Article

The Greek Drama and its
Gender Dimension: the plot to date

From the summer of 2012 the political situation will be one of extreme polarisation between two new players: in opposition will be a bloc deeply hostile to reform and identifying it as an infringement of national independence. And a governing coalition of parties whose main objective is to remain within the euro, accompanied by a (reluctant) understanding that the price for that is a programme of reforms demanded by creditors

 

a.    The situation as of June 2012

 Two years after the first bailout of Greece and the Memorandum of Understanding that accompanied it, Greece has received a second bailout, has subjected private loans to a haircut of 75% and is readying itself for a smaller possible third bailout. In political terms, this was translated into an upheaval of the political system. After two elections in rapid succession, what originally appeared as a demise of the two-party-system in the May election, in June looks more like a changing of the guard: a revival of the two-party-system, with the role of the Left-wing party changing hands. PASOK fell from 42% in 2009 to 12% in 2012. Conversely, a loose alliance similar to anti-globalisation movements (SYRIZA) was catapulted from 4% of the vote in 2009, to 28% in June 2012. Since the bailout, SYRIZA had provided the focus of opposition to everything related with the bailout and the reform programme. This was rewarded electorally by the increase in its electoral support, as large groups who felt at threat from reforms, transferred their allegiance from PASOK to SYRIZA (it remains to be seen whether this transfer is permanent or can be reversed).

 

The key political argument as presented and understood by the media was over the conditions of the bailout, as reflected by the Memorandum of Understanding (MoU), pro and anti MoU. Given that the MoU is a necessary condition for continued finance from the Eurozone, this was understood by the Centre-Right as equivalent to pro- and anti- Europe. However, given the characteristics of the new electoral map, it is probably more useful to think of the dividing line as one between reform and no-reform. Under this interpretation, the disintegration of PASOK can be explained by the fact that it presided over a reform programme, whilst justifying it simply by pointing out that it was due to external pressure. It firmly refused to take ownership of the reform programme, or to justify its actions by internal arguments.

So, from the summer of 2012 the political situation will be one of extreme polarisation between two new players: In opposition will be a bloc deeply hostile to reform and identifying it as an infringement of national independence. A key characteristic is that the deep recession and all the economic and social problems are blamed solely on outside influences, while the promise is made that the situation can return to what it was in 2009. This is confronted by a governing coalition of parties whose main objective is to remain within the euro, accompanied by a (reluctant) understanding that the price for that is a programme of reforms demanded by creditors. The coalition programme is to attempt to negotiate with the creditors the smallest possible size of the reform package, consistent with clinging on the common currency.

In consequence, the political fault-line is between a set of forces, who would prefer to roll back reforms on the one hand, and another set that would pursue the smallest possible reform agenda. This can be interpreted as the result of the fact that, in the last few years, very little discussion took place in domestic politics about the underlying causes of the near-bankruptcy in Greece. The bankruptcy is presented as equivalent to national catastrophe, and there is little awareness other than rhetoric of the mechanisms that made the bailout unavoidable.

This is in sharp contrast with the analysis, which is presented by the Troika and which will colour the external discussion about the Greek crisis. In external discussions emanating from the side of the official creditors, domestic reform is seen as the only antidote to continued and increasing finance and bailout packages. This position (aside from its possible objective merit) is dictated by their need to sharply differentiate Greece from other Eurozone countries in financial difficulty, especially those which are seen as possible future candidates for bailout (Spain and Italy). Similarly, the lack of reforms is cited by the creditors’ side (the Troika) as justification for the perceived failure of the bailout and the need for corrective actions. Thus the dogma of Greek exceptionalism on the part of the Troika is proposed to exorcise the fear of contagion across the Mediterranean. Tardiness in promoting reforms, however, is a difference in degree and not in kind; to buttress its case the troika would need to point out to other exclusively Greek traits, such as the difficulties in implementation of agreed measures or other governance shortcomings.  These characteristics would further differentiate the position of Greece in the case of a new Euro-wide initiative. But, whatever happens in Europe, the Troika is unlikely to concede that European reflation is an alternative to domestic reform, for the case of Greece (as many people in Greece seem to believe).

