News headlines in Greece have been reporting the various attempts by public sector employees to bar members of the Troika’s audit mission from meetings in various Greek ministries. This occurred on both Thursday and Friday in Athens, and included the finance, transport and health ministries, as well as ELSTAT, the Hellenic Statistics Authority. The protestors were heard shouting “take your bailout and go home.”
A good friend and journalist called me Thursday while I was still in Washington, asking why these events were taking place, what they meant. I tried to explain the political symbolism involved, the role of the unions, etc. in modern Greece.
But at the end of the explanation, our discussion boiled down to one simple question: “Don’t they understand that unless the Troika releases the sixth instalment, there is no money to pay salaries and pensions in October?”
It’s an excellent question, and one which cannot possibly be answered by the strikers.
As long as Greece has a primary state budget deficit i.e. a deficit of regular central government operations without taking into account the cost of debt service and interest, the government needs external funding to pay its bills.
Greece total state budget deficit (including interest costs) was EUR 18.06 billion in January-August 2011. Remove interest costs of EUR 12.749 billion, and the primary deficit is EUR 5.3 billion.
However, the state deficit does not include two other expenditure lines. Greece had a further EUR 5 billion in general government payments for social security funds and approximately EUR 7 billion in payments in arrears that are not included in the EUR 18.06 bln deficit.
Add these together, and we see that Greece has unfunded liabilities, or a cash flow deficit, of EUR 17.3 billion in the first 8 months.
If we assume that are 880,645 public servants in the wider Greek public sector, then the deficit year-to-date is EUR 19,645 per public sector employee.
If we assume there are 4,172,280 gainfully employed people in Greece at present, then the deficit per employee is EUR 4,146 year-to-date.
So if you are a public employee, there’s little point in “throwing out” the representatives of the unfortunate creditors who have agreed to finance your wasteful mechanism in the first place. Unless, of course, you agree to far harsher and more permanent measures regarding the public sector, pension and healthcare expenditure, and tax collection.
Perhaps the Troika inspectors should simply go to the airport and return to their respective countries. Issue a communiqué stating that they are unable to work since they are blocked from entering public buildings in Greece by illegal action. Turn off the tap on the sixth installment, wait a month, and then ask the unions whether the Troika should return or not. If it were my money, this is what I would do.
As for the government, I’m [not] surprised it hasn’t taken more active measures. Were these strikes legal? Are striking workers permitted to block access to public buildings? Was anyone arrested for disturbing the peace? Was anyone’s pay docked? Was anyone fired for breaking the law?
The answer to all five questions is “no.” Perhaps that should be the Troika’s answer as well.
Ultimately, Greece will only be saved if its citizens in fact want to be saved. Do they?
© Philip Ammerman, 2011