Greek austerity moves leave nation's economic safety net in tatters

PERAMA, Greece — The shipyards are deserted in this town just west of Piraeus, Greece's main port, and unemployment hovers at 60 percent. The country is at the edge of bankruptcy, and with more government spending cuts looming, newly impoverished Greeks are turning to charity for health care, medicines and food.

The Greek branch of Doctors of the World, a French-founded relief group renowned for aiding war victims and impoverished immigrants, now has a clinic in Perama, where 80 or more people line up three days a week. To cope with demand, the group plans to operate the clinic seven days a week.

Panagiotis Alexius has been coming in for free medicines and a dosage of oxygen since the clinic opened in February 2010. For 40 years he worked in the nearby shipyards, or abroad, spraying a toxic mix of chemicals and sand on ship hulls. Disabled by a rare lung disease in 2002, he received disability payments. But he's now fallen through Greece's safety net: He is officially assessed as 67 percent disabled, but the threshold for government support has been raised to 80 percent.

Because of an unpaid tax bill from 10 years ago, Alexius is barred from receiving government-paid health services.

"Greece is a total mess on these issues," he told a visiting reporter. "I searched for help at the ministry, but it was difficult to figure out what is going on."

His six children, only two of whom are employed, help pay his electricity and food bills.

As Greece's political leaders struggle to reach an agreement with international lenders before a March 30 deadline, the toll is growing from an austerity program that promises only to get tougher. Greece has been living beyond its means for decades, and now the little man is paying the price.

Professionals who do vital government jobs are in dire straits, with take-home salaries now cut to as low as $860 a month, or $10,300 a year. The private sector, too, is about to feel the squeeze. Earlier this week, political leaders agreed in principle to cut the minimum monthly wage in the private sector to $750 from $1,000.

But those measures, which international lenders said Thursday must be imposed if Greece is to received a second bailout, are politically unpalatable to many, and on Friday, when the prime minister, Lucas Papademos, vowed to make sure parliament passes the new austerity measures, six cabinet minister resigned.

A 48-hour general strike called for Friday and Saturday paralyzed much of the country, and demonstrators fought with police outside Parliament.

Optimism is in short supply, both among the country's leading economics experts and at the volunteer doctors clinic in Perama.

According to Dr. Nikitas Kanakis, the dentist who's president of the Greek branch of Doctors of the World, the number of patients coming through the door of the group's Perama clinic has quadrupled in the past two years. Eight in 10 patients now are Greeks, four times what it had been.

"It's a shocking time," he told McClatchy. "The state doesn't know who's poor or who's vulnerable. People used to be able to get money and find a doctor. Now everything is breaking down."

Many who seek help at the clinic have incomes of no more than $260 a month, and others have nothing at all, he said.

The doctors group has been handing out 45-pound food parcels to families since December — 4,000 around the country, 1,000 in Perama alone.

"I think we are the sole support for at least 300 families here," he said.

All medicines are donated. When a new cancer patient arrives, Kanakis issues a community appeal, and locals donate their leftover pills. "It's a Greek thing," he said of the practice, something not seen even in most war zones.

Perama may be the hardest hit part of greater Athens, but the Greek capital also has Kifissia, a posh area full of high-end stores and eateries that appear to be thriving. In central Athens, in view of the Acropolis, people still dine out, though less than before, to judge from the many places that have cut back their hours. There's many a sullen cab driver who would rather not be asked how he's doing, but others hand out their cards and offer a guided tour on your next visit.

Elegant cafes have a cosmopolitan wait staff, who speak other languages and know how to handle patrons' astonishment at the prices — an espresso can cost $5 a pop. The city's modern airport, 30 miles out of town, is connected by a fast metro to the city center, part of the state-of-the-art system built for the 2004 Olympics. Tourism has long been Greece's heavy industry, and, assuming the country doesn't explode over the latest cutbacks, anyone coming here this year can expect a warm welcome.

For Delpina Koutsoumba, however, this is a winter of discontent. She's 37, a trained archaeologist with a master's degree who works for the ministry of culture's department of "aquatic antiquities," issuing licenses and supervising construction of ports, hotels and other investments on Greece's storied coastline. Her take-home pay last month was $860.

"I'm an archaeologist, married with a child. Of course, I cannot live on this," she said.

Nominally, she earns $1,190, but late last year the government announced that it was lowering salaries retroactively — and docking everyone's pay accordingly.

"They told us: 'You owe us money from last year.' And they take whatever money they want," she said. So for three months, it's a starvation salary. Her apartment alone costs $730 monthly.

When she supervises a site, the construction engineer at the site may earn 10 times her salary. But Koutsoumba says she cannot be bought: "In my department, there are archaeologists, who love their job. That's why there is no corruption."

Her appallingly low income is barely augmented by the earnings of her husband, a philosophy teacher. "I don't know what we will do this month," she said. "Maybe I will ask for money from my father again or my grandmother, because she happens to live on her pension. Or my mother-in-law."

If that sounds bleak, the president of the Athens Chamber of Commerce can offer an outlook that makes the current situation sound cheery.

According to Constantine Michalos, not just Greece, but all of Europe is on the skids. "I don't think there is a survival scenario for Europe in the medium to long term," he said in an interview. Greece is the weak link "in a long chain of events" that began with the U.S. banking crisis, but "quite honestly, I don't think there is an overall solution, a sustainable solution on a European level."

He believes that major German, Swiss and other banks are far too highly leveraged as they play the derivatives market and that the Euro zone "will collapse in 18 months."

But there's another view out there. One of the most trenchant critics of the ruling political establishment is Professor George Bitros of the Economics University of Athens.

"Right now, you have neither a democracy nor a free economy" in Greece, he said. But he sees a silver lining to the shock of near-default. Greece, he predicted, will create a genuine market economy and start observing the rules of accounting.

"I waited for 30 years for this crisis to occur," he said. "I believe that we needed this jolt, and no matter what happens, it's going to be something good."

He predicts that private creditors will write off more than 65 percent of the Greek debt they hold, and that the government will reduce the public sector by 150,000 employees, to 450,000. With better tax collection and higher government income, public debt service will fall to 20 percent of the budget. "And then some kind of growth is going to start picking up. Tax rates are going to come down. Greece is again going to be attractive to foreign investment."

It sounds rosy, but he says there's no alternative. "Greeks will never take a decision to leave the European Union." And the European Union cannot dissolve.

"What will happen between Germany and France? What do you think might happen?" He added: "I cannot believe in human stupidity."

(McClatchy special correspondent Apostolis Fotiadis contributed.)

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