Analysis: Greece heads for record books as economy slumps

Tue, Feb 14 2012

By Alan Wheatley and Scott Barber LONDON (Reuters) - Entering the fifth year of recession, Greece is writing its name in the book of unwanted records for one of the deepest economic slumps of modern times. The Greek economy shrank 6.8 percent in 2011, leaving the level of output an estimated 16 percent below its pre-crisis peak. Unemployment has soared to more than 20 percent from 7.7 percent in 2008. Argentina suffered a 20 percent peak-to-trough drop in output as it defaulted on its debts in 2001, while Latvia's economy contracted by 24 percent because of the 2008 global financial crisis. With more belt-tightening in store in return for a proposed 130 billion euro ($172 billion) international bailout, Athens is on course to join their ranks, and possibly overtake them, said Uri Dadush, an economist with the Carnegie Endowment in Washington, a think tank. "On the current path - which is not sustainable in my view - we may very well see Greek GDP go down 25-30 percent, which would be historically unprecedented. It's a disastrous crisis for them," Dadush, a former senior World Bank official, said. For ordinary Greeks, the outlook is dire. Some civil servants have seen their salaries cut by half. Retirement before the age of 65 is a fading dream for those still in work. Some drugs are now in short supply. Couples with children are being forced to move back in with their parents to save money. And across Greece, businesses are closing every day. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a graphic on austerity link.reuters.com/fub66s Interactive timeline link.reuters.com/muq56s Euro zone crisis in graphics r.reuters.com/hyb65p ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ A LONG NIGHTMARE World Bank figures show that Russian output dropped 44 percent between 1989 and 1998, dwarfing the 29 percent drop in the United States during the Great Depression.

But since Russia's economic reversal was compounded by the break-up of the Soviet Union, analysts tend to exclude the episode when examining recent recessions. Comparing crises is like comparing apples and oranges. Every country is different, economically and politically. However, Greece stands out in one important respect: its downturn has already lasted twice as long as the average crisis and yet there is no end in sight, according to Mark Weisbrot, codirector of the Center for Economic and Policy Research, a think tank in Washington. "They're suffering. It's nasty," said Weisbrot, who has studied the lessons to be learned from economic crises in Latvia and Argentina. "If you could say with a reasonable probability that the worst was over, then that would be different. But you can't say that. They're in for a long nightmare." Athens has repeatedly frustrated the European Union, the International Monetary Fund and the European Central Bank - the troika - by failing to implement the reforms it promised in exchange for its first bailout, for 110 billion euros, in 2010. Apart from missing targets for reducing its budget deficit, Greece has dragged its feet on laying off workers from its bloated public sector, privatizing state assets and opening up closed trades and professions to competition. Yet one critical measure, the primary budget balance, which excludes interest payments, shows Athens has made serious adjustments by raising value added taxes and cutting pensions, salaries and public services. The primary balance was in deficit in 2009 to the tune of 10.4 percent of GDP. This year, it is projected to show a surplus of 0.2 percent. "Although they're not given much credit for what they've done, there are not many countries that have brought their primary deficit down as quickly as Greece has," said Andrew Kenningham of Capital Economics, a consultancy in London. RUNNING FASTER TO STAND STILL And yet Greece will still have an overall budget deficit of 4.7 percent of GDP this year because of a huge interest bill. This is estimated at 4.9 percent of GDP, rising to 6.3 percent of GDP in 2013, even assuming that a deal is clinched to write down the bonds owned by Greece's private-sector creditors by 70 percent. To reduce the overall deficit, the EU and IMF are prescribing an increase in the primary budget surplus to 5.0 percent of GDP in 2014 and 2015.

"What the troika is effectively working into its plans is an adjustment in Greece that will go on for many years," Dadush said. Weisbrot said the planned interest burden was the highest in the world, except for Jamaica: "These guys are going to squeeze them forever. There's no light at the end of the tunnel." Figures compiled by Reuters show that government expenditure and real disposable incomes in Greece have already fallen much further since the onset of the crisis than in fellow euro members Portugal and Ireland, which have also received EU/IMF bailouts. Private consumption has also declined more steeply than it did in Ireland. Yet the IMF and the EU have built into Greece's economic program an assumption that consumption will drop by a further 4.7 percent in 2012 and 1.4 percent in 2013. Unemployment will still be at 18 percent in 2015. And the risks - acknowledged by the IMF in its December review of Greece's progress - are on the downside. If austerity crimps growth and squeezes tax revenues, the budget deficit will be forced higher, requiring a fresh round of belt-tightening. That is what happened in 2011. The 6.8 percent drop in GDP reported on Tuesday exceeded the 6.0 percent fall that the IMF had penciled in as recently as December. Which itself was a revision from an earlier forecast of a 4.5 percent contraction. TO STAY IN THE EURO OR QUIT? Countries typically break out of such a vicious circle by devaluing. Output and employment initially fall hard but recover rather quickly, as the examples of Argentina, Russia and the countries hit by the 1997/98 Asian financial crisis showed. Indonesia's currency fell by more than three-quarters after it devalued. Swathes of the banking system were wiped out. Millions were plunged into poverty. Yet its peak-to-trough drop in output was milder than Greece's. Today, the country is thriving and enjoys, unlike Greece, an investment grade rating. These and other examples are keeping the question alive whether Greece should quit the euro zone and devalue. Ireland and Latvia, whose currency is pegged to the euro, have shown that devaluation is not the only way out. Competitiveness can also be regained through budget and wage cuts, a so-called 'internal devaluation'. Portugal, Spain and Italy are ploughing the same furrow. But Weisbrot believes Greece's plight is now so serious it should take the risk and abandon the euro.

