This article was published by Al Jazeera International.
ATHENS, Greece - When Greece cancelled carnival celebrations in late February, many people thought the measure excessive. In the western city of Patra, which hosts Greece’s most flamboyant carnival parade, thousands defied the ban and took to the streets.
“The government has ordered an end to all municipal activities… but this is a private enterprise. No one can shut it down,” said a jubilant reporter for the local Ionian TV in front of a crew dressed up as 17th century French courtiers. “They’re gathering here on St. George’s square, where the [Greek] revolution began in 1821, and that’s symbolic,” he said.
Greeks quickly put their revolutionary spirit aside, however, and largely heeded government advice to remain indoors. The result has been a remarkably low number of deaths – 81 by Tuesday, compared to more than 17,000 in neighbouring Italy. Adjusted for population, that’s a fatality rate almost 40 times lower.
Compared to other European Union members, too, Greece has fared better. Its fatalities are far lower than Belgium’s (2,035) or the Netherlands’ (1,867), which have similar populations but much higher GDP.
#Greece's cumulative #Coronavirus #COVID19 #fatalities compared to #EU members with similar populations. pic.twitter.com/b76l6iOEUZ
— John Psaropoulos (@JTPsaropoulos) April 7, 2020
“State sensitivity, co-ordination, resolve, swiftness, seem not to be matters of economic magnitude,” Prime minister Kyriakos Mitsotakis recently told a pared down session of parliament.
“Our schools closed before we had the first fatality. Most countries followed a week or two later, after they had mourned the loss of dozens,” he said.
Starting from a weak position
George Pagoulatos, a political economist who heads the Hellenic Foundation for European and Foreign Policy (ELIAMEP), a think-tank, agrees that the government displayed “a very professional, managerial approach early on,” largely dictated by inherent national weaknesses.
Greece had very shallow resources with which to tackle a large outbreak. A decade of austerity (2010-2018) saw its national healthcare expenses cut by three quarters. Its intensive care beds numbered just 560 last month, though the government has now raised them to 910, and hired more than 4,000 extra doctors and nurses. Another weakness is that at least a quarter of Greece’s population is over 60, and mostly elderly patients have been known to die from Coronavirus, also known as Covid-19. All this meant that a forward line of defence was Greece’s only real defence, but it has paid off. Greece is using only a tenth of its ICU beds, and has plenty of capacity left over.
The legacy of the economic crisis
Pagoulatos believes that austerity may also help to explain how Greeks put aside their traditionally defiant attitude towards authority.
“Maybe it has helped that Greece has been in an almost constant crisis management since 2010… we’ve been well past the kind of complacency the economies that have been doing well might allow themselves,” he says, adding, “A society that has undergone harship for a prolonged period knows when personal sacrifice is necessary or inevitable.”
As the prime minister’s economics advisor, Alex Patelis was present at many of the top level Coronavirus meetings and tells Al Jazeera that the Greek economic meltdown of the past decade did indeed play a role.
“We want to show that Greece is a serious country. We want people to say that Greece handled this well,” Patelis says. “If we succeed, it will have a multiplier effect on our reputation. Greece emerged from a 10-year economic crisis with its credibility crippled, and we want to get past being labeled as the black sheep of Europe.”
Greece ended up borrowing $277bn (255 billion euros) from its Eurozone partners in three humiliating bailouts that cost its financial sovereignty and earned it a reputation for thriftless habits.
Yet Greece may now have scored two bull’s eyes in winning back its reputation. Just as carnival was being cancelled, Turkey announced it was opening its borders to refugees bound for Europe. Mitsotakis took the controversial decision to push them back. Though fraught with legal and moral controversy, the policy was effective on the ground and won plaudits from Europe’s leaders, who called Greece “our European shield”.
Handling two simultaneous crises so effectively has won Mitsotakis a reputation for good management, in contrast to leaders who treated Coronavirus with contempt in the early stages and are reaping exponential rates of infection weeks later.
Another recession and more austerity?
On March 10 Greece closed its schools, and within the next week all public commercial venues such as cinemas, restaurants and shops. Even its vaunted tourism industry was sacrificed as hotels and museums were shuttered.
