It’s another beautiful day in the northern Greek city of Volos. The sun is shining in a perfectly clear sky, and in the main streets the bars are packed and the restaurants are busy. At first glance, you would never guess that the city is in the grip of an economic crisis.
‘I am tired of folks talking about not having money. Just look around you – there are still customers at the restaurants,’ says Efitehia, 23, a waitress at Pizza Volos. ‘People will spend €6 on coffee for themselves and a friend instead of making a flask of coffee at home and drinking it on a bench overlooking the marina. They never have money to pay bills but they somehow always find the money to sit at a café.’
But away from its bustling main streets, Volos is rapidly showing the signs of decline as planned reforms stall and public services start to buckle under the pressure of repeated budget cuts. Unemployment in Greece’s fourth-largest city is at a record high and neglect is evident everywhere. On Avenue October 28th, many commercial properties have gone bust, their front windows papered over with promotional posters for upcoming concerts.
The sense of poverty is palpable. Pavements that until last year were repaired by a funded municipal government now lie cracked. Backstreets that used to be lit at night are now plunged into darkness. New graffiti covers buildings and houses like overgrown ivy. The painted words have a marked anti-German sentiment: ‘No to fascists’ and ‘Nazis and politicians get out’.
Many ordinary Greeks believe that corruption is endemic among tax officials, and despite widespread reporting of large tax evasion scandals, those responsible have similarly escaped punishment. If the rich won’t pay their taxes, the thinking goes, then why should we?He points to the Siemens scandal as an example of such top-down corruption: two years ago, German company Siemens was found to have been paying bribes to over a dozen cabinet ministers over a decade. The Greek government reached a €270m settlement with the company – but none of the ministers has been punished.
This may help explain why of an estimated €40bn in outstanding taxes, only €10bn looks likely to be collected. The government’s failure to crack down on tax evasion and corruption has weakened public services, which are already reaching crisis point.
Yet loss of tax income is only one of the threats the country faces. Greece’s reform programme is seriously behind schedule, the Economist reports, and unless things change further rescue funding from Europe looks likely to be stopped. Targets to cut 30,000 public-sector jobs have already been missed, and the aim of raising €3bn through privatisation has been drastically scaled back to €300m.
The situation is rapidly becoming extremely serious: some estimate the government will run out of money to pay pensions and public-sector salaries as soon as September. The cuts are affecting every area of people’s lives.
‘The system is falling apart,’ says Antigoni Pasia, 42, an accountant. Her father-in-law, suffering from prostate cancer, had to wait for months at home with a catheter and no medical supervision, before he could get an operation. He suffered serious complications from infection, but doctors would not accept the blame.
‘People do what they can in Greece because they can get away with it now. There is no protection here when things go wrong.’
The family had to buy essential medicine for the operation at a nearby pharmacy because the hospital could not afford it.
Spending on prescription drugs has been cut – yet €1bn (0.5% of GDP) of annual cuts have not been instigated because doctors and hospital procurement departments are still using expensive branded drugs instead of cheaper generic versions. Plans to merge or close about one-third of state hospitals have also been delayed.
Those relying on pensions are also struggling with government cuts. Barbara Chrisomallo, 62, has seen her monthly pension reduced from €600 per month to €460. Her modest property portfolio in Volos earns her little to boost this income – most of her lets are either empty or occupied by tenants who haven’t paid in months.
‘We either keep the properties empty or let people stay in them for free to keep squatters away,’ says Chrisomallo. ‘What can we do? People will otherwise break in and make things worse by not respecting the property. It’s also too time-consuming and expensive to use the courts to get them out.’
Her son, a loan manager at one of Greece’s major banks, says most people are not only struggling to pay rent but also failing to pay back what they owe. ‘We will be lucky if we recover 40% of the money we have lent to the public,’ he says. Nowadays, instead of loaning tens of thousands to customers he approves loans for a couple of hundred euros at a time, for small luxuries like a flight abroad or to fix a car part.
Greece is a ‘society on the verge of a nervous breakdown’, newspaper Ta Nea recently said. For some, this is more than a figure of speech: suicides and anti-depressant drug usage have both risen sharply.
The prime minister, Antonis Samaras, has warned there will be ‘more hardship’ ahead. Next week he plans to hold talks with eurozone leaders to propose that reform measures are spread over a longer period of time. And there is little doubt that as the August break ends and Europe’s bankers return to their desks, the focus on Greece’s financial crisis will only sharpen once again.
Yet for now, in the cafés and restaurants of Volos, the financial crisis is both real and somehow distant.
Perhaps it has something to do with the weather. After all, as the bankers get accustomed again to their desks and computer screens, the Greeks in Volos awake to another clear blue sky and azure sea.
As the prominent Greek economist Yanis Varoufakis tweeted a few days ago ‘Swimming in the Aegean – a timely reminder of why this place is of a uniquely human scale – of why civilisation grew here.’
The economy may be bad but from Greece the view is still beautiful.
The article was published at Analysis: A portrait of a Greek city in crisis.