Country Report: Greece
Crisis Impact and Response
In August 2019 Pierre Moscovici solemnly announced that “normality” is restored to Greece. The country has realigned to the euro-zone criteria, has been readmitted to the European semester and complies with most of the Eurozone convergence criteria. Numbers and statistics confirm the positive macro-economic progress, while international finance and the market welcomed Greece’s recovery with the country’s reliability progressively rising and the return of the Greek government bonds in the markets. Under the EU Economic Adjustment Programs, Greece succeeded in the Herculean effort to move from a deficit of 15% (2009) to 1.9% (2019) and restored unit labour cost competitiveness.
During 10 years of austerity, Greece implemented deep structural reforms and cuts in crucial policy fields such as taxation, public administration, labor market and the financial sector. In particular, Greece created an independent tax collector to reduce tax evasion and reformed the VAT; it instituted a National Authority for Transparency, and is now implementing the National Anti-Corruption Action Plan; it reformed the social security system, unifying the various public health funds into one; it modernized and digitalized various public bureaucratic mechanisms and services; it reformed the pension system, reduced incentives for early retirement, and raised worker contributions to the pension system; it modernised the labour-related institutions and created flexibility in the labour market through reforms to the labour markets’ procedures (employment protection rules, suspension of the unilateral recourse to arbitration, collective bargaining principles of ‘extensions’ and ‘favourability’) and on the duration of employment.
However, despite the above positive developments, serious doubts linger regarding the ability of the country to maintain its commitments on the primary surplus (of 3.5% of GDP up to 2022, and 2.2% of GDP on average from 2023 to 2060), this being the precondition for accessing market facilitations and guaranteeing financial reliability for the EU creditors. The country’s economic stability depends on unknown variables which expose its vulnerability to new setbacks: when the bonds held by its euro-zone creditors mature they will have to be refinanced on the free market; confidence in the markets has improved thanks to a substantial reduction in labour costs. The current surplus is based mainly on cuts and savings in public spending, but the public debt remains around 180% of GDP. Indeed, the Budget Office of the Greek Parliament highlighted significant inconsistencies in the IMF proposed alternative scenarios for future debt sustainability, projections that do not foresee potential variations in the government’s political direction or a variation in the EU commitment to debt relief after 2032, as agreed.
The “normality” must thus be intended as temporary or short term. The country’s “reform capacity” has been overlooked and the consequences of the austerity measures on the Greek society constantly ignored. GDP, employment, exports, and investment are expected to record significantly negative trends, while some projections for GDP growth show a quick V-shaped recovery beginning in 2021, this is rather improbable given the Greek economy’s structural inefficiencies.
Micro-economic data are discouraging: taxation, salary cuts and high unemployment significantly weakened the household budget, eroding purchasing power and adversely affecting huge segments of the society. Consumer spending and confidence shrank even more in the second part of 2020, with the household debt remaining well above prudential thresholds, while progress in promoting investment in education, skills and employability, the health sector and in social inclusion is insufficient. The unemployment rate, even if falling (16,4% in 2019), is still among the highest of the Euro-Area (youth unemployment approx. 37,8% in 2020). The dynamics of the private debt (123% on 2020) leave even less space for positive projections: almost half of the total loans owed to the four largest banks of the country (~86 billion) are substantially irrecuperable, impeding banks from injecting valuable liquidity into the national economy.
According to the OECD, poverty rose and the gap between the richest and poorest sections of the population widened disproportionately. Over the years, homelessness reportedly rose together with rates in suicide, use of drugs, criminality, and mental-psychological illnesses. On the verge of collapse until 2018, the healthcare system is today still in shambles (current public expenditure ranks 5-6% of GDP and health cuts amount to 75%), being further heavily challenged by the pandemic. The levels of unmet needs and inequity in access to care are still very high due to costs. Concerns on human and citizenship rights were constantly waived, especially for the lack of any preventive assessment on the impact of the austerity measures on people’s lives.
The underlying problems that triggered the crisis remain largely unsolved: tax evasion has gone underground (now 21.5% of GDP) as certain commercial segments run in the dark or shadow economy to avoid prohibitive taxation; the potential in national innovation is undermined by a brain drain drift of the overqualified youth with more than 100,000 people leaving the country every year. According to the Supplemental Memorandum of Understanding, Greece is committed to implement all the remaining agreed reforms.
