On 21 October, finance ministers gave the green light for the latest payment (€8 billion) of Greece’s first financial package. This last tranche will be signed off by the International Monetary Fund, and the funds would reach Greece my mid-November. The announcement by the finance ministers followed the Greek parliament’s approval of a new package of austerity measures on 20 October. The Greek parliament’s vote took place amidst a two-day general strike in Greece, populous demonstrations and riots. However, this did not stop Greece’s political elite from passing measures, which in effect will deconstruct Greece’s welfare state and weaken its social policies.
Indicatively, the new austerity package measure includes a solidarity levy of between 1% and 5% of income, an increase in the property taxes, an increase in VAT taxes, lowering the tax-free threshold for income tax from €12,000 euros to €5000 euros (the original plan for €8,000 was abandoned), and cuts in the public sector wages by 20% (on tops of the 20% which they experienced last year). Furthermore, there health spending will be cut by €310 million in 2011 and a further €1.81 billion in 2012-2015, and education spending will be cut by closing or merging 1,976 schools. Social security will be cut by €1.09 billion in 2011, €1.28 billion in 2012, €1.03 billion on 2013, €1.01 billion in 2014 and €700 million in 2015. (Austerity plan in full)
Naturally, the government expressed its mere “hopes” to crack down tax evasion, despite the fact that the names of Greek businessmen, contractor companies, top newscasters and pop-singers who have been systematically evading taxes for decades are well-known among government and journalistic circles. Finance Minister Evangelos Venizelos continued its scaremongering rhetoric, describing the government’s choice as between a “difficult situation and a catastrophe”. According to the BBC, he said “We have to explain to all these indignant people who see their lives changing that what the country is experiencing is not the worst stage of the crisis,” he said.
Well, he is right about that. The worst is yet to come. This latest wave of taxes and spending cuts will not only increase unemployment, dampen growth and depress the economy. The measures are purely anti-developmental and will have a direct effect on the social and humanitarian situation in Greece. The government is reducing the number of hospitals from 133 down to 83 and reducing the number of clinical units from 2000 down to 1700, without any serious impact assessment or research. More and more Greeks turn to NGOs for basic medical services. As the Lancet medical study concludes, “the picture of health in Greece is concerning. It reminds us that, in an effort to finance debts, ordinary people are paying the ultimate price”. Unfortunately, it is hard to find any glimpse of hope. The Papandreou government’s priority is primarily the satisfaction of the lenders’ demands, rather the interests of the Greek people.
Greece and the IMF 