"My prediction is that if Greece left they would do quite well, just like Argentina. They would have a brief crisis and would come out of it and grow very rapidly," he said. Zsolt Darvas, a researcher at Bruegel, an influential think tank in Brussels, acknowledged that Greece could be facing one of the deepest falls in output on record. But he said the chances of Greece's quitting the euro were low because of the chaos that would ensue. Not only would the government go bankrupt as international lenders withdrew aid, but banks and most of the private sector would collapse as a steep devaluation of the 'new drachma' would make it impossible to service huge euro-denominated liabilities. "So from a purely economic perspective, for Greece it is still preferable to say inside the euro even if the suffering continues for another five years or even longer," Darvas said. Ultimately, though, he added, the question is one for the Greek people and their politicians. How long will they put up with austerity? Economic comparisons cannot answer the question. Dadush, reflecting on the running battles between police and rioters on Sunday as flames engulfed downtown Athens, said Greece had stared into the abyss at the weekend. "A lot of people were ready to jump. They didn't. But give them another year or two

Promises, promises... Greece's history of missed targets

Tue, Feb 14 2012

By Dina Kyriakidou and Ingrid Melander ATHENS (Reuters) - Greece has a long history of promising reforms to its creditors and not delivering, and this time looks set to be no different. The Greek parliament defied violent street protests and voted in even more austerity, but fully implementing the measures is likely to prove an impossible task given acrimonious political divisions and deep-seated social unrest. The package including public sector layoffs, sharply cutting the minimum wage and already dwindling pensions, as well as widespread tax increases has unleashed indignant public anger and tested the will of Greek politicians.

After decades of using public services as political spoils, the Athens government must also take on the corruption and inefficiency they fostered before they can implement the reforms that creditors demand before releasing further funds. "They probably won't be able to implement everything and (April) elections make it more difficult," ALCO pollster Costas Panagopoulos said. The punishing austerity bill was needed to secure a fresh bailout and avert a messy default that would shake the euro zone and comes after two years of wage cuts and tax hikes that have plunged Greece into its worst recession in decades. International lenders, the IMF and the EU, blame the failure of the rescue plan so far on slow implementation of structural reforms, such as the opening up of markets and professions. There is widespread skepticism because of a long history of missed targets. "Past history does not give us a lot of hope," said Diego Iscaro of IHS Global Insight. "Every time Greece has to receive a tranche of the money we're going to have the same problem. If they keep missing targets, sooner or later they won't get the money. There is a chance this is just delaying the inevitable." Athens says the deeper than expected recession has put it behind agreed targets. Data on Tuesday showed the economy shrank 7.0 percent year-on-year in the fourth quarter last year, as the downward spiral quickened from 5.0 percent in the third quarter. "Yesterday's vote in the parliament may have saved the country temporarily from default, but the Greek economy is going bankrupt and the country's political system is failing," said Greek Commerce Confederation head Vassilis Korkidis. Greece has repeatedly voted in measures and privatizations that have never materialized. It is proving a Herculean task. The government has passed laws as many as three times to open up the legal and pharmaceutical professions to more entrants, aiming to make them more efficient and bring down costs, with no visible results, angering reformers as well as creditors. The lucrative Greek cruise ship business, crucial to the key tourism sector, still suffers from restrictions two years after it was officially liberalized. As a result far fewer of the big modern cruise liners moor at Greece's picturesque ports and bays than for instance in Italy, depriving souvenir shops, cafes and restaurants ashore of armies of customers. EU and IMF partners have voiced their exasperation openly, increasingly reluctant to commit another 130 billion euros to bail Greece out unless political parties clearly back the measures long term.

CLEANING UP POLITICS The three-month-old coalition government of technocrat Prime Minister Lucas Papademos, now backed by just the main two parties after the far right walked out refusing to vote for the austerity bill, does not have much time left with elections expected in April. The conservative New Democracy party is set to win the vote but not outright, risking yet more political paralysis while parties argue over forming a coalition, or a repeat election if they fail. All this will make the political scene unstable for months to come and tough reforms even harder to implement. New Democracy leader Antonis Samaras has openly criticized the deal, saying it only plunges Greece deeper into recession and has made clear he wants to renegotiate the terms, adding measures such as tax reductions and speedier privatizations. Samaras, 60, believes the measures are self-defeating and will not turn the Greek economy around, a view increasingly shared among Greeks, especially small business owners who saw Sunday's mayhem destroy their last hope of a recovery soon. Many economic analysts say the only way Greece can improve competitiveness is to exit the euro and devalue its currency, doubting a bailout will be fully functioning by the end of 2012. Labor and welfare reforms may take years to show results and an ambitious, 50-billion-euro privatization program has proved disappointing, with little prospect of reaching its full potential soon as investors keep away from crisis-hit Greece. In a first test for parties, before Wednesday's Eurogroup meeting called to approve the fresh bailout, Greek political leaders must give concrete assurances they will back the plan after the election and the government must come up with 325 million euros in cuts to secure aid. Government officials said the expulsion of about 40 deputies who voted against the bailout from the two main parties was a good omen, cleansing parliament of the main opponents to the measures. "Now we have a dress rehearsal of what the next, two-party government might look like," said a government official, who requested anonymity. "With the expulsions, all the populist elements are gone and there is more hope reforms will be done." Sunday's vote in favor of a new wave of austerity was a sign politicians realized they must make a serious effort to tackle the crisis, government officials say. But the election may well produce another government which is hesitant to push unpopular reforms through.

"There is a risk of a huge swing towards fringe parties and the only way to stop that would be for the big parties to go back on the agreements they make and the assurances they have given," said Ben May of Capital Economics. A recent poll showed Socialist party supporters moving to other groups further to the left, its standing down to 8 percent from more than 40 percent in the 2009 election. SWELLING UNREST But politicians face widespread public anger, evident not just in the angry youths that burned or wrecked 93 buildings in Athens on Sunday night but increasingly among middle-class business people and civil servants who turn out to protest. "They should have asked us before voting another round of awful austerity measures that will never get us out of the crisis," said Persa Lissimakou, 31, a bank clerk, watching fire fighters put out the burning roof of a building. "It's such a shame, especially for the people who worked here." Athenians held a candlelit vigil outside the historic Attikon theater building, dating to 1870, which went up in flames during the riot and shop owners picked up the pieces of destroyed and looted shops in the city centre. Although the government has said it expects first signs of economic growth in late 2013, after five years of recession, unemployment has risen to record highs, the number of homeless and beggars on the streets of the capital visibly increasing. During Sunday protests, police said the usual number of 300-500 black-clad youths that usually prompt the violence by attacking police with rocks and firebombs had swollen to 2,000. With one out of two youths now out of a job and more and more families having to rely on one, trimmed down salary, social discontent is bound to become explosive. "It's not over yet. On the contrary, this was just the beginning and we will see more," said Mary Bossis, professor of International Security at the University of Piraeus. (Additional reporting by Renee Maltezou; Writing by Dina Kyriakidou)

