On the Precipice: Can Greece Save Itself and the Dream of a United Europe?

Giorgos Moutafis
Strike force Police and rioters square off in front of the Parliament building in Athens on Oct. 19

Athens these days feels not just like the center of an economy in crisis but also like the capital of a society that is coming undone. Thefts and armed robbery are up, and unemployment has spiked from 9.5% to 17.6% in two years. Greeks are pulling their money out of the country's banks, and right-wing politicians talk darkly about the police siding with protesters when the next round of economic austerity measures kicks in. Achilleas Giraud, a 53-year-old former real estate executive who now works as a gardener in the public park of Kifissia, his upscale Athenian neighborhood, says that rather than pulling together, his neighbors are growing isolated and looking out for themselves. "Right now, we're at the precipice," he says. "It's frightening to see the future collapse like this."

Even when it looked as if a financial apocalypse might be averted earlier this month, the country's leaders managed to instill more fear than trust. On Oct. 31, Greek Prime Minister George Papandreou called for a national referendum on the first really credible European Union plan to get his country's 350 billion-euro debt under control, a surprise move that spooked markets and stunned E.U. leaders. Exasperated, German Chancellor Angela Merkel and French President Nicolas Sarkozy threatened to force Greece out of the euro zone if the referendum failed, and Papandreou backed down, offering to resign as Prime Minister and be replaced by a nonpartisan technocrat. But the lengthy negotiations over a successor that followed the deal only raised again the question of whether the country is prepared to confront the habits of denial and self-protection that have characterized it for so long.

Even if the interim government pushes through the E.U.'s provisions for a large-scale privatization of state assets and previously agreed-on austerity measures, a reckoning is almost surely coming. No financial rescue plan alone can fix the political and social problems that are the true source of Greece's debt.

After Greece emerged from military rule in 1974, its politics calcified into a system of institutionalized cronyism, with party leaders using control of the public sector to extract bribes in exchange for jobs and political favors. Corruption at the top helped foster a culture of un-accountability that permeates all levels of society. Many Greeks dodge their taxes, shorting the public coffers of some 22 billion euros in revenue every year. Powerful public unions have procured unsustainably costly and generous benefits, like retirement at 50 for some public workers. With each sector of society working for its short-term self-interest at the expense of the long-term common good, Greece has been running on borrowed time and borrowed money for years. But as the extraordinary events of recent days have shown and as Greece still faces potential bankruptcy and expulsion from the E.U., time and money are, at long last, running out.