Greece: Polarized Reactions to the Debt “Haircut” Deal

This post is part of our special coverage Europe in Crisis.

The Greek “haircut” debt deal reached by European politicians and banks after a year and a half of agonizing negotiations and unpopular and ineffective austerity measures, has been touted as a solution to stem the sovereign debt crisis.

However, many Greek citizens have reacted with uncertainty and anger to the deal, fearing that it will incur austerity with no end in sight, and that the permanent oversight it imposes will compromise national sovereignty.

“Haircut” analysis

Pensioner protest. Banner reads: "The Greek government has offended my personal worth & merit. As an irritated citizen, I ask for my direct moral satisfaction. The grandfather". Image by Alexandros Michailidis, copyright Demotix (27/10/11).

Pensioner protest. Banner reads: "The Greek government has offended my personal worth & merit. As an irritated citizen, I ask for my direct moral satisfaction. The grandfather". Image by Alexandros Michailidis, copyright Demotix (27/10/11).

The particulars of the “haircut” deal – an unfortunate and frequently derided misnomer for conditional and partial debt abolition – have baffled even journalists and seasoned financial analysts, let alone taxpayers. Financial blogger Zerohedge posted an analysis, claiming that the 50% haircut deal will only reduce the Greek debt – currently $374.76 million – by 28%, leaving the additional debt incurred by the bailouts untouched.

In a more reassuring overview [el] posted on two days earlier, Greek economist Yannis Varoufakis had outlined optimal conditions to make the best of the situation:

Το κούρεμα είναι αναπόφευκτο, πρέπει να είναι μεγάλο (για να έχει νόημα) [..] έπρεπε να έχει γίνει πριν δυο χρόνια, ή τουλάχιστον να το έχουμε χρησιμοποιήσει ως διαπραγματευτικό μέσο. Τι θα σημάνει τώρα πια για την καθημερινότητα του πολίτη [..] Εξαρτάται (1) από τον αντίκτυπο που θα έχει στην Ιταλία και στις Γάλλο-γερμανικές τράπεζες και (2) από το κατά πόσον οι πλεονασματικές χώρες θα προσπαθήσουν να συνδέσουν το κούρεμα με μέτρα που στόχο δεν θα έχουν την βελτίωση της ελληνικής οικονομίας αλλά νέες τιμωρίες για τους έλληνες προς παραδειγματισμό των Ιταλών

The haircut is inevitable, it must be large (for it to make sense) […] it should have happened two years ago, or we should at least have used it as a bargaining chip. What it will mean for citizens’ everyday lives […] will depend (1) on its impact on Italy and Franco-German banks, and (2) on whether surplus states will try to link it to measures meant not to better the Greek economy, but to punish the Greeks in order to make an example to them for the Italians’ sake

Nick Malkoutzis, deputy editor at daily newspaper Kathimerini wondered out loud:

@nickmalkoutzis: If someone has better understanding please tell me: non-Greek banks losing approx 60 bn in haircut but being given 30 bn in sweeteners?

Software engineer Manolis Platakis, one of the many Greeks who emigrated abroad to find employment, mused dejectedly:

@emufear: Spent some time today explaining to my colleagues how the 50% haircut does not (even close) mean 50% reduction in Greece's sovereign debt.

A former economist (@albertjohn on Twitter) based in Thessaloniki published an analysis of the quandary Greece faces on his blog, Redesigning the Foot:

the problem with Greek austerity measures and structural reforms is all that money that has gone outside the country. Greek assets, including properties, will become even cheaper and capital will flow back in (hailed as a success) to buy them back up. Citizens, the poor, the ex-middle-classes, will be worse off (hailed a success. Well done Greece, more competitive, fly the flag, bright future etc). The result will be an increase in inequality and a re-vamped oligarchy energized by financial occupiers who would then slip away quietly.

Erik Wesselius, a senior policy researcher for lobbying watchdog Corporate Europe Observatory, whose Twitter avatar features the Greek flag in solidarity, also cautioned that the deck might be stacked against Greece:

@erikwesselius: ISDA, winner of EU Worst Lobbying Award 2010 decides if Greece triggers a CDS payout. #ISDA #CDS

Journalists Andreas Panagopoulos and Yannis Bogiopoulos laid out a plain and harsh explanation of the deal [el]:

@AnemosNaftilos: To ΠΑΣΟΚ παρέλαβε το χρέος στο 115% του ΑΕΠ και τώρα διαπραγματεύεται να το φτάσει στο 120%, το 2020! Κατάλαβες;

@AnemosNaftilos: [Ruling socialist party] PASOK received the debt at 115% of GDP and is now negotiating to take it to 120%, in 2020! Get it?

