- Greek Tragedy
Ankara—Hubris, Ate, and Nemesis are three minor Greek deities, mostly remembered today for their function in ancient Greek drama. Hubris symbolizes arrogance, and deviation from virtue. Ate refers to an act of folly, a direct consequence of hubris, which provokes the wrath of gods and precipitates their intervention. Nemesis is the retribution of divine justice—painful, but necessary to restore world balance and order. The ongoing, multifaceted crisis that has torn apart Greece's economy and society since October 2009 can also be approached through the lens of this tragic classical trio.
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Today, the country is all but bankrupt, thanks in large part to excesses that have become endemic in Greek society and governance during the past three decades. Only the last-minute intervention of the European Union and the International Monetary Fund prevented a total meltdown of the country's economy in the spring of 2010. As a result, during the past 15 months, a new paradigm has been forced onto Greece. No longer can the profligacy of the past play any role in the country and its future. There is no other viable solution for Greece but radical reform.
This realization is the key moment of nemesis in today's Greek tragedy. It is also a reality that much of Europe is being forced to acknowledge. Ireland, Portugal, but also Spain, Italy and Britain—all are now confronting the costs of past excesses, their fiscal backs to the wall. If Greece can find a way to heal its self-inflicted economic wounds, it may offer a model for economic reinvention in Europe. If not, it may become a cautionary tale.
The Roots of Hubris
The contemporary Greek political elite bears a large burden of responsibility for the country's current woes. Yet the fundamental origins of Greece's problems can be traced to the era of Andreas Papandreou, a hero of the Greek left who served as the country's prime minister from 1981 through 1989, and again from 1993 until 1996. Before entering politics, Papandreou was a well-regarded economics professor in the United States, teaching at Harvard and the University of California at Berkeley. His father was Georgios Papandreou, a liberal former prime minister who died in 1968 after being placed under house arrest by the right-wing military junta that had taken power in Greece the previous year.
When the junta was overthrown in 1974, the younger Papandreou returned to Greece and formed a political party, the Panhellenic Socialist Movement (PASOK), which opposed Greece's entry into NATO and the European Economic Community (EEC). In 1981, Papandreou was elected Prime Minister, having campaigned on promises to withdraw Greece from those organizations and end the country's Cold War alignment with the United States. Once in office, Papandreou reneged on those promises, charting a more moderate course, at least when it came to foreign policy. Greece remained a full—albeit often problematic—member of the EEC and NATO.
Papandreou's leadership was instrumental in healing the wounds still festering from the 1946 to 1949 Civil War that pitted Greek against Greek—the conservative right and center versus the communist left. Exiled left-wing insurgents who left Greece in the aftermath of the Civil War were allowed to return, while their earlier contributions to the anti-Nazi resistance were officially recognized. Bureaucratic posts ceased to be a privilege offered exclusively to right-wing Greeks. But very rapidly, Papandreou's government began to go off the rails. Unprecedented levels of borrowing and spending created massive government debts. While debt-to-GDP ratio was 30 percent in 1980, it skyrocketed to 90 percent by 1990.
The new funds were spent to subsidize private consumption rather than promote [End Page 102] development of infrastructure, which could have boosted growth. Salaries in the public sector kept rising, without generating any parallel growth in productivity. Economic assistance from the EEC increased the size of the pie without encouraging investment in long-term growth or fostering a culture of accountability. Under Papandreou, Greeks became accustomed to a perpetually improving standard of living. Yet...