Giorgos, a 77-year-old pensioner from Athens, sits outside a branch of the National Bank of Greece as he waits along with dozens of other pensioners, hoping to get their pensions in Athens, Greece June 29, 2015.
Photograph by Yannis Behrakis — Reuters
By William Antholis
June 30, 2015

My family and I started traveling annually to Greece in 2010, the year after the crisis began.

Our visits mixed business and pleasure. As the former managing director of the Brookings Institution, I helped launch and supervise a Brookings study of the crisis, including recommendations for how to return competitiveness to the Greek economy.

As a Greek American who spoke the language at home, but who rarely visited here as a kid, I wanted my own children to be exposed to the country’s history and culture and hospitality.

Over these last five years, we’ve seen the growing impact on the lives of real people — shuttered stores in Athens, tales of people losing their jobs, pension cuts, businesses unable to find financing, tensions with middle eastern and north African immigrants, etc.

We’ve also witnessed our share of public protests, and parliamentary debates. Two years ago, the then-finance minister, Yannis Stournaras, showed me the bullet hole in his office window. He’s now the Governor of the Bank of Greece, and in open disagreement with Prime Minister Alexis Tsipras.

We’ve also witnessed sparkling successes. On the top of any tourist bucket list: the modern, gleaming new Acropolis museum. One well-traveled American friend described it as the best museum he’s ever visited … ever. It is a rare shining star in Greece of public sector success.

And, on this trip, my wife and I helped organize travel for 100 friends to the exquisitely designed and implemented Costa Navarino resort in the western Peloponnese. The Kalamata region of Greece is home to some of the country’s most important and least explored antiquities, not to mention beautiful natural wonders and true farm-to-table dining. Costa Navarino is tasteful and elegant, and also the kind of large-scale tourist resort that Greece needs.

In our annual visits here, we never once have had a travel inconvenience or delay within the country – once standard issue in Greece. Our only troubles have been on U.S. or European carriers: United Airlines, Air Canada, Delta (DAL), Air France (AF), Lufthansa (LHA), each caused one headache or another. But not so for Aegean or Olympic or the countless ferries and buses we’ve taken. One still meets an occasional officious or gruff taxi driver, hotel clerk, or ferry porter. But by and large, the hospitality culture dominates.

Despite those successes, this year the crisis came home directly. The look of real frustration and fear in the faces of hotel clerks, cab drivers, restaurant owners, and politicians remind us that modern, industrial societies can experience true depression. “Mr. Bill, what will happen to us? Will America save us from Europe?”

 

The long lines at ATMs are only the most noticeable tremor of financial instability that has been coursing through the economy for six years. In that period, the Greek economy has declined by nearly 30%, with one out of three Greeks out of work, and six out of ten Greeks under 25 in search of a job.

This year, my kids got to see their first-ever Communist Party rally — red flags everywhere, and while peaceful, it was a reminder that economic distress fuels support for views that (in my humble opinion) will only lead to further misery for the country. The kids were amused. I was not.

Greece certainly bears much of the blame. “We have chosen to be governed by fools,” one Athenian restaurant owner told me. It is a country with too many public employees who deliver too little public benefit. That’s a budgetary issue – largely because it has not been able to generate enough tax revenue to pay those salaries and pensions.

But it’s also a competitiveness issue. Greeks need to both free up their companies from excessive red-tape, and also allow their companies to invest in research and development. They need to reform their universities and research institutes, allowing them to build a more innovative, and entrepreneurial society.

Worse still, Europe has directly contributed to the problem. The EU has focused only on Greece’s budget deficits, and not on the building blocks of competitiveness. Now, with Europe’s help, the country is on the verge of moving backwards, of seeing the Greek state as the salvation of economic malaise. Whether or not Greeks favor staying in the EU, I have not met one Greek who believes that European partners care about restoring growth, alleviating unemployment, or building a more competitive Greece. They rightly point out that the EU simply want Greece to follow the Eurozone’s budget rules.

In short, Europe has ignored the political viability of reform. By demanding immediate and unceasingly higher taxes and cuts in government spending, they have helped to send Greece into a depression. The last Greek government had begun to implement some reforms and return the country to economic growth. But Europe’s constraints were too heavy, and the growth was not fast enough.

As a result, Europe has given the current government exactly what it wanted: an excuse to blame failure on the EU.

Two years ago, we hosted Alexis Tsipras at Brookings. He struck us as politically astute, but surrounded by an amateurish and ideologically driven group of advisors.

Tsipras, at the time, told us that Europe needed Greece as much as Greece needed Europe. We agreed with him that austerity would not by itself lead to growth. But we also made clear to him that neither would government spending alone – that Greece needed to unleash its innovative and entrepreneurial spirit.

This is just the opening scene in the final act of this drama. It is a very complicated play — multiple forces and voices within both the Greek government and the EU. There is still a chance that they can pull a rabbit out of the hat. But for the first time in the last five years, I’m not optimistic.

William Antholis is the CEO of the Miller Center at the University of Virginia. He served as Director of International Economic Affairs on the White House National Security Council from 1997 to 1999.

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