Athens mayhem raises fears of Greek social explosion

Mon, Feb 13 2012

By Renee Maltezou and David Stamp ATHENS (Reuters) - Greek political leaders say the nation must accept yet more punishing austerity or face a social explosion, but after a night of violence and destruction in Athens, some people fear this explosion may already be about to begin. Trade union leader Ilias Iliopoulos condemned the mayhem in which buildings burned across Athens as parliament debated new budget cuts but said the government had to listen to the people. "People sent a message yesterday: Enough is enough! They can't take it any more," Iliopoulos, general secretary of public sector union ADEDY, told Reuters. "The social explosion will come one way or another, there is nothing they can do about it any more." Prime Minister Lucas Papademos has repeatedly told his people that however much the budget cuts ordered by Greece's international lenders hurt, the alternative was far worse. He says Greece must avoid going bankrupt at all costs next month when it has to meet 14.5 billion euros in debt repayments, and the only way to achieve this is to accept the tough terms of the bailout offered by the European Union and IMF. "A disorderly default would set the country on a disastrous adventure," Papademos told parliament. "It would create conditions of uncontrolled economic chaos and social explosion." "The country would be drawn into a vortex of recession, instability, unemployment and protracted misery and this would sooner or later lead the country out of the euro," he added. However, much of this is already happening. Greece has entered its fifth year of recession, unemployment is over 20 percent and life for many Greeks is undoubtedly miserable following big pay and pension cuts - with more to come.

Likewise, it is hard to argue Greece remains stable. As parliament responded to the prime minister's appeals by endorsing the austerity bill early on Monday, protesters fought pitched battles with riot police outside. MUCH-LOVED VICTIMS By morning, shocked Athens residents gathered outside the burnt shells of buildings, speaking quietly and photographing the rubble-strewn wrecks with their mobile phones. "It is very likely that such protests will be repeated because people are very angry," Vassilis Korkidis, head of the Greek Commerce Confederation, told Reuters. City authorities said 93 buildings were wrecked or seriously damaged. Some were much-loved, such as the Attikon cinema that was housed in a neo-classical building dating from 1870. Workers cleared barricades while cleaning crews collected an estimated 40 tonnes of shattered marble and stone from the streets and pavements. The riots were the worst since 2008 when the police shot dead a 15-year-old schoolboy, provoking weeks of violence. Mary Bossis, professor of International Security at the University of Piraeus, said the trouble, which also provoked less serious incidents in towns and cities across Greece, was merely a taste of things to come. "It's not over yet," she told Reuters. "On the contrary, this was just the beginning. We will see more." At the moment relatively small numbers of people get involved in violent protests, many of them young but sometimes led by older, radical intellectuals. They organize using electronic media including websites which are easy for anyone to monitor. "These people are talking openly, they are not hiding at all, but the state is not listening," said Bossis. "If they listened they would know that this was only the beginning and that they want to continue." While Athens has a long-standing radical community, the riots of the past 24 hours were marked by groups from the provinces converging on the capital to take on the police. Injuries were numerous but largely not serious, unlike in May 2010 when three bank workers died in their burning office. "What scares me is that this kind of organized operation may lead to murders. It doesn't surprise me, it just scares me," said Bossis.

With youth unemployment around 50 percent, young Greeks face a particularly bleak future as political leaders say the country will endure a decade of hardship. What remains unclear is whether mainstream Greeks will join the radicals in resisting the austerity violently. Leftists believe a general uprising is under way. "The Greek people, regardless of ideology, have risen," said 89-year-old Manolis Glezos, a hero of Greek resistance to the Nazi occupation of World War Two, during the disturbances. STRESSFUL LIVES Many seem exhausted by more than two years of political, social and economic chaos. They lead stressful lives, constantly worrying about losing their job - if they have one - and how they can cope with tax increases on top of pay and pension cuts. Greeks are often bewildered, unable to understand what good the torment they are going through will achieve. "I wouldn't mind paying for the next two years if I knew austerity would take us somewhere," said Leto Papadopoulou, 32, a civil servant whose monthly pay has been almost halved to 900 euros. "But this crisis seems endless. In 10 years from now, I will be a lost cause for the labor market," she told Reuters as she watched a recent protest. Those who argue that the deal with the EU and IMF has saved the country from a social explosion, rather than hastened it, say that chaos among the general population could have come in the form of panic rather than violence. "Just imagine the state of chaos that Greece would have been in today," former minister Adonis Georgiadis, who defied his far-right party to vote for the package, told Mega TV. "Just imagine if the loan agreement had not passed, we would have thousands of people outside banks trying to get their money, thousands of people rushing to the supermarkets." If Greece were to suffer a major breakdown of law and order, the government would need an absolutely loyal police force. Riot police has fought countless battles with protesters in the past few years, but its biggest union said the force also had its limits of tolerance. "We refuse to stand against our parents, our brothers, our children," the Greek Police Federation said. (Additional reporting by Harry Papachristou and Tatiana Fragou Editing by Maria Golovnina)

