Last Thursday, the Institute for Global Citizenship held an event centered on the state of the Greek economy as part of their lecture series ‘Global Citizenship in the News.’ Three panelists provided context regarding the culture, economics and history of Greece and gave insight as to how the Greek economy might progress in the coming years.

Nefeli Neamonitaki ’18, a Greek citizen, explained the background of the crisis. “The crisis as we know it started in 2008, but the main factors that created [this situation] existed many years before that.”
Neamonitaki explained some of the basic causes that contributed to Greece’s current financial situation. She cited tax evasion as a problem as well as political corruption and the eurozone.

“For many years there have been two parties and one succeeded the other. The fate of these were passed on from father to son. Greek politics were kind of a family business. In order to stay in power, the politicians would promise things that they couldn’t afford to pay for and would make deals that would benefit a small portion of the population.”

Neamonitaki also explained how Greece accumulated so much debt over the years. “When Greece got the euro, all the EU countries pushed and urged Greece to take out loans because there was this idea that [the loans] were cheap and you’d be able to repay them and they could borrow money.”

Harry Contopanagos, a physicist educated in Greece and the United States, also shared his opinion. As a Greek citizen raised in Athens, Contopanagos has seen the state of Greece’s economy evolve over the years. “I come back to Greece every summer to visit my family and friends and I noticed that Greece was starting to change dramatically.”

Echoing Neamonitaki’s comments, Contopanagos also discussed how political inheritance in Greek politics has harmed the country. “That’s one part [of the problem] that the Greek population should be blamed for,” said Contopanagos. Another part, he continued, was the newly-developed extreme consumerism he noticed in the younger generation.

After going through a short history of Greece’s recent political leaders and the shortcomings of economic policies, Contopanagos explained that an industry of fear has settled in Greece. “Everybody feels fear. That’s what’s happening in the streets of Athens now. You either obey or get left alone.”

Providing the economic perspective for the event was economics professor Mario Solis-Garcia. Using graphs, he compared the Greek crisis with other well known economic crises: the Great Recession in the US, economic struggles in Argentina and Mexico and finally the Great Depression. In terms of duration, turnover, debt to GDP ratio, employment rates and productivity, the state of Greece’s economy is worse than any other crisis.

Solis-Garcia argued that the main cause for the crisis might not be what most people think it is.“Debt is not a sufficient cause for a crash. Japan has a lot of debt and no one is thinking Japan is going to crash in the next year.”

“Labor productivity is the problem,” he said. A post-crisis boost in productivity is the key to avoiding economic crisis in the long-run, as has been the case in countries like the U.S. and Germany.

When the panelists were asked what is in store for Greece’s imminent economic future, opinions were divided.

“I don’t think that if Greece abandons the Eurozone it will be a great disaster,” said Contopanagos. “What it will be is an adjustment phase, where Greeks will be slightly poorer and will be forced to develop their own production forces, which were essentially destroyed over the last 30 years because of European Union handouts and the statement that Greece should be a service-based economy.”

Solis-Garcia and Neamonitaki agreed that Greece would likely stay in the European Union.

“Greece is having a really hard time, but if the Euro didn’t break up when Greece was having a really, really bad time, when Greece didn’t have money to pay their obligations, it’s not going to break up now,” said Solis-Garcia. “A deal will be struck.”

“I think the crisis is not going to be over soon,” said Neamonitaki. “It’s far from over. It’s not going to be history any time soon, but I am hopeful.”

Student responses to the event were largely positive although some students acknowledged more information could have been provided.“I thought it was okay, but considering that Greece recently elected a radical left government it would have been good to articulate their position clearly, which no one did,” said Alex Bartiromo ’16.“They could have articulated the government’s position and why they are making their demands instead of more stereotypical admonishment about Greece having low productivity, which is almost a code word for ‘lazy,’ in my opinion.”