When I bought the ramshackle shepherd’s cottage on a Greek island, I did not aspire to play a bit part in the financial crisis now shaking Europe. I was living in Beirut and eager to find a haven away from manmade storms — not a center for new ones.
That was in 1974. The Greek military dictatorship had just been overthrown. Taking on a cheap fix-up project in the new democracy was a way to celebrate that happy event. And for someone living on a reporter’s salary, the fact that Greeks paid only token property taxes made the deal possible.
My Greek friends and neighbors turned out not to pay many taxes of any kind — as the European Union has learned to its dismay. How the E.U. could have been surprised is a mystery to anyone who has lived in Greece. Greeks refined milking their government into an art, and they were certainly not going to treat the distant, generous European treasury in Brussels differently.
“Bringing Greece in and expecting the budget figures to add up was a romantic policy,” concedes a French friend who was in the government that championed Greece’s 1981 E.U. admission. I got his drift — remember, I’m the guy who made a real estate decision based on a dictator’s downfall. But the E.U. and I failed to foresee that Goldman Sachs would teach the Greeks even more sophisticated ways of acquiring and hiding national debt and thus enable these supposedly simple, fun- and sun-loving folk to push the once-haughty euro to the brink.
You will detect some sympathy for the Greeks on my part. It is based on years of personal friendships, particularly with the family of Vangelis, the goatherd who looked after my small place until he died 10 years ago and I lost the heart to go back to his village. But they deserve our understanding for more momentous reasons, too.
The Greeks are forerunners of what the rest of us are becoming. The perilous waters that finally submerged George Papandreou now lap at the throats of the other leaders of the developed world. Like the former Greek prime minister, they soon must admit — to voters determined not to hear the message — that they have been making promises of low taxes and high benefits that they could never afford to keep. “We are all Greeks now,” to paraphrase Richard Nixon on John Maynard Keynes.
Papandreou was the first European leader to walk the plank, with Italy’s Silvio Berlusconi being maneuvered up as the next in line. The only choice left to other leaders of nations accustomed to living beyond their means and refusing to think seriously about it may be how their own political demises will occur.
For his part, Papandreou preferred a rapid dose of hemlock to the slow-motion political suicide his European partners proposed for him. Led by Germany’s Angela Merkel, they demanded that he sign his nation onto a decade of austerity, sacrifices and culture-changing reforms in return for $11 billion to pay off bills coming due in December, and the promise of another $30 billion to $40 billion for maturing debt in 2012.
The Greek leader clearly mishandled his referendum call. Not only did he not tell Merkel and France’s Nicolas Sarkozy, he did not even tell his own finance minister or allies at the International Monetary Fund that he was going to make the proposal. The referendum, and Papandreou’s hold on power, evaporated in the uproar from a public not ready to adopt austerity.
A national unity government will now try to persuade Greeks to make those massive sacrifices. But Europe’s leaders still confront a choice between a true federal structure with greater burden-sharing (anathema to the Germans) or retreating into being a large free-trade area. The middle ground has become unsustainable. But it may cost Merkel, Sarkozy and others their jobs to tell their electorates that and to work to change it — just as U.S. politicians risk political suicide by talking frankly about real remedies for this country’s problems.
I sold my Greek shack a few months ago. I don’t need to go to Greece anymore to be surrounded by people who reflexively refuse to raise taxes to help with the national debt and the nation’s eroding infrastructure. And, alas, I don’t need to go to Greece to find political leaders too frightened to fight for proposals coming from deficit-cutting commissions they appoint. I can get that right here in the U.S.A.
The writer is a contributing editor to The Post.