y Erik Kirschbaum ATHENS | Sat Apr 28, 2012 9:27am EDT (Reuters) - On Monday, a 38-year-old geology lecturer hanged himself from a lamp post in Athens and on the same day a 35-year-old priest jumped to his death off his balcony in northern Greece. On Wednesday, a 23-year-old student shot himself in the head. In a country that has had one of the lowest suicide rates in the world, a surge in the number of suicides in the wake of an economic crisis has shocked and gripped the Mediterranean nation and its media - before a May 6 election. The especially grisly death of pharmacist Dimitris Christoulas, who shot himself in the head on a central Athens square because of poverty brought on by the crisis that has put millions out of work, was by far the most dramatic. Before shooting himself during morning rush hour on April 4 on Syntagma Square across from the Greek parliament building, the 77-year-old pensioner took a moment to jot down a note. "I see no other solution than this dignified end to my life so I don't find myself fishing through garbage cans for sustenance," wrote Christoulas, who has since become a national symbol of the austerity-induced pain that is squeezing millions. Greek media have since reported similar suicides almost daily, worsening a sense of gloom going into next week's election, called after Prime Minister Lucas Papademos's interim government completed its mandate to secure a new rescue deal from foreign creditors by cutting spending further. Some medical experts say this form of political suicide is a reflection of the growing despair and sense of helplessness many feel. But others warn the media may be amplifying the crisis mood with its coverage and numbers may only be up slightly. "The crisis has triggered a growing sense of guilt, a loss of self-esteem and humiliation for many Greeks," Nikos Sideris, a leading psychoanalyst and author in Athens, told Reuters. "Greek people don't want to be a burden to anyone and there's this growing sense of helplessness. Some develop an attitude of self-hatred and that leads to self-destruction. That's what's behind the increase in suicide and attempted suicide. We're seeing a whole new category: political suicides." Police said the geology lecturer, Nikos Polyvos, who hanged himself, was distraught because a teaching job offer had been blocked due to a blanket hiring freeze in the public sector. NATION IN SHOCK

Experts say the numbers are relatively low - less than about 600 per year. But increases in suicides, attempted suicides, the use of anti-depressant medication and the need for psychiatric care are causing alarm in a nation unaccustomed to the problems. Before the financial crisis began wreaking havoc in 2009, Greece had one of the lowest suicide rates in the world - 2.8 per 100,000 inhabitants. There was a 40 percent rise in suicides in the first half of 2010, according to the Health Ministry. There are no reliable statistics on 2011 but experts say Greece's suicide rate has probably doubled to about 5 per 100,000. That is still far below levels of 34 per 100,000 seen in Finland or 9 per 100,000 in Germany. Attempted suicides and demand for psychiatric help has risen as Greece struggles to cope with the worst economic crisis since World War Two. Nikiforos Angelopoulos, a professor of psychiatry, has a busy psychotherapy practice in an upmarket Athens neighborhood. He said the crisis has exacerbated the problems for some already less stable people and estimates that about five percent of his patients have developed problems due to the crisis. "We're a nation in shock," he said, even though he suspected that it was the media coverage of suicides that had increased dramatically rather than the actual numbers of suicides. He nevertheless says the crisis is behind a notable rise in mental health problems in Greece. "I had one patient who came in with a severe depression - he owns a furniture making company that got into financial trouble and he had to lay off 20 of his 100 workers," he said. "He couldn't sleep and couldn't eat because of that. He said his good business was being ruined and he couldn't cope anymore." The furniture maker spent four months in therapy and was also helped by anti-depressants, Angelopoulos said. "He's better now. He realized what happened just happened. But there are many others who are unstable or psychotic to begin with and the crisis is increasing their anxiety and insecurity." Angelopoulos, 60, has also suffered himself because about 20 percent of his patients can no longer afford his 100 euro ($130) per hour sessions. Some have asked for a half-price discount while others tell him they simply can't afford to pay anything. "I never turn people away," he said. "If a patient says to me 'I have no money', I couldn't tell them to go away. I tell them okay you don't have to pay now but remember me later." HAPPY GREEKS? There are several possible explanations for Greece's low suicide rate that go beyond the fact that the country has an abundance of sunshine and balmy weather.

To avoid stigmatizing their families, some suicidal Greeks deliberately crash their cars, which police often charitably report as accidents. Families often try to cover up a suicide so their loved ones can be buried because the Greek Orthodox church refuses to officiate at burials of people who commit suicide. Another important factor behind the low suicide rate is that Greeks have extremely close knit families as well as a highly communicative and expressive culture. "Greece is a country where everyone will talk to you," said Sideris, the Athens psychoanalyst. "You'll always find someone to share your suffering with and someone's always there to help. "It's not only the good weather. It's the powerful network of support that has made the suicide rate in Greece so low. It's still there but this crisis is still too much for some people." Many Greeks have also not lost their sense of humor. Dimitris Nikolopoulos, a 37-year-old salesman, laughed at the idea that the suicide rate was so low because Greeks are well-adjusted and a generally happy people. "Greeks used to be very happy people because we were living off money that didn't belong to us," he said with a wry smile. "But sometimes you have to face reality. It wasn't our money." ($1 = 0.7542 euros)

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By Li-mei Hoang and Renee Maltezou LONDON/ATHENS | Tue Apr 24, 2012 10:02am EDT (Reuters) - The wistfulness in the voice of George Kapetanios is heart-warming and an increasingly familiar tone for Greek families at home and in cities all over Europe and the world these days. Put out of business by a shrinking economy that has been crushed by the eurozone crisis, unable to find work at home and desperate to stay afloat financially, Kapetanios, his wife Katerina Germanou and daughter Paraskevi came to London months ago so the parents could find work abroad. Now they are hoping for a brief taste of their former family life when stepson Thanos Kehagias, who has remained in Greece to finish his university studies, comes for a visit. "I've met people here from all over the world, who say I've not been back for seven years, not been to see my mum for seven years, I don't do that," Kapetanios told Reuters in London. "I don't live like that. We (Greeks) are very close with family."

In Munich, Maria Zatse dreams of work and frets about improving her faltering German. The 49year-old was a hairdresser in her native Greece for 30 years. Then the eurozone crisis hit. The construction company where her husband Niko worked went bankrupt in 2010 and he lost his job. They struggled along on her income for a while before business at her salon dried up. Then they sold their house and moved to Germany in search of work. "People didn't have any money," she said. The story for the Kapetanioses and the Zatses is being replayed for Greek families all over Greece and Europe. About 600,000 jobs in debt-riddled Greece have disappeared since 2008 and economic output has shrunk by around 20 percent. So far, more than a fifth of all Greeks are unemployed, creating an army of jobseekers spreading out across the European Union and beyond. ONE MEAL A DAY Some 7,000 Greeks have come to Germany in the past year, according to its Federal Statistics Office. The number of migrants from other debt-stricken countries -- Spain, Portugal or Italy -has been significantly less. The tale for young Greeks is just as dire in a country where one in two cannot find a job. George Kapetanios' stepson Thanos Kehagias said he has made peace with his parents' decision to take his sister and leave him behind while they made a new start in London. The 23-year-old stayed to study engineering at a state university in Patras, Greece's third largest city. He said he lives on just over 6 euros ($7.87) per day and can only afford one daily meal at the cheap university restaurant. "I weighed 97 kg but have lost weight, I'm now almost 70," he told Reuters in Greece. "I can't afford to order food or eat out." Although he struggles to make ends meet and is afraid that the university may shut down due to the budget cuts, he said he was not prepared to join his parents and sister in London. "My parents' move was not a bad one, at least they make some money there. And my sister is going to school there and is a good student," Thanos said. Life is perhaps a bit tougher for Maria Zatse's 15-year-old daughter Margarita, who hopes to follow her mother into the beauty trade.