Rule of Law
Since 2012, the prioritization of executive procedures at the expense of parliamentary negotiations, the confiscation of the national sovereignty and the legal nature of the Memoranda (in terms of constitutionality, but also as supranational political agreements with an extraordinary capacity to enact deep restructuring of the country’s public structures), have been long debated in Greece. Since 2010, the Greek Governments have been almost exclusively implementing the dispositions provided in the Memorandums of Understanding (MoU), thus regulating the Greek legal order according to the Economic Adjustment Programs. In fact, coherently to the ECJ’s rule (2014), Draghi’s pledge to do “whatever it takes” (2012) to save the region from economic ruin is in compliance with the EU law. Accordingly, the ratio of the Greek rule of law, included its constitutional principles, had to identify with Draghi’s statement in order to enable the Troika’s structural interventions and to implement the packages of the harsh austerity measures. The recurring terms of “necessity”, “urgency” and “exceptionality” respond to the comprehensive acquiescence of the IMF’s “conditionalities” imposed on the Greek rule of law. The ratification of all Memoranda via the “emergency parliamentary procedure” lacking the ordinary Parliamentary activity (i.e. substantive public consultation), and the recourse to the exceptional ruling powers of the executive (Government) were justified by the impossibility to “accommodate participatory methods when Greece was about to default on its loans”. This exceptional praxis produced a consistent corpus of “prioritized crisis legislation”, consolidated through Acts of an administrative nature equivalent to laws. These crisis-laws would often appear as ‘omnibus’, incorporating several measures into a single article in order to accelerate the procedures and minimize potential divergent voting, containing fiscally technical language and titles unmatched to the content, providing for the competence of different ministries, yet reviewing entire legal areas.
The impossibility of the Greek Council of State to ensure a preventive judicial scrutiny of constitutionality or to substantiate the constitutionality of the ‘extraordinary circumstances of an urgent and unforeseeable need’ reinforced the concerns about the infringement of the democratic rules and national sovereignty. The Council of State rules relied on the voluntary political will and on ‘the obligation of compliance with the commitments undertaken by the Greek government becoming a Member of the Eurozone, and signing as a sovereign state the Maastricht Treaty, the Lisbon Treaty, and the Stability and Growth Pact’.
The labour reform, in particular, fuelled complaints for unfair dismissals (especially due to pregnancy or maternity-leave). The “flexibility” standings on the duration and conditions of contracts, the performance-related wages, and the limitations on collective bargaining were challenged before the Court. The Court’s decision explained that, reasons of ‘overriding public interest’ demanded the loan agreement and the proposed measures within; the priorities of the euro-zone principles on competitiveness and growth identify with the national priorities, as part of a larger program of fiscal adjustment that ‘serve the public interest and the immediate need to address the economic needs of the country’.
Reforms also addressed the Greek judicial system, in particular the excessive length of court proceedings, aimed at clearing the existing case backlog (upgrading and speeding-up of judicial case processing) and reducing the inflow of cases by increasing court-fee costs and introducing more stringent admissibility conditions. Out-of-court settlements (mediation and arbitration) were also encouraged. Despite numerous positive impacts, scholars would underline the “tax-collecting” character of the judicial reforms, endangering the right to access justice.
The Greek asylum system as a regional arrangement was set up in late 2011, but due to its long-lasting procedures and the shortage of trained personnel, instead of relieving the crisis it has trapped thousands of refugees in Greece. The living conditions of immigrants and refugees, often deprived of their documents for long durations of time, and thus also of any assistance or legal support, was worsened by the euro-zone crisis, as documented in the big urban centers (such as central Athens, Patras, Thessaloniki) but especially on the islands. Moreover, a large number of regular resident immigrants lost their jobs because of the economic crisis, consequently undermining the possibility to renew their stay-permits and creating thus more irregularity. The intensification of “shadow labour” of underpaid immigrants without welfare security contributed also to increasing their engagement in illegal activities, and facilitated the rising of violent xenophobic phenomena, outright racism, and defensive nationalism.
