In an attempt to rid themselves of the dangerous nationalism that caused such global devastation during World Wars I and II, the countries of Europe have spent the past six decades establishing diplomatic treaties to create organizations, such as the European Union, that unite countries with common political and economic goals.
In the late 1990s, a group of countries in Europe created the Eurozone, which ties together the economies of its 17 member-states with a common currency—the Euro—in order to promote trade and economic cooperation. However, the Eurozone is an economic entity and not a political entity; with very little political unity among its members, the Eurozone has had some difficulties taking decisive action in response to the effects of the 2008 global financial crisis. Even before Greece joined the Eurozone in 2000, the Greek economy wasn’t doing too well. The combination of the 2008 financial meltdown and a slew of internal financial problems put Greece into so much debt that the other countries of the Eurozone were forced to lend Greece hundreds of billions of dollars in 2010 and 2011. Most of the money came from Germany, the strongest economy in the Eurozone. Some say that Greece’s inability to pay back these loans proves that the single-currency experiment has failed. To investigate the European debt crisis for ourselves, the UltraViolet asked staffers of Greek and German descent to call their relatives abroad.
These are their stories.
By Caroline ‘13
My grandfather, Dieter Ambros, is one of the smartest people I know. He is one of the tallest people in my family, with tan skin and white hair, and he always wears a suit. He worked as an executive for Henkel, a chemical company that produces personal care products, before his retirement, and he’s always been able to explain in simple terms any topic he’s well versed in.
In order to understand more about what is at stake and the German point of view, I spoke with my grandparents, who live in Munich, Germany. Germany has the largest economy in Europe and has been the least affected by the worldwide Great Recession. In addition, Germany is harboring much of Greece’s debt, meaning it’s primarily Germany’s money that Greece has borrowed.
According to my grandfather, Europe’s debt crisis originally arose be- cause Greece, Italy, Ireland, Portugal, and Spain—collectively referred to as GIIPS, or PIIGS—import more goods than they export. Now, Germany and France are leading the charge in a bail- out for Greece, lending them money at a very low interest rate. In addition, he told me that Germans are worried that the situation in the GIIPS countries will spread throughout Europe.
“There is a concern by [Ger- man Chancellor Angela] Merkel and [French President Nicholas] Sarkozy, [often referred to collectively as] “Merkozy,” that a Greek bankruptcy may spread to other GIIPS, and that such a bankruptcy will bring a deep recession,” Ambros said.
Many Germans blame the Greek government for the current financial situation, and believe that their extreme debt stemmed from their profligate spending. However, my grandfather believes that the fault lies more with the eurozone leadership, as the organization decided to admit Greece in 1999 even though Greece had a higher debt percentage than eurozone member-states were sup- posed to have.
“Greece was admitted even though it was known that they did not offer the entrance criteria,” he said, explaining that Turkey and Greece sought membership in the eurozone at the same time, and Turkey’s human rights abuses were considered a more significant drawback than Greece’s bad economy.
My grandfather further explained that the economic crises in Europe have been so hard on the population because, unlike in the US, language and cultural barriers between countries and regions make it so that hard- hit families are stuck where they are, unable to search for a job beyond the country’s borders.
“There is a fundamental difference in culture between the US and Europe,” he said. “The society in the US has only one language, English. Europe has many languages, and habits are equally different. The result is limited mobility. Housing in the EU is for a lifetime.”
Finally, apparently many German citizens are also poorly informed about the debt crisis because of inaccurate press coverage, as economic experts are rarely consulted. My grandfather said he worries that this confusion and fear will put a further hold on consumer activity.
“Many decision-makers may not be on top of all of this, experts are seldom consulted and the media con- fuses the public,” Ambros said. “Gradually fear is spreading within the public, which could paralyze the current boom in Germany.”
By Christina ‘14
My grandmother, Hrisanthi Bartzokis, lives in Greece, and as she yelled through the telephone at my dad as he hurried to translate, it was easy to envision her wild gesticulations from across the ocean. She was once a pharmacist but has now retired and spends most of her time gardening and gossiping with friends. She cannot speak English very well, but she stays well informed about politics and the global economy.
She explained that the majority of Greeks do not want to lose the Euro. “There would be even more catastrophe,” she said. Like most Greeks, my grandmother blames the politicians for this economic disaster, saying that the government mismanaged the country’s treasury by borrowing too much from other countries and not using the funds to develop the economy or benefit the people of Greece.
“They used [the money] to buy votes,” she said. “The politicians are thieves.” As the Greek government struggles to curtail a national debt of $485 billion, the crashing economy has ignited inflation and panic; government jobs have been cut, incomes have been slashed and banks completely shut down. Protesters wielding petrol bombs and stones have clashed violently with riot guards while demonstrating against the budget cuts and austerity measures implemented by the government to combat the debt problem. Strikes against lowered salaries paralyzed the country in 2011 and early 2012, garbage piling in the streets as municipal workers refused to collect it.
The panic that spread through the country in 2011 and early 2012 was not unfounded: as the government slashed spending to reduce the debt, they cut pensions, imposed pay cuts for workers in the public sector, and implemented a property tax. My first cousin once removed, Lula Korani, who is 65 years old and retired, lived on a government pension of €1400 ($1853), which was cut by 30% to €1000 ($1323). Her daughter, Evmorphia Korani, works as a nurse and is employed by the government. Her salary used to be €1700/month ($2250), and is now €900/month ($1191).
People who had bought houses based on what they could afford with their previous salary levels are now in danger of losing their homes. Salaries have decreased so dramatically that many can no longer pay their mortgages. Exacerbating the problem, the government instituted new property taxes which were not in place before the collapse. My grandmother owns two properties in Greece: a condominium in Athens and a house in a village. Her condo is now taxed €600/month, and her house is taxed €200, which adds up to more than $1060 per month that she didn’t have to pay before. The currency has also inflated 5%-15%, so the amount people can afford with the money they do have has de- creased.
Now that Germany and France, the countries holding the majority of Greek debt, have agreed to exchange the bonds owed by Greece for new ones worth half as much, effectively cutting Greek debt in half, the Greeks feel that they are slowly edging back towards economic stability. “They couldn’t have possibly ever paid the original debt off,” she said. “Now there’s a possibility that they will be able to pay it off.”