Within a month of moving to Munich all their money was gone, spent on hotels and guesthouses. Maria still has no job and Munich is one of the most expensive cities in Germany. Niko has found modest work at a printers. The family slept in Munich's central station for 10 days, before they got accommodation in a hostel in Aubing, in the west of the city, through a social worker. Maria, Niko and Margarita now live, eat and sleep on a tiny bit of floor space. Three beds, three lockers and a little table complete the room. Clothes, hand towels and other belongings are piled up on the chairs, things they have salvaged from their old lives. In the corner, an image of the Madonna stands on a shelf, next to family photos. Maria's brother emigrated to Italy, only her father refused to leave Greece. She telephones him regularly, but he can only visit once she gets more space. SONS AND MOTHERS In London, George Kapetanios is reminiscing about the old life in Greece and how quickly 15 years of work and family life evaporated in the crisis. "Where I live is a small village, a small town. Nine, ten thousand people. I couldn't find a job anywhere," he said. Faced with crippling taxes imposed as part of the government's austerity measures to appease the financial markets, a deteriorating health system and massive unemployment, Kapetanios said he had little choice but to leave. But the move has been hard on his wife Katerina. "She has a really big problem with leaving our son behind. Because you know, mum and son. But what can she do? She knows we don't have a chance back there. No chance." Kapetanios and his wife both work part time, he as a chef in a restaurant and her in a caf in west London. It's a far cry from the enviable life they had a few years ago in Greece when they had a successful restaurant and owned three cars. Post-eurozone crisis he faced losing everything he had. The restaurant was not doing well, and he was unable to find a new job. He rents out their house and sold the restaurant, but still cannot afford to make the monthly 800 euro mortgage payments. Now he works in London at a Greek restaurant after arriving by himself and living for the first two or three months without the family in London. "I was alone and it was really bad. But it wasn't London's fault. It was my psychology that was really bad. Because when you feel alone and doing what I'm doing now, you think I don't have anything here, I don't know anybody."

Kapetanios says he dreams about moving back to his hometown, back to his mother, father and sister and his friends whom he left behind but realizes this is just a romantic notion. "I speak with people every day in Greece. They tell me: George, you do your best. Don't do anything stupid and be romantic and sensitive and say I'm coming back to live here. "Don't do that. You'll regret it". ($1 = 0.7619 euros) (Additional reporting by Irene Preisinger in Berlin, editing by Paul Casciato) By Harry Papachristou ATHENS | Fri Apr 20, 2012 2:48pm EDT (Reuters) - Close links between the Greek state and the Orthodox Church are turning from a blessing for the clergy into a curse as the debt-laden government struggles to fund the ancient institution, just as impoverished Greeks need its charitable work most. Starved of money as the state makes huge spending cuts, the deeply conservative church which grew from one of the earliest centers of Christianity is seeking new sources of funds. But despite a new spirit of enterprise, such as at one monastery which wants to build a solar energy farm, numbers of priests are dwindling, those that remain are suffering pay cuts, and the church is fighting to keep soup kitchens open as unemployment soars and poverty deepens. "The tills are empty and the system is collapsing," said Ignatios Stavropoulos, a modernizing priest who has his own page on LinkedIn, a social website for professionals. Under a 60-year-old treaty, the state agreed to pay priests' salaries in exchange for large amount of church property, including land. But this means more than 10,000 priests are now on the government payroll, putting a 190 million euro ($250 million) annual burden on the country's overstretched budget. Under the terms of an international bailout that saved Greece from bankruptcy, the government is cutting pay which for a typical parish priest is about 1,000 euros a month. Athens will also fund only one new priest to replace every 10 who retire or die, causing shortages in remote parishes during a deep recession when the flock most needs help. In the cities, the church has stripped operations to the bone to save money for the soup kitchens and charities it runs for the growing army of the homeless and the unemployed. Unlike in some European nations to the north where the influence of religion is dwindling, the church plays a leading role in the life of the Greece.

Long-bearded priests, dressed in flowing black robes, are a common sight on the country's streets and the Orthodox faith is recognized by the constitution as the official religion. When a new government was sworn in last year, the Archbishop of Athens blessed the prime minister and cabinet in a colorful ceremony. According to opinion polls, about 80 percent of respondents believe in God. This makes Greeks among Europe's strongest Christians, although many are infrequent church-goers. MIXED FEELINGS In a country where private charities and volunteering remain embryonic, the main burden of helping the destitute and downtrodden falls on church shoulders. But attitudes towards the church are mixed and it often draws criticism for being too close to the state. Many citizens believe it still owns too much property, pays too little in taxes, and generally fails to contribute its fair share as ordinary Greeks' tax bills soar under the austerity demanded by the country's bailout from the EU and IMF. The church dismisses such notions. "It's a myth that we're drowning in money," said Father Irinaios Laftsis, a priest in the northern diocese of Alexandroupolis. Over the past decades the church has transferred 96 percent of its property to the state. It also paid 12.6 million euros in taxes in 2011, it said last month, stressing that the church was treated no differently from any other non-profit organization. To cover the shortage of priests, some bishops are permitting laymen to take services. These volunteers receive no state wages and don't wear the characteristic vestments. For instance, a retired army officer recently started holding mass at Avantas, a village close to the eastern border with Turkey, said Father Irinaios. "Priests in small villages retire or pass away and there is nobody to replace them," he said. "We are going to have a huge problem." The church is already slashing its operating expenses to cope with the rising costs of its social work. Last year, it spent almost 96 million euros on the 700-odd charities it runs. "The crisis does not only affect our charities' functioning, it also threatens their very existence," Bishop Efstathios of Sparta said earlier this month. State pension funds had stopped paying contributions to the charities he runs for almost a year, he complained. Building or restoration work on churches, some home to ancient frescoes and ikons, has often ground to a halt while many are not properly heated during the harsh Greek winter to cut back on fuel expenses.