The immigration crisis provisions became more restrictive with the deepening of the economic crisis. After August 2012, the Ministry of Public Order and Citizen Protection launched the operation ‘Xenios Zeus’ aimed at apprehending undocumented migrants, but was heavily criticized for the violent procedures reported and the risks it entailed for asylum seekers. The same Ministry with the International Organization for Migration (IOM) agreed on a pact for a disputable “voluntary repatriation” of immigrant people. In the same period another illegal practice was established: anyone indiscriminately (migrants, asylum seekers, refugees, unaccompanied minors) crossing the Greek-Turkish borders would be immediately arrested, held in prison for prolonged periods and released under expulsion decision.
The Syrian war outbreak created later on a new, unprecedented wave of massive arrivals of asylum seekers, especially on the islands, and the worsening of the economic-political crisis (2015) precipitated the migration crisis with dramatical consequences of social marginalization that exacerbated the conflicts with the local populations. The Greek government, short on solutions, became a sort of “traffic controller”, re-directing the arrivals massively from the islands to the “Balkan Route”, most often without registration and without processing of the asylum applications. In those years, a supplemental massive economic support by both the European and the international community came in support of the containment structures of arrival. Part of the funding has barely reached the municipalities; instead, practices of collective arbitrary detention are still reported today. NGO’s, volunteers and solidarity groups were actively charged with the hosting conditions, de facto replacing governmental responsibilities. The then newly signed EU-Turkey Statement of March 2016 halted the arrivals, which dropped from 850,000 in 2015 to in 30,000 in 2018, while FRONTEX and the Greek coast guard prevented the worsening of the loss of life at sea. Nonetheless, the events at the Greek-Turkish borders of March 2020 are symptomatic of the fragility of the EU-Turkey Statement, while the Dublin III regulation and the shutting of the ‘Balkan route’ have exacerbated the detention practice of immigrants. Allegations of “push-backs” to Turkey are consistently reported to be, not only illegal, but also violent. The governmental plan of creating bigger detention centres on the islands (2020) has been suspended after massive clashes and protests of the locals.
Greek laws would guarantee substantial reception conditions and an adequate standard of living only on the paper. More than 80,000 registered refugees and migrants are currently stuck in Greece, more than 15,000 on the 5 islands, under desperate and humiliating conditions that severely compromise human dignity, mental and physical health: structures are overcrowded with poor infrastructures and insufficient basic services (tents or containers for housing) or hygiene (running water, showers, soap, sewerage), severely lacking public healthcare, which often triggers inmate violence.
On different grounds, the citizenship law has been reformed (2015) introducing a tempered “ius soli”, allowing children born in Greece from foreigners to obtain Greek citizenship, and second-generation migrants meeting the prerequisites (successful completion of a certain number of years in the Greek educational system) to apply as well.
The withdrawal of the United Kingdom from the EU could negatively affect Greek exports of goods and services if a trade agreement between the EU and the UK is not reached from 2021 onwards. The possible disruption of the international financial markets includes a risk of increasing the borrowing interest rates due to the decrease of the prices of the Greek state bonds. Slowing economic growth in Europe will further burden domestic liquidity and non-performing loans of Greek banks. The Greek economy may also suffer from the decrease of British tourism, with effects that would range from 0.4% to 0.8% of Greek GDP (€800 million to €1.6 billion) as stated by the Deputy Minister of Foreign Affairs Katrougalos (May 2019).
The policy-divide in addressing the crisis between the Northern and Southern Europe is easy to recognize, both in economic and in legal-political terms. This north-south divide has been discussed as the foundation of diverging economic performances as a consequence of the euro crisis. The southern European countries Portugal, Spain, Italy, Cyprus and Greece have been hit disproportionally hard by the crisis, while their northern European partners have managed to sail rather calmly through these choppy waters. Nonetheless, differences are evidently determined also by other factors, such as stereotyped perceptions or responsibility culture. For example, Belgium and Italy sailed into the crisis with public debts of about 100% of GDP and yet did not end up with IMF programmes, while Ireland and Spain, with ratios of just 40%, (admittedly kept artificially low by large tax revenues associated with the real estate bubble) needed bailouts. In other words, the nations that ended up with bailouts were not those with the highest debt-to-GDP ratios. Moreover, many of the countries that ran current account deficits – and thus were relying on foreign lending – suffered; none of those running current account surpluses were hit.
