Greeks shrug off Europe's warnings that turmoil could get worse

Europe's dire warnings to Greece about the consequences of a potential default engender little fear among Greeks, who say the worst has already arrived.

On a recent spring weekday afternoon, Eleni Terizaki, a middle-aged housewife, sat with her friends on the balcony of her home in the working-class Athens neighborhood of Peristeri.

Her neighbor, Maria Vasiliou, had to leave to prepare dinner for her husband, who was on his way home after 14 hours at work at a car repair shop. The other women assumed that meant business was going well – a rare sign in a country that hasn’t seen economic growth in more than five years.

Maria quickly corrected her friends. “No, they don’t have any new orders," she said. "They just sit there with the owner because they’re afraid that they might be the next one to be fired, and with this economy there’s no way they’ll find a new job.”

Greeks have become accustomed to hearing their country is on the verge of default and that the return to the national currency, the drachma, is inevitable. The need for austerity measures has been conveyed by mainstream media and pro-austerity politicians, who paint apocalyptic scenarios of gas, food, and medicine shortages if Greeks don't comply. On the eve of May 6 parliamentary elections, German Finance Minister Wolfgang Schaeuble said that if Greece's new government deviated from its commitments, the country would have to "bear the consequences.

But in Athens, the feeling is that austerity isn’t leading anywhere – and that the consequences have already arrived. And while the European Union has warned  insistently that Greece's repeat elections in June will actually serve as a referendum on whether Greece will remain in the eurozone, more than five years of deepening recession and numerous dire pronouncements have desensitized many Greeks to such threats.

Europe made similar noises ahead of the May 6 vote, but Greeks still voted in record numbers for non-mainstream parties, giving anti-bailout party Syriza the second-largest number of votes in a reflection of their disillusionment with Europe's aid. 

Because the votes were too split for any party to build a government, and Syriza refused to join the two other top parties, who had agreed to the austerity measures, a re-do of the election is being held in June. 

“I want Greece to remain in the eurozone, but under certain conditions,” says Angela Papapimitriou to her friends on the balcony. "I don’t want us to become the slaves of Europe, or have Bulgarian wages. Austerity isn’t working, even I know that.”

Ms. Papapimitriou's sentiments are widely shared. In the recent election, 63 percent of the electorate voted for parties that are pro-European but anti-austerity.

“The last election was the way to tell the two big parties, 'It’s your fault we are here, and we don’t want to leave the eurozone, but we need help,' ” says Timos Melissaris, an Athens hedge fund manager. 

“People understand that the problem for Greek economy isn’t the euro. But, on the other hand, they can’t take any more austerity. They’re very right about it – it wasn’t their fault that the politicians and the government haven’t been able to fix the problematic state of the economy up to now," he says. “We want our fellow Europeans to change the austerity measures, loosen them, put certain things on track but start giving money, so the engine will start working."

The latest austerity measures cut the minimum wage by 20 percent, to 583 euros a month, and eliminated so many labor laws that analysts joke that they’re not needed anymore.

The country’s lenders say they still need more. "Greece has to do a lot more, that is the case," International Monetary Fund head Christine Lagarde told BBC radio on May 23. "It has a long way to go. It has made efforts but they have more to do, more structural reforms to do."

Later that week, Ms. Lagarde said that she feels more sympathy for children in Niger, a poverty-stricken country in Africa's Sahel region, than for the Greeks struggling under austerity measures. She said that it's time for Greeks to pay back their lenders. An attempt to tamp down the resulting Greek fury instead prompted fresh anger and more than 14,000 comments on her Facebook page. 

Greeks say that if Europe wants them to obey their mandates, it needs to soften the blow.

“Yes, I believe we should pay the money that we’ve borrowed and go through a structural reform of our economy,” says Ms. Terizaki, whose balcony the women were gathered on. “But, if they really want to help us, they should take out a part of the interest. Germany, for example, makes profit from the interest. You can't call that help.”

And because gross domestic product has shrunk, partially because of growth-hindering austerity measures, the country’s debt levels have only risen – from 145 percent of GDP in 2010 to 165 percent in 2011 – since it began receiving funds from the IMF and the European Central Bank, leaving ordinary Greeks without much hope of improvement 

“You work your whole life,” said Terizaki’s husband, Apostolis. “You pay all your obligations to retire and get a retirement [payment] slashed down to 30 percent of what you’d normally get. I feel cheated.”