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"Serious social effects" plague Greece

Lorenzo Amberg says Greeks are prepared to give the coalition government a chance

(swissinfo.ch)

The political mood in Greece has calmed down since the appointment of a coalition government last month, the Swiss ambassador in Athens tells swissinfo.ch.

Lorenzo Amberg said the will for the necessary change was slowly gaining a foothold, but admitted many ordinary Greeks were struggling to afford food and medicine.

On November 11, a new coalition cabinet led by Lucas Papademos was sworn in, easing the political tension.

On December 6, Athens witnessed riots following a ceremony to mark the shooting of a teenager by a police officer in 2008. But two earlier demonstrations – one in mid-November to mark the anti-junta Polytechnic uprising of 1973, as well as the general strike on December 1 – proceeded peacefully.

swissinfo.ch: Has the popular mood improved under the transitional government?

Lorenzo Amberg: There is less uncertainty than at the beginning of November. We now know there’s a coalition government that is endeavouring to carry out these cutbacks and economic measures.

That doesn’t mean this increased calm will last for ever, since there could be new elections in February or March. But for the moment people want to give the new government a chance and let it do its job.

swissinfo.ch: The talk is still that despite loans worth billions, Greece will go bankrupt anyway, have to leave the eurozone and bring back the drachma. Is this fear justified or simply paranoia?

L.A.: All fears exist in such a situation. Above all the realisation has spread that this is not just a Greek crisis but a pan-European crisis. That does not mean, however, that all Greeks believe Greece will leave the eurozone tomorrow.

According to surveys, a significant majority of Greeks believe Greece will remain in the eurozone. Most people are pro-European. There’s no noticeable anti-European feeling. People know that the country’s fate is closely tied to Europe.

swissinfo.ch: Are people prepared to tighten their belts? Do they understand that things have to change?

L.A.: There’s a widespread view that for a long time Greece experienced growth that was based not on production but on consumption, that people spent money that didn’t belong to them but was lent to them by the banks and the EU. They realise things can’t continue like that.

The penny’s dropping that certain structural adjustments must be made – in politics in general, in the running of individual ministries, in public life. What exactly that will look like, no one really knows. But the political will to change is there.

swissinfo.ch: Pensions are going down, taxes and prices are going up. Once again it’s the ordinary people who are being hit. One often hears of people who don’t have enough money for medicine or food. Is there a new poverty?

L.A.: This poverty can be seen in certain districts in Athens, not only among the illegal immigrants – that’s always existed – but increasingly also among the Greek population. Organisations such as Médecins Sans Frontières or the charitable wings of the Orthodox Church are reporting a large increase in those in need of medical aid or food.

It’s true that this crisis is having serious social effects. On top of that there’s unemployment, which according to official figures is at 18 per cent. Among young people it’s double that.

swissinfo.ch: Greece is also home to many very rich people who keep their fortune in Switzerland, among other places. How are negotiations going on a flat rate withholding tax between Switzerland and Greece?

L.A.: This issue has generated a lot of interest in the street and also in parliament. According to the Swiss finance ministry, meetings took place this year at a state secretary level. Bern also signalled its readiness to negotiate and informed Greece of the main features of an agreement, like those it has already signed with Germany and Britain.

swissinfo.ch: Are there other ways in which Switzerland could support Greece in sorting out its budget and the situation in general?

L.A.: Yes, for example in the area of migration. Switzerland and Greece are both members of Schengen [an EU agreement which did away with internal border controls]. We’ve established that Greece has serious problems dealing with waves of illegal immigrants, simply because it lacks many structures that exist in Switzerland.

This year a delegation from the Federal Migration Office looked at the situation and examined how Greece could be supported within the framework of Frontex [the EU agency for external border security] but also bilaterally, to cope better with the migration situation. As part of Frontex we sent several border guards to the Turkish border.

Inspection

On December 12 international austerity inspectors visited Greece for talks on a second rescue loan package agreed weeks ago but not yet finalised.

Officials from the European Union, the European Central Bank and the International Monetary Fund (IMF) were due to hold meetings at the finance ministry later in the day.

Greece was granted an initial €110 billion (SFr135 billion) bailout package by its European partners and the IMF in May 2010. The loans staved off bankruptcy and in return Greece imposed tough austerity measures to cut its budget deficits.

But it soon became clear that the loans were not enough, and in October a second €130 billion deal was agreed. The second deal also provides for a €100 billion debt writedown by private holders of Greek government bonds, on which talks are under way with banks.

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Greek capital in Switzerland

According to the Greek Finance Ministry, around €38 billion (SFr47 billion) left Greece for Swiss banks between January 2010 and June 2011.

Athens says there is around €280 billion of Greek funds held in Switzerland, which has meant an annual loss of SFr10 billion in tax income for the Greek treasury.

This is in contrast to the Swiss National Bank (SNB)’s figures: SFr2.2 billion of Greek funds held in Swiss banks up to the end of 2009. The SNB acknowledges that this does not include investments in financial bonds.

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(Translated from German by Thomas Stephens), swissinfo.ch

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