The Adjustment Programmes aimed, in Greece, not only to address its economic divergence, but mainly to prevent contagion in the euro area. In that perspective, as reported, inexperienced in the management of such a crisis process, the Commission established procedures focusing on the formal arrangements but with no specific internal guidelines on the actual design of the programmes’ conditions. An operative system for assessing the Greek conditions was set in time, but weaknesses emerging were not reviewed nor assessed consequentially for the implementation of the deep structural reforms. The austerity measures for Greece have been admittedly particularly inflexible and have had an excessive negative impact on people’s quality of life. Specific policies were applied in the Greek case, like capital controls (2015-2019). Within the EU, only Cyprus had capital controls for two years (2011-2013), while outside EU, Argentina is the “closest” example (2011-2015). Forms of Enhanced Surveillance are still operating in Greece. None of the European countries that has returned to “normality” is still under such conditions.
 https://www.imf.org/en/News/Articles/2019/11/14/pr19418-greece-imf-executive-board-concludes-2019-article-iv-consultation; IMF Country Report No. 19/340, November 2019; https://www.theguardian.com/world/2018/jul/15/greece-exit-final-international-bailout-debt-catastrophe; https://www.euromonitor.com/greece;https://www.statistics.gr/en/greece-in-figures; https://data.oecd.org/greece.htm
 K. Featherstone, 2011. The JCMS Annual Lecture: The Greek Sovereign Debt Crisis and EMU: A Failing State in a Skewed Regime. Journal of Common Market Studies, 49, 193–217; A. Andriopoulou, 2020. ‘Normality’ versus social citizenship. The case of Greece, in “Italy-Greece” two faces of the same crisis (ed. F. Farina, A. Vincenti), Aracne.
https://www.statistics.gr/documents/20181/13058a0c-e1cb-d2d7-dc94-f274dffb5d83; https://www.statistics.gr/documents/20181/1515741/GreeceInFigures_2020Q1_EN.pdf/4ab68b3f-bd6c-d77d-8bf9-cfcbf91aa937; https://www.statistics.gr/en/home/
 2020 European Semester: Assessment of progress on structural reforms, prevention and correction of macroeconomic imbalances, and results of in-depth reviews under Regulation (EU) No 1176/2011, COM(2020) 150 final, Country Report Greece, 26.2.2020
 https://tradingeconomics.com/greece/youth-unemployment-rate. Experience elsewhere shows that internal devaluations are more likely to be maintained when accompanied by productivity-enhancing reforms, while the literature has found both wage and labor productivity are important in determining external balances. O. Blanchard, M. Griffiths, B. Gruss, 2013. “Boom, Bust, Recovery: Forensics of the Latvia Crisis,” Brookings Papers on Economic Activity, 44(2), 325–388; J. Bluedorn, H. Lin, 2017. “External Adjustment in Europe: Competitiveness, the Real Exchange Rate, and the Trade Balance, IMF Country Report n. 17/236.
 During the crisis, while foreign investment was precipitating, a substantive segment of medium-small entrepreneurs, representing the vital lymph of the Greek economy, was left exposed and went bankrupt, and most medium-large enterprises delocalized their production, subtracting employment, contributions and development to the Country. At the same time, the private property, representing the household “safety-net” and a pledge for private loans in entrepreneurship, was subjected to exorbitant property taxes (3.7 billion in 2017, from around 600 million in the pre-crisis period) obliging many owners to hastily sell sold below cost to get tax relief. Paying the burdens of the crisis the private deposits collapsed together with Greek banks.
 https://data.oecd.org/greece.htm; https://www.reuters.com/article/us-greece-incomes/greeks-40-percent-poorer-than-in-2008-idUSBRE99L0I420131022. https://www.oecd-ilibrary.org/docserver/g2g9e924-en.pdf?expires=1588228739&id=id&accname=guest&checksum=4FA3C424B5411C0E17D12F06D7F4B934.
