The cure which made Greece sicker | Theodoris Daskarolis

Greek ambassador Theodoris Daskarolis compares Greece to a patient who has been forced to endure a debilitating treatment, which after five whole years, ended up making him sicker than ever before. 

He compares the institutions (European Commission, European Central Bank and International Monetary Fund) making the final financial offer, on which Greeks will be voting today, to a physician who persists in offering this treatment despite clear signs that the patient needs a different cure.

The Greek embassy, located in a beautiful colonial mansion in Ta’ Xbiex, has also taken the brunt of austerity. Cost-cutting has resulted in a reduction of staff from eight to three people. I met the Greek ambassador on Thursday, three days before his country holds a referendum in which the Greeks are being asked whether their country should accept the latest austerity package offered to them by the European Commission, the International Monetary Fund and the European Central Bank. 

Many in Malta think that the Greek crisis is simply a matter of Greece being asked to pay its creditors back. But underlying the financial crisis is an unprecedented humanitarian crisis unseen in any member of the European Union since its inception.

Daskarolis describes Greece as a society where roles have been reversed to the extent that pensioners earning €300 to €400 a month are supporting their jobless children. 

“People are surviving thanks to the strong solidarity ties binding Greek families,” says the ambassador. 

That is why the kind of cuts in pensions proposed by the European institutions in the latest proposal made to Greece were deemed unacceptable by the Greek government.

Not only has the official unemployment rate hit  the 27% mark and rises to a staggering 60% among young people but many people who have a job are not even getting paid for it.

“Many continue working without being paid for months simply not to lose their jobs… they hold on to their job hoping that things may change in the future.”

Even professionals like architects, accountants and economists are not charging any fees simply because they cannot afford to lose their clients.  Many others, especially educated young people have lost hope and are leaving Greece seeking greener pastures in other countries including Malta.

“We have good universities which are now training people who end up offering their talents to other countries. We are losing doctors, lawyers, engineers and other talented people to other countries after investing so much in their education.”

According to Daskarolis this is a clear indication that the original bailout programme has failed.  

“The bailout programme was wrong not just from a humanitarian perspective but also from an economic dimension,” he says.

According to leaked documents Greece would face an unsustainable level of debt by 2030 even if it signs up to the full package of tax and spending reforms demanded of it, according to unpublished documents compiled by its three main creditors. The documents, drawn up by the so-called troika of lenders, support Greece’s argument that it needs substantial debt relief for a lasting economic recovery. They show that, even after 15 years of sustained strong growth, the country would face a level of debt that the International Monetary Fund deems unsustainable.

“This is the wrong medicine which is making the patient sicker… moreover it risks killing him… If the intention was to cure him, we have to admit that he needs a different medicine.”

Still how does he reply to those in Malta who insist that whatever the circumstances Greece is obliged to honour its debts.

He also makes it clear that most of this money did not actually go to Greece.

“Malta and other European countries were forced to lend money to Greece for the sake of saving private German, French, Dutch and other banks which were exposed to the Greek debt.”

It is calculated that less than 10% of the bailout money was left to be used by the government for reforming its economy and safeguarding weaker members of society.  According to Daskarolis the money went full circle, from the banks from which Greece originally took loans to the same banks to save them from collapse.  

He immediately expresses his gratitude for Malta’s willingness to help Greece while qualifying that Malta actually gave Greece  €50 million and not €177 million as claimed by the Maltese government. This is because the other €127 million were offered as guarantees to the European Financial Stability Facility (EFSF) set up as a temporary rescue mechanism in 2010. He also points out that Greece is repaying its interests on the loan given by Malta.

“I cannot understand why this issue has become politicised in Malta…we are repaying the loan already through interests which are paid regularly.”

In fact the Greek ambassador is surprised by the hawkish stance taken by the Maltese government and the opposition on this issue.

“I may understand that there may be an ideological dimension on the part of the centre-right Nationalist Party and to some extent the Labour Party but I still cannot understand why Maltese politicians have taken such a hard line,” the Ambassador said.

He is even more surprised by the Maltese government’s hawkish stance in view of the positive relations between the two counties and the solidarity shown by Greece towards Malta in the past.

“Greece, which has been an EU member since 1981 was fully supportive of EU membership for Malta even when other countries were more interested in eastward expansion.” 

The Greek ambassador is taken aback by any suggestion that it was Greece which has shut the door on the other EU member states after Greek PM Tsipras, called for a referendum. He blames this perception on “dirty media wars”.

“The Greek government was seeking an honest and viable compromise to make it possible for the Greek economy to start recovering by making the debt sustainable and by healing some of the wounds inflicted on Greek society.”

He also admits that the Greek government was making “huge concessions” in its bid to reach an agreement with its European partners. One of the biggest concessions consisted in accepting an increase in the VAT rate applicable in Greek islands. Some of these islands have long benefitted on a special VAT rate 30% lower than elsewhere, which offsets the high cost of having to ship basic everyday goods long distances. While the EU institutions demanded that the increase in VAT is implemented immediately, the Greek government wanted to postpone the increase by three months, to avoid penalizing inhabitants during the peak of the tourist season.

