—Hubris, Ate, and Nemesis are three minor Greek deities, Amostly remembered today for their function in ancient Greek drama. Hubris symbolizes arrogance, and deviation from virtue. Ate refers to an act of folly, a direct consequence of hubris, which provokes the wrath of gods and precipitates their intervention. Nemesis is the retribution of divine justice—painful, but necessary to restore world balance and order. The ongoing, multifaceted crisis that has torn apart Greece’s economy and society since October 2009 can also be approached through the lens of this tragic classical trio . NICK DITMORE / MAMJODH 101 Published by World Policy Institute World Policy Journal ESSAY Today, the country is all but bankrupt, a liberal former prime minister who died in thanks in large part to excesses that have 1968 after being placed under house arrest become endemic in Greek society and gov- by the right-wing military junta that had ernance during the past three decades. Only taken power in Greece the previous year. the last-minute intervention of the Euro- When the junta was overthrown in pean Union and the International Monetary 1974, the younger Papandreou returned to Fund prevented a total meltdown of the Greece and formed a political party, the Pan- country’s economy in the spring of 2010. hellenic Socialist Movement (pasok), which As a result, during the past 15 months, a opposed Greece’s entry into NATO and the new paradigm has been forced onto Greece. European Economic Community (eec). No longer can the profligacy of the past In 1981, Papandreou was elected Prime play any role in the country and its future. Minister, having campaigned on promises to There is no other viable solution for Greece withdraw Greece from those organizations but radical reform. and end the country’s Cold War alignment This realization is the key moment of with the United States. Once in office, Pa- nemesis in today’s Greek tragedy. It is also a pandreou reneged on those promises, chart- reality that much of Europe is being forced ing a more moderate course, at least when to acknowledge. Ireland, Portugal, but it came to foreign policy. Greece remained a also Spain, Italy and Britain—all are now full—albeit often problematic—member of confronting the costs of past excesses, their the eec and NATO. fiscal backs to the wall. If Greece can find Papandreou’s leadership was instru- a way to heal its self-inflicted economic mental in healing the wounds still fester- wounds, it may offer a model for economic ing from the 1946 to 1949 Civil War that reinvention in Europe. If not, it may be- pitted Greek against Greek—the conser- come a cautionary tale. vative right and center versus the commu- nist left. Exiled left-wing insurgents who THE ROOTS OF HUBRIS left Greece in the aftermath of the Civil The contemporary Greek political elite War were allowed to return, while their bears a large burden of responsibility for earlier contributions to the anti-Nazi re- the country’s current woes. Yet the funda- sistance were officially recognized. Bureau- mental origins of Greece’s problems can cratic posts ceased to be a privilege offered be traced to the era of Andreas Papandre- exclusively to right-wing Greeks. But very ou, a hero of the Greek left who served as rapidly, Papandreou’s government began the country’s prime minister from 1981 to go off the rails. Unprecedented levels of through 1989, and again from 1993 until borrowing and spending created massive 1996. Before entering politics, Papandreou government debts. While debt-to-GDP was a well-regarded economics professor ratio was 30 percent in 1980, it skyrock- in the United States, teaching at Harvard eted to 90 percent by 1990. and the University of California at Berke- The new funds were spent to subsidize ley. His father was Georgios Papandreou, private consumption rather than promote Ioannis N. Grigoriadis, who was born and raised in Greece, is an assistant professor of political science at Bilkent University in Ankara, Turkey. 102 WORLD POLICY JOURNAL Published by World Policy Institute World Policy Journal GREEK TRAGEDY development of infrastructure, which could Meanwhile, young Greeks became more have boosted growth. Salaries in the public interested in securing well-paid and unde- sector kept rising, without generating any manding government jobs, rather than im- parallel growth in productivity. Economic proving their skills through education and assistance from the eec increased the size seeking success through entrepreneurship. of the pie without encouraging investment These flaws remained fixtures of Greek in long-term growth or fostering a cul- society and governance long after Papan- ture of accountability. Under Papandreou, dreou left office. Still, for nearly three de- Greeks became accustomed to a perpetually cades, Greece escaped any real economic improving standard of living. Yet it was reckoning. It was aided by an exceptional financed not by genuine and sustainable amount of eec/EU financial