@Yboyio: Το χρέος μειώνεται 100 δισ για να πάρουμε δάνειο 130. Τα υπόλοιπα είναι μπούρδες. Το δε 120% του 2020 είναι χάντρες για ιθαγενείς

@Yboyio: The debt is being reduced by 100 bn so we can get 130 in loan. The rest is bullshit. As for reaching 120% [of GDP, the 2009 national debt level] by 2020, it's a pipe dream

Reactions to prime minister's announcement

The Greek prime minister addressed the nation in a prerecorded speech [el], following a live press conference by the country's finance minister. Journalist Diane Shugart echoed sentiments common among Greeks [el]:

@dianalizia: οι ευρωπαίοι θα είναι μόνιμα στην ελλάδα για να επικοινωνούμε εύκολα, είπε ο βενιζέλος. να, σαν την πεθερά σου που εγκαταστάθηκε στο σπίτι.

@dianalizia: [Finance Minister] Venizelos said the Europeans [troika oversight committee] will be permanently based in Greece so we can communicate easier with them. Kinda like your mother in law, who just took up residence.

@dianalizia: ουάου! πάλι πρωτοτυπίσαμε. είναι η πρώτη φορά που νικήτρια δυνάμης (της μάχης των μαχών, μάλιστα) βρίσκεται υπό κατοχή.

@dianalizia: wow! we're innovating again. It's the first time that the winner (of the mother of all battles, no less) ends up occupied.

The official Twitter account of the Greek prime minister posted highlights of his upbeat and reassuring address as it was being broadcast on television [el]:

@PrimeministerGR: Εμείς θα φτιάξουμε την Ελλάδα κανείς άλλος. Μην περιμένουμε ούτε κακούς δαίμονες ούτε θεούς να έρθουν να κάνουν την δουλειά για εμάς #Greece

@PrimeministerGR: We'll fix Greece, noone else. Let's not expect foreign devils or gods [“wizards and dei ex machina” in the speech] to come and do the work for us #Greece

The speech was ill-received, with journalists and citizens – who had been agonizing for days over the outcome of negotiations – deriding both content and delivery. Web designer Cyberela pointed out a glaring omission [el]:

@Cyberela: Ούτε μία κουβέντα ο @PrimeministerGR για την *ανεργία*. Σαν να μην υπάρχει.

@Cyberela: @PrimeministerGR didn't say word one about the *unemployment*. As if it doesn't exist.

Political communications consultant Vivian Efthymiopoulou was aghast [el]:

@vivian_e: Εχει γίνει πλέον σαφές ότι τα κάστανα από τη φωτιά θα πρέπει να τα βγάλουμε μόνοι μας. Οι άνθρωποι θέλουν αλλά δεν μπορούν. Όλοι τους.

@vivian_e: It's become obvious that we'll have to pull the chestnuts out of the fire ourselves. These people want to but can't. All of them.

There were some calls for positive action, echoing the prime minister's plea for Greeks to work together. Communications expert George Flessas [el]:

@gflessas: Αντί των αναλύσεων και των αφορισμών χρειάζεται θετική δράση: για μείωση δαπανών,προσέλκυση επενδύσεων, μηδενισμός γραφειοκρατίας κλπ

@gflessas: We need positive action instead of analyses & aphorisms: to reduce wastefulness, invite investement, zero bureaucracy etc.

Writer and journalist Manolis Andriotakis blogged about the need to provide tangible hope to the coming generations [el]:

@andriotakis: Δώστε στα παιδιά εργαλεία να σκέφτονται, να κρίνουν, να δημιουργούν κι όχι να ονειρεύονται τη Δυστοπία

@andriotakis: Provide tools to children that will allow them to think, judge and create, instead of dreaming of Dystopia

Just say no?

Documentary journalist Janine Louloudi pointed out a potentially inauspicious and prophetic slip of the prime minister's tongue:

@janinel83: Through his twitter account #Papandreou asks every Greek to have his own “small revolution” about wrong choice of words…#gap #Greece

Students parade with Greek flags during Ochi Day, Thessaloniki, Greece. Image by Alexandros Michailidis, copyright Demotix (27/10/11).

Students parade with Greek flags during Ochi Day, Thessaloniki, Greece. Image by Alexandros Michailidis, copyright Demotix (27/10/11).

The level of discontent with politicians in Greece is high, with many ministers and parliamentarians accosted by angry crowds in recent months over austerity policies. Reportedly, no high ranking government officials attended the school pupils’ parade – and subsequent protests – in Thessaloniki, on the eve of the national celebration of October 28, 2011, for the “Ochi Day” (“No Day”). Even Chinese dignitaries were mistakenly booed [el] during a recent visit to the Knossos archeological site in Crete.

Teacher and citizen photojournalist Craig Wherlock, present at the earlier incident, commented:

@teacherdude: About the bravest thing a Greek minister can do is to try and walk thru the streets of Athens.

In the wake of the “haircut” deal, indignant activists celebrated Ochi Day in their own fashion this year, urging people through an impromptu Facebook campaign (since deleted) to hang banners with the word “Ochi” (No) from their balconies and protest at local parades.

This post is part of our special coverage Europe in Crisis.

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