The scene over the next few months will be played out between on the one hand the EU and Troika pressing for greater reforms and better implementation, and the domestic side attempting to placate public opinion by concessions to the most vocal and entrenched pressure groups. However, in order to be able to negotiate at all, the new Greek government will have to show that it is capable of implementing agreed upon measures, as well as to restart the basic functions of the state after four months of electoral hibernation.

 

bThe economy

While the tension has been focused on a largely unsuccessful attempt to roll back the size of the state sector (accounting for well over 50% of the GDP), the recession has been especially damaging to the private sector. The key mechanism there is not so much austerity and public finance, but a drastic contraction of liquidity. Indeed, revisions of national accounts show that the recession predated the onset of austerity by two years (from 2008). The continued uncertainty has exacerbated this greatly, by capital flight reminiscent of bank runs. Insecurity has meant that 50% of the banknotes in circulation have been added to idle balance (National Bank) as households have tended to withdraw their savings to guard against the euro-exit.

This has translated into a major and accelerating deterioration in the employment picture, exclusively centred in the private sector. Despite some discussion and a target of reduction in the public payroll, the public enterprise and government sector are still immune from unemployment, as any reduction in the number of employees had to rely on natural wastage (speeded up by grandfathering provisions in pensions reminiscent of early retirement. As a consequence, the hazard rate of unemployment for the private sector is of the order of 40% (the unemployed divided by the number of workers who are at a realistic risk of losing their job, i.e. excluding the public sector employees). Adverse developments in the tourist sector in the summer are likely to exacerbate matters further. Political and currency uncertainties add to the general picture of gloom.

Possible developments in the Eurozone are likely to have an indirect effect on the Greek macro-economy. Eurobonds are a case in point, as Greece, is currently borrowing under the bailout terms at  a lower interest rate than any of the possible Eurobond interest rates. Thus the introduction of Eurobonds will carry no direct benefit for Greece.  On the other hand, the debt servicing situation will be undoubtedly facilitated by a rising inflation rate, while more buoyant export demand and greater spending by tourists will also help matters.

c.     Gender implications

Gender implications are driven by two factors: first, liquidity and the effect of this on small (family) firms. Small family business has been relatively resilient but at the cost of burdening family finances. It is the recipient of pressures to finance the continued expenditure of the state. Given the inability of the state to borrow, the maintenance of a large state sector and reluctance to reform it, translates into a greater tax burden for the family firm.

The second driver is unemployment. The increase in unemployment among male breadwinners has intensified the search on behalf of women and other family members to supplement family income. However, their search is made more difficult by the smaller number of job offers due to the problems of the small firms. Tourism in 2011 operated as a stabiliser, halfway through the year, propelled by instability in the Mediterranean; the prospects for 2012 so far are disappointing. The public sector as a possible employer for labour market entrants has more or less closed down. So, unemployment is spreading towards the middle class.

Those two drivers are affecting the economics of the family and its role as a provider both of social services and of social protection (the Informal Welfare State). The family and its finances are squeezed directly through austerity, and indirectly through liquidity. They are unlikely to be much improved as a direct result of a renegotiated bailout package, given that this renegotiation will be focused chiefly on delaying reforms to the public sector. On the liquidity front, it will be eased only once the underlying uncertainty about Greece’s continuing membership of the Eurozone is conclusively resolved. A weak government coalition confronted with an ascendant opposition will do much to extend uncertainty (rather than contain it). So, even though the formation of a credible government is a step in the right direction, there is still much uncertainty remaining. This will only be resolved if underlying issues are brought to the open, discussed and given credible answers. In consequence, the Greek crisis will keep unravelling,  even as on the european scene new acts are added to the drama.

 

 

 

 

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