…and the times they are a changin: A Eurosceptic accepting the Euro

by Ms Railey January 29, 2007

Major economic reforms have been taking place in Greece since the early 1990s and one of the strongest catalysts for these changes has been the Euro. In November 2001, the price of a return ticket from Pireaus to the island of Crete cost ten thousand drachmas. One year later, after the EU had officially converted the drachma to the irrevocable six-digit figure of 340.750 to the Euro, that same ticket became sixty euros. A 100% increase in price, three hundred and sixty-five days after the official conversion. This phenomenon spread to the smallest corners of the Greek economy. When confronting a kiosk vendor to explain why a copy of ‘Asterix at the Olympic Games’ had suddenly jumped from five hundred drachmas (about 2 euros) to seven euros, I was told that if others were doing it, so he would follow; a crass yet undeniably successful business plan indeed.

In 1998, Greece was the only country that was denied entry into the Euro because it failed to meet the convergence criteria. Lucas Papademos, speaking at the 9^th European Banking Congress in Frankfurt in 1999, commented that even after the introduction of the Euro into the country, ‘the economy will have to continue to adapt significantly in order to perform efficiently within the increasingly competitive environment of the European Monetary Union.’ Fast forward five years and Athens has become one of the most expensive European cities to live in, where a pint of milk is more expensive than a pint in France. Everything from rent to the price of a coffee has increased whilst comparitively, wages have flatlined. Compare the fact that Athens is the 29th most expensive cities in the world and the fact that today, per capita income is in the 0-10% ‘below average’ margin.

Nevertheless, there has been a vast improvement in the Greek economy over the last five years. Since a large percentage of the population has little to show for it, however, exposes the great currency implementation of 2001 for what it was; an economic curtain that allowed for stealthy increases in price amidst the confusion of a country-wide currency conversion. The purpose was to force Greece, being one of the weakest members of the European Monetary Union, into a period of economic growth that would raise it to economic levels deemed acceptable according to EU guidelines. Effectively, the Euro forced citizens of Greece into pumping money back into the system, without receiving an increase in their own incomes. The Euro conversion has basically sustained the economy, enabling it to make huge and urgent leaps in a short space of time. Now, Bulgaria and Romania must face the economic pressures of joining ‘ Europe’ in order to appease the wealthier EU members who do not want to be weighed down by less economically sound countries.

Although unnoticeable, such fast developments in a country will produce reactions, and the question of living standards is a major issue in a country where the average worker receives a monthly salary of six hundred euros. What is more frustrating, or perhaps baffling in Athens at least, is that such a wage is considered good, despite the fact that apartment rents are on average between four hundred to six hundred euros a month. To subsidise their incomes, a large proportion of the population work two jobs in order to live. As a positive, the Community Support Framework, which has been assisting Greece since 1986 on financial integration, proposes that between the years 2007-2013, cohesion for growth and employment will be the main focus. If or when the issue of living standards can be tackled, Greece will most definitely become a country to watch.

As Kostas Karamanlis said recently during a speech at London’s School of Economics, ‘ Greece has entered a period of intense structural reform to enable it to adjust to international changes and to be sufficiently prepared for the future.’ Indeed, with foreign investment pouring into the country due to privatisation, we are beginning to see slow transformations in the labour market. New Democracy is taking on a rather New Labour image in that it is pushing for major education and business reforms. These policies are necessary for Greece to modernise into the country it deserves to be. The general consensus is in favour of the New Democracy government, a young accountant and a taxi driver both agreeing that New Democracy has pushed Greece’s economy forward. On the other hand, the forces of Pasok and the socialist opposition are still firmly rooted in the government. Disheartened voices of fascists, communists and rebellious students protest against any attempted change, using the failures of the government and the current state of Greece for their argument. These angry voices made 2006 a very difficult one for restructuring.

Nonetheless, no matter which party controls government, Greece must push forward with the privatisation of Universities and a structural reworking of the Educational system. For too many years, public administration and services have been dogged by inefficiencies and inadequacies. To date, this has been Greece’s unhealthy image to both locals and foreigners alike. Thankfully, the European Union is now placing more pressure on Greece to comply with regulations ranging from environmental issue to health issues. This is a welcome order for a local government that seems keener than ever to remove the old image of unprofessional governance, to one of professional and rational administration. In a country where the simplest and most necessary procedures such as food safety are routinely ignored and corruption abounds, a strong government that is willing to push forward with change is urgently needed. Happily, the EU provides the perfect scapegoat for the current situation; because if the Greek people don’t like reform, the government can blame it on the Euro.