aid, in amounts economic growth, but by an ever-growing that exceeded even those Greece received mountain of debt. Politicians who warned from the post–World War II Marshall Plan. of the potentially disastrous consequences These funds were were repeatedly defeated in parliamentary disbursed with the critical elections and marginalized. At the same aim of narrowing deficiencies time, the state bureaucracy became infected the gap between by inefficiency, nepotism, and corruption. Greece and the of the Greek Large swaths of the private sector, in- more developed state had been cluding the construction and telecommu- EU member states. cleverly hidden nications industries, became dependent Despite the ineffi- on the state. Public health and education ciency of the public from view for increased in scope but not in quality, and sector, those funds too long. became tainted by rampant corruption. did help improve Pharmacists would bribe physicians to the country’s infrastructure. Greece’s private prescribe unnecessary drugs to their pa- sector also benefited from the post–Cold tients, paid for by the government. Public War opening of economies in the Balkans. high school teachers would violate their Throughout the 1990s, Greece’s most oath of exclusive public service and earn competitive economic sector, shipping, extra money by offering private courses to took advantage of worldwide trade liber- students preparing for the university entry alization and steady growth in emerging exam, depriving less-fortunate students of markets like China, India, and Brazil. their attention in the classroom. As this And between 1989 and 2000, the arrival kind of behavior spread, the social fabric of more than one million immigrants from was slowly shredding. southeastern Europe, the former Soviet Official tolerance of corruption encour- Union, the Middle East, and the Indian aged public acceptance of rule-breaking. subcontinent revitalized the Greek econ- Tax evasion became the norm, and honest omy and gave a critical—if only tempo- taxpayers were often penalized by paying rary—boost to its competitiveness. ever higher taxes on the income they volun- Spurred by those factors, the eco- tarily declared. Increasingly generous pen- nomic growth of the late 1990s allowed sions and social benefits, combined with the Greece’s entry to the Eurozone and its country’s aging population, undermined the adoption of the euro as its currency. Ques- stability of the Greek social security system. tions of fiscal reform, responsibility, and SUMMER 2011 103 Published by World Policy Institute World Policy Journal ESSAY competitiveness were far from the minds cheered by both political leaders and vot- of politicians and voters alike. The convic- ers. It was, indeed, a big national suc- tion that the country could indefinitely cess. Yet the Greek government failed to live beyond its means and enjoy a debt- make clear to the electorate that Eurozone financed “Greek dream” was the defining membership came with strings attached. moment of hubris. By voluntarily relinquishing national monetary policy, Greece could no longer TWO MOMENTS OF ATE periodically devalue its currency to in- While Greece was pressing forward with crease competitiveness—a common prac- its efforts to join the Eurozone in the late tice for decades. Greek political elites 1990s, it also embarked with great fanfare continued to compete for the popular vote on a project that would most lucidly reveal using the same old tricks, while European its structural weaknesses and pave the way authorities failed to develop the supervi- for a dramatic shift of fortunes—hosting sion mechanisms that would ensure the ac- the 2004 Olympics in Athens. The return curacy of Greek financial statistics and the of the Olympics to its ancestral home was compliance of Greek economic policy with greeted by the public with jubilation and the Eurozone standards. In the absence of pride. Still, there were a few skeptics who innovative policies to promote competi- doubted the wisdom of the multi-billion- tion and reform, the prospects of the Greek dollar project. They were right. economy remained bleaker than ever. The Athens games went smoothly. The left-leaning Papandreou era may But the costs of hosting them far out- have been the origin of contemporary weighed the benefits. Today, many build- Greece’s hubris. But Greek governance tru- ings constructed for the Olympics remain ly hit its nadir during the 2004 to 2009 under-used, even abandoned, since there administration of Kostas Karamanlis, was no comprehensive plan for their future leader of the center-right New Democracy after the games ended and the world de- (nd) party. As the nephew of the conser- parted. A rare opportunity to reshape Ath- vative Prime Minister who had hauled ens was squandered. Even worse, colossal Greece into the eec in 1981, Karamanlis cost overruns and astronomical budgets appeared to enjoy impeccable pro-market were financed through reckless borrowing.