In May 2010, Greece pledged to meet tough targets to cut its deficit as part of a bailout deal with the European Union, the International Monetary Fund and the European Central Bank. But it resoundingly missed those targets in 2011, in part because the Greek economy went into a nose dive, estimated to have shrunk by nearly 6 percent, or twice as much as initially predicted. That happened despite the government actually putting into effect less than a quarter of pledged measures, suggesting, critics say, that a fuller embrace of the austerity would have been far more socially damaging.
Greece agreed to stringent bailout terms to avoid a catastrophic debt default that could force it to exit the euro, an event that would probably increase the immediate hardship here but potentially set the stage for future growth. But skeptics caution that a default may happen anyway. Some economists are suggesting that more cuts this year would force Greece into another economic contraction that would be far worse than the current estimates of a 3 percent drop this year. That could cause the government to again grossly miss its agreed-upon deficit targets, triggering a standoff with its lenders, who have suggested they would cut Athens off from rescue funds if it does not fulfill its pledges.
Greece is no newcomer to economic chaos. After decades of budget crises and high inflation, stabilization came with the adoption of the euro a decade ago. Using its new, solid currency to access record-low interest rates, Greece proceeded to rack up a massive national debt of roughly $442 billion — or $40,000 for each of Greece’s 11 million citizens.
The current cuts, critics say, are exacerbating a growing social crisis here, particularly in public health. A rising tide of unemployed Greeks have lost their private health-care coverage, leaving them turning to public hospitals left dangerously understaffed by hiring freezes. Suppliers are cutting off shipments of syringes, catheters, gauze and other medical materials because of the government cash crunch.
In the cold foyer of the Nikaia hospital in south Athens, Miranda Tzima, 37, said her husband almost died last week. After a car crash, his ambulance had to take him to a more distant public hospital because the closest one was overburdened, causing him to lose more blood en route.
Leaving her children with her parents, she has moved into her husband’s hospital room to tend to him amid a hospital staff shortage. She has been warned that it may take him months to learn to walk again, perhaps longer, given cutbacks in the public physical therapy staff. Once, she would have turned to private medicine, but her family lost its health coverage when she was laid off from her job at a Citibank branch in Athens as the economy tanked in 2011.
“They say we are doing this to stay in” the euro, she said. “But I look our situation, and I wonder, is it worth it?”
Special correspondent Elinda Labropoulou contributed to this report.