Overnight, large chunks of the retail and service economy, normally tax generators, became major government expenses instead. The cost of subsidies and tax deferrals to businesses and 2.4 million affected workers for March and April alone runs to 5.1bn euros.
How did a country that only recovered from recession two years ago so quickly decide to risk another?
“There is a clear tradeoff between the health consequences and the economic consequences,” says Panos Tsakloglou, an economist who acted as the chief advisor to the finance ministry at the height of the recession. “The earlier you take the social distancing measures the heavier the blow for the economy… it’s not an easy tradeoff.”
Patelis says the government’s crisis management team turned this argument on its head. “The consensus was that the worse the health problem becomes, the worse the economic fallout will be,” he tells Al Jazeera. “It’s not as though you’re never going to have to take measures… And there was the fact that if you did not take measures, people would take them for themselves. In reality the dilemma is false.”
Again, Greece’s previous economic crisis seems to have indirectly pushed it towards the right decision. Ever since it graduated from its austerity programme in August 2018, Greece has been selling government bonds when market conditions were favourable in an effort to rebuild its credit profile and lower its long-term interest rates. Raising money without any pressing need for it means that the government has cashflow.
“The ‘cushion’ [for servicing debt] is 15.7bn euros ($17bn). The central government’s ready cash in the central and commercial banks amounts to another 20bn euros ($21.8bn),” the finance minister recently told parliament.
This keeps Greece in its hard-won financial health only for the short-term, warns Tsakloglou.
“Estimates tend to say that the fixed cost [of Covid-19] to the Greek budget is 3.5-5bn euros ($3.8bn-$5.4bn) a month. My suspicion is that this is not a fixed number throughout the year. Tourism activity, for example, is highly seasonal. The direct and indirect revenue the Greek state collects from this activity tends to be concentrated in the summer. I tend to believe the cost is likely to be lower now and higher in the coming months… The [cash buffer] can get us out of the market for about three months. If we are parsimonious it may be a bit longer but not very much longer.”
Timeline of Greek measures to stem Coronavirus infections
· Feb 27 First COVID19 case. Carnival festivities cancelled.
· March 10 Schools and universities close.
· March 12 Cinemas, nightclubs, gyms, lawcourts close.
· March 13 Malls, cafes, restaurants, bars, beauty parlours, museums, archaeological sites close.
· March 14 Organised beaches and ski resorts close.
· March 17 Churches close.
· March 18 All commercial shops except supermarkets and pharmacies close. Entry for non-EU non-resident nationals banned. Repatriating Greeks are asked to go into 14-day quarantine.
· March 20 All out-of-doors gatherings of 10 or more people banned, on pain of 1,000 euro fine.
· March 21 Travel to islands banned for non-residents.
· March 23 Nationwide restrictions on unnecessary movement outside the home imposed. People not carrying an ID and a filled-out form stating specific reasons for being out are fined 150 euros. Intercity travel by car strongly discouraged.
· March 24 Greece’s Civil Aviation Authority bans flights to and from UK, Spain, Italy and Turkey.
· March 26 Greece’s biggest airline, Aegean, suspends all international flights
· March 28 Greece’s Civil Aviation Authority bans flights to and from Germany and the Netherlands
· Apr 2 Swimming and watersports in the sea banned.
Greek economic measures to dampen Coronavirus impact
1. 1.7mn private sector workers (about 80pc of the total) have been promised a handout of 800 euros to help get them through the crisis. the cost of this is estimated at 1.4bn euros.
2. 2.2mn private sector workers and 700,000 self-employed professionals are being allowed to not pay taxes and social security for april, estimated to cost the government another 2.1bn and 1.6bn euros respectively.
3. smes are being given a cash advance, in theory to be returned to the government, worth a total of another 1bn euros.
4. the government is spending another 700mn on hiring more doctors and nurses, setting up temporary health centres, buying tests and preventive personal suits, and offering healthcare workers a bonus.
5. The government says that by summer, similar measures to protect the economy will reach a cunulative cost of 14bn euros, and 10bn euros’ worth of measures will be introduced to enhance the liquidity of businesses – a total of 24bn euros’ worth of measures equal to 13pc of 2019 GDP.