 Commissioner for Human Rights, Report of the Commissioner for Human Rights of the Council of Europe Dunja Milatovic following her visit to Greece from 25 to 29 June 2018, CommDH(2018)24
 https://www.ohchr.org/Documents/HRBodies/HRCouncil/RegularSession/Session20/A-HRC-20-23_en.pdf; https://www.ohchr.org/Documents/Issues/Poverty/A-HRC-21-39_en.pdf; CEDAW, Concluding observations on the seventh periodic report of Greece adopted by the Committee at its fifty fourth session (11 February – 1 March 2013). The IMF admitted that this does not fall within its mandate. https://www.imf.org/external/np/pp/eng/2012/061912a.pdf.
 https://ec.europa.eu/info/sites/info/files/economy-finance/draft_smou_4th_review_to_eg_2018.06.20.pdf; https://ec.europa.eu/info/sites/info/files/economy-finance/ip134_en.pdf.
 Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (otherwise known as the ‘Fiscal Compact’).
 Th. Beukers, B. de Witte, C. Kilpatrick, 2017. Constitutional Change through Euro-Crisis Law, Cambridge University Press.
 Gauweiler, Case C‑62/14, Judgement of the Grand Chamber 2015
 O De Schutter, ME Salomon, 2015. ‘Economic Policy Conditionality, Socio-Economic Rights and International Legal Responsibility: The Case of Greece 2010-2015’, Legal Brief for The Special Committee of the Hellenic Parliament on the Audit of the Greek Debt, “Debt Truth Committee”.
 Article 109 of the Standing Orders of the Greek Parliament provides that ‘if a bill is characterized as urgent, it is processed and examined in one sitting’, while ‘the debate and passage of the urgent bill is concluded in one meeting which cannot last more than ten hours’. Furthermore, the process of ratification of an Act by the Parliament is characterized as interna corporis, and as a result is not subject to judicial review.
 G. Kouretas, P. Vlamis. 2010. The Greek crisis: Causes and implications. Panoeconomicus, 57(4), 391–404.
 https://link.springer.com/article/10.1007/s10978-017-9217-4; G. Gerapetritis, 2012. The economic crisis as element of deregulation of the hierarchy of sources of law: determinism or alibi? ΝοΒ 10/2012, 2754; ‘Individual regulations concerning the emergency measures of the implementation of Law 4046/2012 and the Medium Term Fiscal Strategy Framework 2013-2016’, Government Gazette A’224/2012, which amended several provisions of the 3rd MoU (Law 4093/2012).
 Said differently, MoU’s orders were transposed in the legal system through “administrative acts”, capable to reform the country. Legislative power, vested upon the Parliament, extends to the President of the Republic narrow legislative competences (Article 44(1) of the Constitution): under extraordinary circumstances of an urgent and unforeseeable need, he may, upon proposal by the Ministers Cabinet, issue acts of legislative content that require the Parliamentary ratification within 40 days.
 Law 4093/2012 ‘Ratification of Mid-term Fiscal Strategy 2013 – 2015 – Urgent Regulations relating to the implementation of Law 4046/2012 and the Mid-term Fiscal Strategy 2013 – 2016’, Government Gazette A’ 222/2012 has only one article and is constructed in paragraphs and subparagraphs while its length reaches 123 pages.
 Law 4172/201340 ‘Income tax and urgent measures for implementing Laws 4046/2012, 4093/2012 and, 4127/2013 and other provisions’ includes, only in Section I, the new Code of income tax and measures concerning the areas of competence of eight ministries (Ministries of Interior, Education and Religious Affairs; Culture and Sports; Administrative Reform and E-governance; Health; Labor Social Security and Welfare; Environment, Energy and Climate Change; Justice, Transparency and Human Rights).
 D. Mackie, M. Barr, 2013. https://www.legrandsoir.info/IMG/pdf/jpm-the-euro-area-adjustment-about-halfway-there.pdf.
 The judiciary had to recede before the political legislative judgments and had to rely on his technocratic adequacy, thus de facto proclaiming him the original interpreter of the crisis.
