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NY Times, May 26 2015
With Money Drying Up, Greece Is All but Bankrupt
By LANDON THOMAS Jr.
ATHENS — Bulldozers lie abandoned on city streets. Exhausted surgeons
operate through the night. And the wealthy bail out broke police
departments.
A nearly bankrupt Greece is taking desperate measures to preserve cash.
Absent a last-minute deal with its creditors, the nation will run out of
money early next month.
Two weeks ago, Greece nearly defaulted on a debt payment of 750 million
euros, or about $825 million, to the International Monetary Fund.
For the rest of this month, Greece should be able to cover daily cash
deficits of around 100 million euros, government ministers say. Starting
June 5, however, these shortfalls will rise sharply, to around 400
million euros as another I.M.F. obligation comes due. They will then
double in size on June 8 and 9.
“At that point it is all over,” said a senior Greek finance official who
spoke on the condition of anonymity.
On Sunday, the interior minister, Nikos Voutsis, said that there would
not be enough money to pay the I.M.F. if there was no deal by June 5.
In a society that has lived off the generosity of the government for
decades, the cash crisis has already had a shattering impact.
Universities, hospitals and municipalities are struggling to provide
basic services, and the country’s underfunded security apparatus is
losing its battle against an influx of illegal immigrants.
In effect, analysts say, Greece is already operating as a bankrupt state.
The government’s call to conserve funds has been far-reaching.
All embassies and consulates — as well as municipalities throughout the
country — have been told to forward surplus funds to Athens.
Hospitals and schools face strict orders not to hire doctors and teachers.
And national security officials complain they are under intense pressure
to keep air and sea missions to a minimum, at a time when migrants from
Africa and the Middle East are rushing to Greece’s shores.
Even the swelling ranks of investment bankers, lawyers and consultants
advising the Finance Ministry have been told that, for now at least,
their work is to be considered pro bono.
Since its first bailout in 2010, Greece has been forced by its creditors
to cut spending by €28 billion — quite a sum in a €179 billion economy.
A proportional dose of austerity applied to the United States, for
example, would come to $2.6 trillion.
During the last six months, a period during which Greece has had its
credit line revoked over disagreements with Europe regarding economic
overhauls, the state has been forced to wield an even sharper knife.
For a generation of Greek politicians who saw government spending (and
borrowing) as a national birthright, the idea of deploying only the
money at hand has been jarring.
But for other Greeks who are eager to break from the country’s tradition
of dispensing political favors to the well-connected, these
Mr. Bakoyannis was in the middle of a weeklong tour of the 25
municipalities that he oversees. He delivered this very message to the
city elders of Thebes, a town of about 36,000 people, roughly 75 miles
northwest of Athens.
Although Mr. Bakoyannis was elected as an independent and is scathing
about Greek politicians past and present, he himself is a scion of the
country’s right-leaning New Democracy Party: A grandfather, Constantinos
Mitsotakis, was a prime minister, and his mother, Dora, has been a
senior minister in various governments.
As it is in many small towns here, the unemployment rate is higher than
the national average of 25 percent. And while the trash is being
collected, budget cuts of 50 percent leave room for little else.
For about a year now, Thebes has been trying to complete a modest €2
million project to refurbish the town’s main street. But because the
construction company has not been paid in more than a month, work has
ground to a halt.
An abandoned bulldozer gathering dust in the rubble of the road suggests
that the project will not be completed anytime soon.
What makes this work stoppage especially worrisome to Mr. Bakoyannis is
that the street refurbishment is one of the many infrastructure projects
in Greece that is backed by the European Union.
Some 89 percent of Greece’s €6.5 billion investment budget is majority
financed by Europe, meaning the government is paid back shortly after
each outlay.
Through the worst days of austerity, Mr. Bakoyannis explains, these
investments — highways, bridges and ports, for example — had continued,
as the government always knew it would be paid back in weeks.