So what was the straw which broke the camel’s back?

The ambassador insists that what led Tsipras to go back to the Greek people was the final proposal made by the institutions which demanded further reductions in pensions and salaries.

He points out that while the institutions refused a Greek proposal to increase taxes on those with higher incomes, they wanted the Greek government to cut pensions and salaries.

“They told Prime Minister Alexis Tsipras to take it or leave it. It was an ultimatum and the Prime Minister had no choice but to go back to Athens to seek the advice of his cabinet. The cabinet decided that the proposals made by the institutions would end up promoting recession instead of recovery.”

Ultimately it was for this reason that the Greek government has asked the Greek people to express themselves through a referendum.

“Greece never abandoned the table of negotiations but the government wanted to give a say to the Greek people who have to live through the consequences of whatever the Greek government signs to.”

Politicians in Europe, including the Maltese Prime Minister, have referred to the referendum as an  irresponsible decision. But Daskarolis defends the democratic legitimacy of the referendum. 

“What could be more responsible for a government than to heed the advice of its own people?  I can’t understand why we are being called irresponsible simply because we are asking the people to determine whether they are willing to accept the conditions being imposed on us.”

He compares the Greek government to a father or mother asking for the opinion of other family members before taking a major financial decision.

“I am obliged to ask for the opinion of other family members before selling the house in which they live. For they will have to live with the consequences of my actions.”

I point out to the Greek ambassador that senior European politicians like Italian PM Matteo Renzi have said that on Sunday the Greek people will be choosing between the euro and the return of the drachma in the referendum. Daskarolis insists that the referendum question is clear and unambiguous and is a choice between accepting what is currently on offer or negotiating a better deal with the European institutions.

“The referendum is not on whether Greece should remain in the eurozone or in the European Union.  It is on whether we agree with the latest proposals made by the institutions.”

For the Greek ambassador the Greeks have two options in the referendum.

“If they vote no to the proposals made by the institutions, the government will continue finding a sustainable solution with our European partners. If the Greek people accept the proposals, the government will work with its partners to implement these proposals.”

But what will happen if the other European governments insist that by voting no the Greeks are shutting their door on Europe?  Wouldn’t this mean that Greece would be effectively out of the European Union?

The Greek ambassador replies with another question.

“Do you believe that the international system can endure Europe without Greece?  The EU without Greece is simply unthinkable.”

He also points out that there is no mechanism in place through which a country can be forced to exit the eurozone.

What worries the Greek ambassador most is that the roots of the rift between European governments and Greece are “political” and “ideological” and not economic.

He agrees with Nobel laureate Joseph Stigliz, who previously served as chairman of President Bill Clinton’s Council of Economic Advisers and as Senior Vice President and Chief Economist of the World Bank, that the true nature of the ongoing debt dispute, “is about power and democracy much more than money and economics”. 

He believes that some influential circles in Europe are simply interested in preserving their political prestige and their ability to impose on Europe austerity policies, which are being used to punish rather than help the Greek people.

He reminds these circles that with Syriza Europe has an interlocutor with whom it can negotiate and which has a mandate to negotiate – a mandate which would be reconfirmed in the referendum.  

Asked whether Syriza had promised the impossible at the election when it promised to end austerity, the ambassador replies by noting that the party, which now governs in coalition with a right wing conservative party (ANEL) has exclusively focused on realistic proposals aimed at tackling the humanitarian crisis.

“Although it is a left wing party, Syriza has not proposed a change of the economic system. It is very realistic and is focusing on correcting the mistakes of the past and promoting growth friendly policies.”

Despite being sidelined in meetings with fellow European governments, the Greek government does not feel isolated.

“Greece already enjoys the support of European civil society and the solidarity of prominent politicians and intellectuals.”

He refers to the contributions of former German chancellor Helmut Schmidt. economists Paul Krugman and Joseph Stigliz, screenwriter and director Jean Luc Godard,  former Italian Prime Minister Massimo D’Alema, and philosopher Jurgen Habermas who have all criticised the way European institutions have dealt with Greece.  

He also welcomes Pope Francis’ declaration, when he invited the faithful to pray for the “beloved Greek people” while adding that the “dignity of the human person must remain at the centre of any political and technical debate”.

Daskarolis remains optimistic and refuses to accept the ‘doom and gloom’ scenario which is being conjured up to scare the Greeks into voting yes. He insists that the European Union and Greece must find a way forward after the referendum. 

“To those who say that Greece has no future in the eurozone if they vote no I say that in politics one cannot ever say never… After the referendum the sun will still rise and the EU and Greece will continue to exist… they are destined to be together.  We speak of a globalised world. How can we imagine a European Union without Greece?”