Greeks remain pro-euro, but austerity may test their will

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Greeks remain pro-euro, but austerity may test their will

Joanna Kakissis - McClatchy Newspapers

November 17, 2011 04:19 PM

ATHENS — Thomas Vitsounis was a teenager when Greece dropped its old currency, the drachma, and adopted the euro in 2001. He still remembers how proud he felt. Here was proof, he says, that his country had finally evolved from a backward Balkan state into a respected member of Europe.

"I kept thinking, 'It's going to help our country develop and grow into something so sophisticated,'" says Vitsounis, now 28 and working as a maritime economist. "We would no longer be the single guy sitting alone, in a corner, during the party. We would be part of the party — part of Europe — and someone would have our back."

Whether that's turned out to be true is still to be determined.

Greece has developed during its more than 10 years using the euro. It used billions in low-interest loans to build roads, a new airport and impressive Olympic venues. But the inefficient state also built up a $400 billion debt — more than 120 percent of its gross domestic product, double what the eurozone allows — and now Greece is struggling to find a way to trim that debt and keep the euro as its currency.

The world's economic attention has turned to Italy, where the longtime prime minister, Silvio Berlusconi, resigned last week in favor of a technocratic government that also has promised economic reform. But even as Europe's debt crisis moves on, the sense of despair has hardly passed here, where a new government has pledged to cut back in return for new loans to meet its operating expenses.

That almost certainly will mean wage cuts and tax hikes, steps that opinion polls show are opposed by as many as 90 percent of Greeks. That's left Greeks debating whether so much pain is worth keeping the euro.

"The sense of national failure that would result from exiting the euro would be traumatic," says George Pagoulatos, a political economist at the Athens University of Economics and Business who favors staying with the euro despite the costs.

Leaving the euro would worsen the country's already deep recession and drive away investors, he says. Greeks would see their salaries, pensions and even savings collapse. It would lead to "extensive and prolonged social unrest, geopolitical weakening and the marginalization of Greece in Europe," he says.

But others, like Costas Lapavitsas, an economics professor at the School of Oriental and African Studies in London, say austerity measures imposed by international lenders will destroy Greece far more than defaulting and leaving the euro, which he says is a badly structured currency.

He says Greece's new premier, Lucas Papademos, has posed the right question: Do Greeks want in or out of the euro? But he doesn't agree with Papademos' conclusion that leaving the euro would destroy Greece.

Adopting the drachma and nationalizing banks might make for a rocky few months, Lapavitsas says, but then recovery would begin, and "an economy that's fairer to working people can be created."

"This is an issue of national sovereignty," he said. "The euro is crushing democracy in favor of monetary policy."

Polls in Greece show that 70 percent of Greeks want to stay in the eurozone, but whether that margin will hold as austerity measures continue to strain the economy remains to be seen.

Elias Papadopoulos, a 28-year-old economic analyst, said he favored staying in the eurozone — until he contemplated what that would mean. Under the latest bailout deal, even if Greece is disciplined about cutting its deficit it could still have a debt burden of 120 percent of gross domestic product in 2020. That's the same debt the country began austerity with and that Italy is buckling under now.

"I don't want to leave the eurozone, but then when I think about staying in the eurozone under austerity and the country still being in debt after all those years, I think, what's the point?" Papadopoulos said Thursday during a protest march commemorating a 1973 student uprising against a military junta. He was marching with members of the Den Plirono, or We Won't Pay, movement, which refuses to pay toll and public transportation tickets to protest austerity measures.

"We will be poor whether we use euros or drachmas," he said.

Katerina Petrucci, a 21-year-old bookshop employee, says her heart sank when German Chancellor Angela Merkel and French President Nicolas Sarkozy demanded that any referendum on the austerity measures be a question about whether Greece wanted to stay in the eurozone.

"It seemed very clear to me that they don't want us in the euro anymore," she said. "I thought, well, we're doomed. We're going to be the poor cousins of Europe. We're going to be branded the bad people who brought down the euro. And it's a shame, because being part of Europe is what gives me hope for Greece."

Vitsounis, the maritime economist, says Greeks must try to hang on and build an even more open and productive economy, if only to show the rest of Europe that Greeks are resilient and far more substantive than the caricatures promoted by some in northern Europe.

"We have done a lot of stupid things as a country, but we are also being killed by austerity," he said. "And yet people think we're a bunch of lazy guys who don't pay our taxes. They're wrong. And I want us to show them that we belong in Europe just like the rest of them."