Since April 30, he says, the liquidity crisis in Athens has forced the
government to stop payment on these initiatives as well, the first time
in his memory that that has happened.
“These projects are our lifeline,” said Mr. Bakoyannis, who has seen his
infrastructure budget cut to €12 million from €65 million in the past
four years. “It’s not about Keynesian politics anymore — it’s about
finding enough money to repair a simple road.”
Security experts say that well-to-do families in suburban pockets
surrounding Athens are now supplying critical funds to local police
departments.
“It’s an increasing trend,” said Ioannis Michaletos, an analyst with the
Institute for Security and Defense Analysis, a nonprofit group in
Athens. “There is less money and a lot more work for the police to do.”
Perhaps no other areas in Greece have felt the full force of the
country’s cash drain than its state-funded universities and hospitals.
At the University of Athens, the country’s largest educational
institution and home to about 125,000 students, the annual operating
budget has fallen to €10 million from about €40 million before the crisis.
As for the hospitals, even though they are taking in twice as many
patients now, their budgets have been cut to the bone. In the first four
months of this year, health officials say that the 140 or so public
hospitals in Greece received just €43 million from the state — down from
€650 million during the same period last year.
Sitting at his desk at the start of yet another 20-hour-plus workday,
Theodoros Giannaros, the head of Elpis Hospital in Athens, chain-smoked
cigarettes and signed off on a pile of spending requests that he said he
knew would not be fulfilled.
Since he started work at the hospital in 2010, Mr. Giannaros has seen
his salary shrink to €1,200 a month, from €7,400. His annual budget,
once €20 million, is now €6 million, and the number of practicing
doctors has been reduced to 200 from 250.
Like almost everyone in Greece, he is making do with less. The hospital
recycles instruments; buys the cheapest surgical gloves on the market
(they occasionally rip in the middle of operations, he says); and uses
primarily generic drugs.
“We have learned that we can live with a lot of money and survive with
nothing,” he said. “Maybe the crisis makes us better people — but these
better people will die if the crisis continues.”
Mr. Giannaros, who is 58, says he recently suffered a heart attack from
the constant stress. But he says it is his surgeons he worries about most.
In aging, depression-ridden Greece, treating the 150 or so patients that
come to his hospital each day has put an extraordinary strain on his
shrinking corps of doctors.
Theodoros Giannaros, the head of Elpis Hospital in Athens, said he
recently suffered a heart attack from the constant stress of his job.
But it is his surgeons he worries about most, he said. They are working
extremely long days, and for less pay than they were earning just a few
years ago. Credit Eirini Vourloumis for The New York Times
The fact that many have begun to strike because they are not getting
paid for overtime makes matters worse.
Striding across the hospital grounds, Mr. Giannaros waved over his star
surgeon, Dimitris Tsantzalos.
How many operations did you do last year, he asked.
“About 1,500,” said Dr. Tsantzalos, who, with his strapping build, seems
younger than his 63 years.
Recently he says he put in a month of consecutive 20-hour days and, not
surprisingly, confesses to exhaustion.
“I am burnt out,” he said. “It’s very dangerous for the patients.”
A week later, a tragedy struck Mr. Giannaros: His 26-year-old son,
Patrick, committed suicide by jumping in front of an Athens subway train.
“There was just an emptiness in front of him,” Mr. Giannaros said
between wrenching sobs in a brief telephone conversation. “The emptiness
of the future they have taken away from us.”
His son had finished university studies and, unable to find work in a
country where more than half the young are jobless, was helping Mr.
Giannaros at the hospital.
“He saw no future, no way to help his family,” Mr. Giannaros said. “Now
God has found him a job — as an angel.”
While Mr. Giannaros said he understood the importance of staying current
with important creditors like the I.M.F., he said enough was enough.
“They can take their money,” he said, using an expletive. “I feel
ashamed to be a European.”
Pavlos Zafiropoulos contributed reporting.
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