Economies are being made at all levels. Church orders for candles dropped 40 percent this Easter season, a religious items merchant in the southern province of Arcadia told Reuters. OFF THE AIR In February, the church briefly took its 23-year-old, cash-strapped radio station off the air, depriving listeners of the daily mix of sermons and cultural programs. Spreading poverty is making matters even worse. Austerity-pinched believers are cutting down on private donations while businesses are going belly up, depriving the church of rental income and swelling the queues in its soup kitchens. "Needs are increasing while resources are falling," said Father Vassileios Hatzavas, who runs the Athens Archbishopric's poor relief fund. As Greek unemployment soars to record levels, soup kitchen rations more than doubled in Athens last year to about 10,000 a day, not counting about 3,000 food packages sent to families each month, Hatzavas said. As the government tightens its purse strings, the clergy are increasingly looking to alternative revenue sources. Short of cash and with much of its still abundant real estate tied up in ownership disputes, the church is seeking cooperation with municipalities, the army or private business to develop sites, Hatzavas said. For the first time, the church sent an official delegation last month to a religious tourism fair in Russia, the world's biggest Christian Orthodox country and a major tourism target. Also, Penteli monastery outside Athens is planning to build a solar park to tap into subsidies for renewable energy producers. Some priests may have gone too far in their fund-raising zeal, such as Efraim, abbot of the 1,000year-old Vatopedi monastery. Efraim masterminded a scheme six years ago under which monks at the monastery on Mount Athos, a independent Orthodox peninsular enclave, persuaded government officials to exchange cheap farmland for prime Athens real estate. Efraim has been charged with a fraudulent deal which prosecutors say cost the state tens of millions of euros. Notwithstanding the Vatopedi affair, the crisis is offering the church a chance to reduce its financial dependence on the state via legitimate business enterprises, as other churches did decades ago. "It's a matter of survival for the Church," Stavropoulos said. ($1 = 0.7621 euros)

(editing by David Stamp)

One in five Greeks unemployed, half of all youth

Thu, Apr 12 2012 By Harry Papachristou ATHENS (Reuters) - Greece's jobless rate rose to a record of 21.8 percent in January, twice as high as the euro zone average, statistics service ELSTAT said on Thursday, as the debt crisis and austerity measures took their toll on the labor market. Youth unemployment remained at levels where more are jobless than in work. Budget cuts imposed by the European Union and the International Monetary Fund as a condition for saving the debt-laden country from a chaotic default have caused a wave of corporate closures and bankruptcies. Greece's average annual unemployment rate for 2011 jumped to 17.7 percent from 12.5 percent in the previous year, according to ELSTAT figures. December's rates was 21.2 percent. For the second consecutive month, those aged between 15-24 years were hit hard. Unemployment in that age group stood at 50.8 percent, twice as high as three years ago. Greece's economy is estimated to have shrunk by about a fifth since 2008, when it plunged into its deepest and longest post-war recession. About 600,000 jobs, more than one in 10, have been destroyed in the process. A record 1.08 million people were without work in January, 47 percent more than in the same month last year, according to ELSTAT figures. The number in work dropped 8.6 percent to a record low of 3.88 million. As an increasing number of people claim unemployment benefits, the government is finding it increasingly difficult to meet its budget targets. The finance ministry announced on Wednesday that the deficit of its central government budget had widened by 53 percent in the first quarter, compared with a target to narrow it by 38 percent in the full year. For many of those still in work, the situation is also worse. Under the terms of its EU/IMF bailout, the country's second since 2010, Greece slashed its minimum monthly wage by about a fifth to about 580 euros ($760), gross, to encourage hirings.

Starting this month, Greek unemployment figures are being adjusted for seasonal factors. The average jobless rate in the 17 countries sharing the euro rose slightly in January to 10.7 percent, from 10.6 percent in December. (Reporting by Harry Papachristou. Editing by Jeremy Gaunt. (Reuters) - In a bid to raise cash, Greek police are offering a 30 euro ($39) per hour "cop-forhire" scheme for private companies or citizens seeking protection at special events. Police said the service was provided only under special circumstances, such as cases of highsecurity risk, and that revenues would be used to fund police equipment and boost the state budget. It used to be available for free before a debt crisis hit the country. "We will provide these services only in exceptional cases and only if we have the available assets and staff. We'll first make sure that no citizen is deprived of police protection," police spokesman Thanassis Kokkalakis said on Tuesday. Hiring a police officer for an hour costs 30 euros, according to the law, which has entered into force. A police vehicle escort, for example for the transfer of art works or other sensitive material, will cost an additional 40 euros per hour and a motorcycle escort 20 euros. For larger-scale operations, police patrol boats can be hired for 200 euros and helicopters for an hourly 1,500-euro fee. Along with other public sector workers, Greece's 55,000 police officers have suffered wage cuts and layoffs amid austerity measures imposed by international lenders in exchange for financial aid.

