I am back from Cuba and have a long list of posts in my mind, both from the conference I attended and from talking to Cubans on the street. Coming soon.
However, these days I can’t stop thinking about a topic closer to home, at least mentally – the Greek/European tragedy unrolling over the last weeks with popular referenda, meetings behind closed doors and politics winning over economic arguments. All culminating with the reluctant approval of the demanded austerity reforms (here a version annotated by former Finance Minister Varoufakis) by the Greek parliament amidst widespread doubts as to their effectiveness, while Greek youth throwing molotov cocktails clashed with police outside the debate’s doors.
Among the demands is an even harsher restructuring of the value-added tax system in an effort to increase government revenue and service the country’s unsustainable debt, which in 2014 had reached 177% of its GDP.
Among the agreed-upon reforms are the following:
– The top rate of 23% will be extended to processed food, restaurants, etc;
– A rate of 13% will cover fresh food, energy bills, water and hotel stays;
– The VAT discount of 30% to be abolished on islands, but remotest islands are to keep the discount until next year;
– Farmers’ tax to rise up from 13-26%.
The top VAT rate of 23% was introduced in the early days of the crisis, and is credited with contributing to the destruction of the construction sector. Now, it will also apply to restaurants, one of the engines of Greece’s only growth sector, tourism. Hotels’ 13% VAT is double that which they pay now. In a fiercely competitive Mediterranean holiday market, caught between Spain, Italy and Croatia all vying for tourism dollars, this doesn’t bode well.
Additionally, or even more worryingly, the creditors’ demands of terminating the smaller islands’ VAT discount of 30% were met after a long struggle by the Greek governing party Syriza. The discount was until recently seen as set in stone and ‘untouchable’. Its goal is to balance out the high shipping prices to get nearly all basic supplies to these islands; without it, depopulation of the less famous ones and drops in tourism in the well-visited ones loom at the horizon. One interviewed restaurateur said that 90% of his supplies had to be brought in from the mainland; everything but the vegetables they grow themselves. And of course, here the farmers’ tax hike hits.
Much has been written about the culture of tax evasion in Greece, but truth is that value-added tax on food, water and energy is pretty much impossible to avoid while still living in the country. This might be why it’s a popular austerity measure to put into place – fiscal results are pretty much guaranteed – but it is also one of the most regressive (which means that it targets the poor more than the rich when considering what proportion of their income they are spending).
The United Nations Independent Expert on foreign debt and human rights, Juan Pablo Bohoslavsky, appealed to the Troika and the Greek government to consider the protection of basic human rights (like the right to food, health care and social security) when implementing austerity measures. “I am seriously concerned about voices saying that Greece is in a humanitarian crisis, with shortages in medicines and food,” Mr. Bohoslavsky said.
Indeed, the level of food insecurity has grown steadily worse, as a 2013 NY Times article exposed. At that point in time, an estimated 10% of elementary and middle school students faced hunger or the risk of it at home. Teachers regularly complained of fainting and weak students and have difficult discussions with parents who cannot afford breakfast for their kids. One year later, according to a poll of more than 42,000 respondents, filled by parents of school students in 23 prefectures of the country.
54% of the families experience food insecurity.
21% of the families experience hunger.
In 40% of families one of the parents had no income, while in 13% of the families both parents had no income.
In response to this need, NGOs and private foundations picked up the slack, creating school meal programs like Diatrofi that now reaches over 400 schools and 61,870 students throughout Greece. A total of 1,053 applications have been submitted for inclusion in the meals-providing program, though, corresponding to 152,397 students.
Food banks and soup kitchens are also encountering unprecedented demand. As lines grow, welfare organizations have taken to ask for proof of economic need to triage the masses. The recent economic paralysis aided by the bank closings and capital controls create worries for the future, though: “”It will be hard, dark, painful,” the priest said, nibbling from a bowl of pistachios as a long line of people waited for their turn to eat at the communal tables. “We will have trouble receiving food.” Importing supplies from abroad is effectively impossible since money cannot be spent abroad; in the meantime, the number of people queuing for food, medicine and clothing donations has doubled in some areas over the last two weeks amidst fears of shortfalls.
Will the additional austerity measures lead to even more food insecurity? It depends on who absorbs the additional taxes, but if farmers pass along the increase, fresh food will become more expensive. Workers in restaurants and hotels are likely to see impacts on their income if the tourism sector loses competitiveness. Small island-dwellers with limited sources of income will have to contend with one-third more taxes on all their goods. And we haven’t even talked about the “comprehensive pension system reform programme” that is aimed at cutting pensions even further. With the exception of the humanitarian crisis bill, passed in spring of this year, which grants food stamps and a capped amount of free electricity to the poorest of citizens, Syriza also had to pledge to take most of its recent legislation back that it passed to cushion the regressive effects.
Having followed the debate closely over the last few days, I am aghast at the apparent lack of concern of the Troika for human wellbeing amidst the crisis. I agree that responsibility for past excesses should be held; that creditors have a right to be repaid (though why the debt was transferred from private banks to public accounts should be discussed also); and that rules must apply if the Eurozone is supposed to work. However. If we are really a European “Union”, one of the last vestiges of welfare states with enviable social security systems, it strikes me as increasingly cynical to demand the erosion of these systems to pay down an unserviceable debt, and to watch from the sidelines as a depression unfolds in order to “keep to the rules”. Especially as there are clear economic misgivings whether these ‘rules’ will ever lead to the Greek economy recovering or the government repaying its debts.
A very thought-provoking blog post talks about power, the abstraction of suffering, and the human element to the crisis. I’d recommend reading it in its entirety, but let me close with a hard-hitting quote:
Perhaps the greatest loss is that of human dignity. Dignity demands some determination over one’s fate and standard of living. There is little room for dignity when fears of losing one’s home to a missed electricity tax payment resurface every month. There is little dignity to being a parent who has to entirely depend on your daughter to stay alive, and there is little dignity to being the daughter who cannot meaningfully help.
The space that dignity could have occupied is now instead filled with shame: shame about all the things we wish we could do, and the collective web of helplessness that binds us. Dignity is personal, but like many other facets of identity–like masculinity, like victimhood–it is also continuously confirmed, contested, or validated by others. The indignity of many Greeks’ existence right now becomes especially unlivable when it is cast in the frame of having been earned: of being a just end to a trajectory of excess. Cast in this light, Greek dignity and its lack are invisible, blinded instead by notions of justice and deserving and agency and responsibility — notions which, in turn, blind our compassion.
Is compassion a currency in our economic systems? Is compassion a vector in austerity packages? Is dignity? Are our conversations about these programs and policies framed around compassion and the dignity of the human experience? And can we truly live in a world in which they are not?