 Particularly challenging was the Troika’s veto to a prior review of the Parliament’s legislative products, and the €50 billion fund valued in public assets (ports, airports, public companies) as a pawn for the loan and entrusted to an independent manager. K. Chrysogonos, http://constitutionalism.gr/site/wp-content/mgdata/pdf/xrysogonosxamenitimi.pdf; https://www.euractiv.com/section/economy-jobs/news/eurozone-delays-greece-debt-relief-over-household-insolvency-law/. The political dismissal of the 2015’s Referendum verdict on the last bailout revitalized complaints on the power of supranational (Troika) impositions against the expressed popular consensus, in favour of an economic reasoning (conditionality) http://eulawanalysis.blogspot.com/2016/06/pulling-rug-from-under-marios-feet.html; P. Pikrammenos, 2012. https://tinyurl.com/y7qy5yx7
 The Second Memorandum introduced an immediate realignment of the minimum wage level (determined by the national collective agreement) by 22% (32% for young employees). In 2015, 55.36% of the jobs created were under part-time or fixed-term contracts, whereas only 44.64% were with open-ended full-time contracts. In addition to this, 60% of the wage-earners were dismissed at least once from their jobs in 2015. Cfr. A. Petropoulos, 2012, The new ‘Labour’ law, MONO. Other austerity measures have been defied before the Greek Council of State: Decision 2307/2014, which found unconstitutional a limited aspect of the labour-law regulations of the Second Memorandum, i.e. the unilateral recourse to arbitration, and 2307/2014, on the constitutionality of the second Memorandum
 The Court reaffirmed that a member state’s commitment to “reform” as a condition to participate in a rescue program may verge on the edge of legal constitutional boundaries but, based on a voluntary agreement, it expresses the political compromise between “necessity and urgency” in favour of the superior general interest: https://www.law.ox.ac.uk/business-law-blog/blog/2016/09/necessity-vs-legality-ecb-running-or-ruining-europe; G. Katrougkalos, 2010. http://constitutionalism.gr/site/wpcontent/mgdata/pdf/atrougalosmemoranda2192010.pdf; G. Kassimatis, 2010. http://constitutionalism.gr/site/wp-content/mgdata/pdf/9_kasimatis_symfoniadaneismou_27-11-10.pdf; N. Frangakis, 2011. ‘A State’s Exceptional Economic Measures under the European Convention on Human Rights. The case of the “Greek Memorandum”’ in The European Convention on Human Rights, a Living Instrument – Essays in the Honour of Christos L. Rozakis, Bruylant, Spielmann, D.
 Opinion of the Advocate General Wahl on a request for a preliminary ruling from the Greek Council of State. The legal issue arose on a dispute between the Greek government and a cement company after a decision of the latter to proceed to collective dismissals of its labour-force. The question referred to the CJEU (Case C-201/15) concerned the compatibility of Article 5(3) of Act 1387/1983 of the Hellenic Parliament with Articles 49 TFEU (freedom of establishment) and 63 TFEU (free movement of capital): Anonymi Geniki Etairia Tsimenton Iraklis (AGET Iraklis) v. Ypourgos Ergasias, Koinonikis Asfalisis kai Koinonikis Allilengyis Intervening party  EU Court of Justice C-201/15.
 Paragraph 35 of Judgment 668/2012 of the Greek Council of State.
 Higher amounts of judicial duty notes, obligation to pre-pay large part of the disputed amount as admissibility criteria for tax cases, submission of a Tax Authority certificate of payment of the new property tax ‘ENFIA’ as a procedural condition in cases related to realty. Extra costs were set at a very early stage of the judicial proceedings, under the penalty of inadmissibility, hindering citizens’ right to access to justice, especially given that a large and growing part of the population was exposed to poverty and social exclusion.
 In 2015, UNHCR data recorded 857 000 arrivals, that is twenty times the number that arrived in 2014.
 Law 4540/2018 of 18 May 2018.
 https://www.economist.com/graphic-detail/2011/11/22/latitude; Gill, I. S., Raiser M., 2012, Golden growth : restoring the lustre of the European economic model, Vol. 1 and 2, Europe and Central Asia Studies Washington, D.C., World Bank Group, http://documents1.worldbank.org/curated/en/539371468036253854/pdf/Main-report.pdf and http://documents.worldbank.org/curated/en/539371468036253854/Main-report
 G. Tsebelis, 2015. Lessons from the Greek crisis. Journal of European Public Policy, 23(1), 25–41. Eventual distinctions-differentiations must be considered within the specific geo-political context (historical, political, juridical, and sociologic) and the parameters inspiring the policies, necessarily “specific” for each country.