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Greek suicide a potent symbol before election

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By Renee Maltezou ATHENS | Thu Apr 5, 2012 4:21pm EDT

(Reuters) - A Greek pensioner's suicide outside parliament has quickly become a symbol of the pain of austerity and has been seized upon by opponents of the budget cuts imposed by Greece's international lenders. The 77-year-old retired pharmacist, Dimitris Christoulas, shot himself in the head on Wednesday after saying that financial troubles had pushed him over the edge. A suicide note said he preferred to die rather than scavenge for food. The highly public - and symbolic - suicide prompted an outpouring of sympathy from Greeks, who set up an impromptu shrine on the spot where the pensioner died On Thursday, hundreds of Greeks - including students, teachers, members of leftist groups, and the "Indignants" who held daily sit-ins for months last year - staged a second day of protests at the shrine, leaving flowers and candles. Late in the day, minor clashes broke out between a small group of demonstrators and police, who fired tear gas. A peaceful demonstration was also held in the city of Thessaloniki. The newspaper Eleftheros Typos called Christoulas a "martyr for Greece". His act was imbued with a "profound political symbolism" that could "shock Greek society and the political world" before an upcoming parliamentary election that will determine the country's future. Anger over the suicide was directed as much at politicians as at the harsh austerity prescribed by foreign lenders in return for aid to lift the country out of its worst economic crisis since World War Two. "It's horrible. We shouldn't have reached this point. The politicians in parliament who brought us here should be punished for this," said Anastassia Karanika, a 60-year-old pensioner. So far this week, police reported that at least four people have tried to kill themselves because of financial troubles. In one case, a 35-year-old cafe owner in central Greece was hospitalized on Tuesday after drinking pesticide because he feared his business would be seized by his bank. With the election expected on May 6, smaller parties opposed to harsh spending cuts included in the country's second bailout were quick to blame bigger parties backing the rescue. "Those who should have committed suicide - who should have committed suicide a long time ago - are the politicians who knowingly decided to bring this country and its people to this state of affairs," said Panos Kammenos, a conservative lawmaker who recently set up the Independent Greeks anti-austerity party. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Interactive timeline on austerity protests:

link.reuters.com/pys56s ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ SHAME ON THEM Smaller parties like the Independent Greeks have been riding high in opinion polls before the election at the expense of the two main ruling parties, the conservative New Democracy and socialist PASOK, which backed the bailout. The two big parties are together expected to take less than 40 percent of the vote. Losing more voters to the smaller parties could mean they will not have enough seats in parliament to forge a pro-bailout coalition again. That would have profound implications for Greece's finances as continued aid from the European Union and the International Monetary Fund depends on the next government pushing through reforms. "The main issue is not the suicide itself but the reasons behind it," said Thomas Gerakis from the Marc pollster group. "The problem is far more serious than a single suicide. It shows that there is a serious - and growing - problem of people in despair." New Democracy and PASOK, which have ruled Greece for decades, expressed their sorrow over the tragedy. Political opponents attacked them for joining in the mourning. "Shame on them. The accomplices responsible for the suffering and despair of the Greek people ... should at least keep quiet in the face of the hideous results of the capitalist crisis and their policies, instead of pretending to be saviors and sensitive," the KKE Communist party said. Resentment is rising in Greece over repeated wage and pension cuts that have compounded the pain from a slump which has seen the economy shrink by a fifth since 2008. The IMF, which is unpopular among many Greeks, said it was saddened by the pensioner's death. The number of suicides jumped 18 percent in 2010, and many Greeks feel ordinary people like the retired pharmacist are being forced to pay for a crisis not of their making. "When dignified people like him are brought to this state, somebody must answer for it," said Costas Lourantos, head of the pharmacists' union in the Attica region. (Additional reporting by Angeliki Kountantou in Athens and Lesley Wroughton in Washington; Writing by Deepa Babington; Editing by Janet McBride, Elizabeth Piper and Giles Elgood)

Poverty-stricken Greek town hits new low

Fri, Mar 30 2012 By Deborah Kyvrikosaios PERAMA, Greece (Reuters) - A "humanitarian crisis" is unfolding in an impoverished Greek city where a deepening economic crisis has left thousands seeking food from an international charity more used to helping refugees and bringing aid to famine or disaster zones. Once home to a thriving shipbuilding industry, the port city of Perama near Athens has seen its fortunes wane over the years as buyers abandoned it for cheaper options outside Greece. The country's financial crisis is the latest blow - pushing up unemployment in the area to 60 percent, triple the national average. Without health insurance or money for fees at state facilities, many of the town's 25,000 residents have begun flocking to a free clinic set up by Doctors of the World seeking medical care and, lately, staples like milk and bread. The clinic was set up two years ago to treat poor immigrants. Instead, it now finds that 80 percent of its patients are Greeks struggling to get by. Doctors say many of them cannot even afford the bus fare to the local hospital. "We tell a lot of people that come here: 'Your child needs to go the hospital, we can't treat the problem here,' and they tell us: 'I don't have the 1.40 euros to take the bus and go to the hospital,'" said Liana Maili, a paediatrician at the clinic. A large chunk of the town's residents live on less than 200 euros ($270) a month, the agency says. "There are some families that have not had electricity for five, eight months, who spent the winter burning pieces of wood to keep warm and whose children eat from the garbage." Lately, the clinic has been overwhelmed with vaccination requests for Greek children whose parents cannot afford booster shots - something the agency has only ever seen in the developing world, said Nikitas Kanakis, head of the agency's Greek arm. "We will need the help of other organizations as we are in a humanitarian crisis," he said. FOOD PARCELS Greece is struggling through a debilitating debt crisis that has forced it to accept financial aid to keep afloat. The aid comes at the price of painful wage and spending cuts that have helped push the country into its fifth year of recession.

Most Greeks have felt the pain of salary and pension cuts and higher taxes, with towns like Perama showing the extremes of a crisis that social workers say has punished the weakest sections of society. In the clinic's small waiting room, patients outnumber the available seats as they wait to be seen by a doctor or pick up a free meal box of beans, olive oil, pasta and condensed milk. Unable to find a steady job for five years, Antonis Giatras relies on the clinic to feed his family of five. He recalls once being forced to live in his car and in a cemetery for months when he was homeless with a pregnant wife. "There are some days when we have no bread, or food," said the 50-year-old Giatras. "My young daughter who goes to school is forced to go some days without taking any food with her." In a one-room shack with a ceiling damaged by water and held together with bits of rope and wood, 36-year-old Spiridoula Firlemi lives in fear her electricity will be cut off because she cannot pay back power bills of 1,250 euros. "They'll cut it off. We'll see, maybe I'll get electricity from a neighbor," said Firlemi, who has a 45-day-old baby. "I can't leave the baby in the cold." ($1 = 0.7509 euros)

Greek town withers as boom turns to bust

Sun, Mar 4 2012 By Renee Maltezou and Deepa Babington KOMOTINI, Greece (Reuters) - Decades ago, Antonis Seitanidis' family fled Asia Minor to settle in the northern Greek town of Komotini in search of a better life. Today, he is urging his grandchildren to abandon the town - a place that once gave him hope but is now ravaged by factory closures, a lack of jobs and rising anger.

