Official Warmth and Public Rage for German Leader in Athens - Rachel Donardio and Nicholas Kulish via NYTimes.com
Indeed, even as the prime minister greeted Ms. Merkel as “a friend of our country,” in a crisis that has revealed the deep divisions and even hostility within Europe, Ms. Merkel’s visit sometimes seemed more akin to President Richard Nixon’s famous 1972 visit to the People’s Republic of China than a routine bilateral summit between allies.
Three years of grinding austerity in exchange for foreign funding to pay back banks and meet expenses has seen Greece’s gross domestic product shrink 25 percent. Unemployment is now at 50 percent for young people and 24 percent overall. A series of governments has dramatically cut spending without improving the functioning of the state, resulting in cuts to essential services like hospitals.
In the news conference, Ms. Merkel acknowledged the “suffering” that the Greek people had endured as the government forced through deep spending cuts in the midst of a recession that has lasted for years. But she said the country was headed in the right direction. “I am convinced that the path, which is a difficult path, will lead to success,” Ms. Merkel said.
But many Greeks disagreed. “It’s just spin, it means nothing,” said Vassiliki Tsitsopoulos, a literature professor who attended Tuesday’s demonstration. “It’s never been worse, it’s just going to get worse, there’s no bottom, there’s just spin.”
“We’re just keeping up appearances,” Ms. Tsitsopoulos added. “Including the demonstrators. At this point we’re part of the scenery.”
Others believed the protests were necessary. “This is pure provocation, we have to answer back,” said the nurse, Christina Amanti, 37. “It’s like she’s visiting her protectorate. What’s she going to do, pat us on the back and tell us to keep getting poorer, that it’s good for us?”
While German policy makers have complaints about their struggling partners, the realization appears to have dawned on Ms. Merkel and officials in her chancellery that with Mario Monti in Italy, Mariano Rajoy in Spain and Mr. Samaras in Greece, Ms. Merkel has the most cooperative partners she is ever going to have to work with.
And the Greek government has lost the trust of the Greek people.
Here’s a scenario: The Greeks will fail to achieve the necessary ‘reforms’ — cuts in spending, increased taxation, reduction of services — and the Europeans will delay or block the next round of funds (which are just more loans). The Greeks will default on at least some of their debt payments, which will lead to many calling for their expulsion from the eurozone and the EU. The Greeks will throw out the technocrats that the troika wanted, and Syriza will take office and push to leave the eurozone. They will nationalize the banks, and devalue the currency.
Behind all this is magical dreaming about growth. There cannot be enough growth in time to save the debt holders: the banks and the rentiers want to get paid back, and are unwilling to accept the obvious: they have to write off these bad debts based on real estate and other high risk speculation that all collapsed in 2008. But they are managing the world’s governments to avoid the losses, and instead composed these technocrat governments to gouge the money out of the people who had no upside in the gambles being made, and now are being forced to pay back the losses from their savings, pensions, jobs, and future prospects.
The people will finally rise up and revolt. They always do.