"This is the worst crisis I can remember in at least 50 years," the 84-year-old said. "I have five grandchildren and three of them are unemployed. I tell them to leave the country - to go to Germany or Australia. People will help them there. I don't understand, what are they waiting for? The end?" Things in Komotini appeared to hit rock bottom last week, when an unemployed man burst into the factory that laid him off and shot his former boss and another worker, injuring them both. Stunned disbelief soon turned into sympathy in a town where one in four residents is unemployed. "After the initial shock, many people sympathize with this man," said George Petridis, the local mayor. "I'm afraid we can't sink any lower than where we are right now." With a sizeable Muslim minority and economic problems that began several years before the debt crisis emerged in the rest of Greece, Komotini has a complex history that sets it apart from other stricken towns across the country. But the town's decay also epitomizes the messy fallout from a rapid boom and bust seen across much of Greece over the past decade, offering a sobering picture of what the rest of the country could look like after a few more years without growth. Greece, which is being forced to cut spending and wages by its European partners, including Germany, as a condition for loans to prevent bankruptcy, is in its fifth year of recession. The human cost of the crisis is all too easy to see in towns like Komotini. "What exacerbates the disappointment and despair with us, is this sentiment of national humiliation," said Petridis. "Whether right or wrong, people feel that Greece has become a protectorate of Germany." At the town's outskirts, a once-thriving industrial zone that drew thousands of workers to the area now looks like a wasteland. At its peak, about 100 factories whirred away near open fields, churning out sweets, Adidas sneakers, iron and bottled beer. Today, only about seven or eight factories are thriving, while another 10 are struggling to survive the crisis, says Petridis. Rusting pipes, broken windows and empty buildings surrounded by overgrown weeds are all that is left of the rest. "It's like an industrial graveyard," said Petridis. "For those of us who remember the area at its height, it is very sad." Unemployment in the town is three percentage points above the national average, at 24 percent. SMILES ON THEIR FACES

Near the Turkish border, Komotini looks like many other towns in mainland Greece - wide roads lined with apartment blocks for its 60,000 residents, souvlaki shops and a sprawling central square with cafes. Its historic centre with an old mosque and shops with Turkish lettering reveals an intriguing past and attests to the mix of Greeks - including many from the former Soviet Union and Asia Minor - and Muslims of Turkish or Bulgarian origin who live here. Wedged between the sea, Bulgaria to the north and Turkey to the east, the region has had its share of struggles, long before the debt crisis arrived at its doorstep. During its occupation by Nazi forces during World War Two, hundreds of Jews were sent to concentration camps. After the war, the town - mainly tied to farming in the surrounding countryside - struggled for years. A new university in the 1970s brought in students, but the good times really began in the 1980s, when an industrial zone was set up and European Union funds began flowing in. Greek companies flocked to the area, setting up factories to take advantage of subsidies. By the 1990s, Komotini was flourishing. Nearly 18,000 workers from all over Greece toiled in its factories. A consumer boom took off, a large shopping mall sprang up and German cars became popular as money flowed in. "Each year I returned, I saw the change. It was very rapid and visible - the buildings, the smiles on the faces, the new cars," said Petridis, who had studied elsewhere. The industrial boom ended as abruptly as it began - when subsidies and funds dried up in the early 2000s. By the time Greece sank into a debilitating debt crisis in 2009, Komotini's heady boom days were long gone. Since then, things have only got worse, say residents. "In the last two years there's been a sharp decline. Three years ago there were twice as many factories and now it is not just the factories anymore," said Petridis. "The crisis is hitting everyone." ECONOMIC WAR Since 2009, the town's municipal budget has been cut about 40 percent, says Petridis. But the town has had to boost spending at the same time, as it tries to provide part-time jobs for unemployed youth and meals for the homeless.

George Nikolaidis, head of the local business union who owns a fertilizer factory, says he dealt with as many as 10 banks a few years ago but now has to make do with just three as bank lending to companies like his dries up during the crisis. "Once we had Germany occupying us, but today what we have is an economic war," he said. Theodora Stroubi, 22, a political science student, has been searching for a part-time job for months without luck. She says she knows her future is not in Komotini anymore. "I can't just sit here waiting for something to happen," she said. "If I can't get by anymore, I'm thinking of going abroad." At 1 a.m. on Saturday morning, flower shop owner Ibrahim Hussein revs up his motorbike. A slump in business has forced him to take up a second job as a late-night delivery man. "People used to buy flowers for birthdays or patron saint days. Now they just call to offer their wishes," the 44-year-old said. "When people buy a simple wreath for a funeral they say they will pay you tomorrow," he added. "But days and weeks go by and they don't pay. The dead must be turning in their graves." (Writing by Deepa Babington; Editing by Andrew Heavens and Giles Elgood)

Under Zeus' gaze, austerity-hit Greeks queue for potatoes

Sat, Feb 25 2012 By Harry Papachristou KATERINI, Greece (Reuters) - Struggling to cope with austerity, hundreds of Greeks in the town of Katerini at the foot of Mount Olympus have turned to a cheap way to do groceries: ordering potatoes on the Internet and picking them up in a parking lot. As dawn broke on a cloudless Saturday, buyers patiently gathered to buy directly from growers at less than half the supermarket shelf price - the unemployed who struggle to make ends meet, the retirees whose pensions have been cut by the cost-saving measures and even well-heeled lawyers and women in fur. The idea to cut out profiteering middlemen, started by a local activist group in Katerini, northern Greece, has led several other towns to seek advice on emulating the action.

"Every penny counts," said Kyriaki Kotropoulou, a 41-year old jobless mother of three, as she stood in line to pick up five bags of potatoes, each containing 10 kg (22 pounds) of the produce at 25 euro cents ($0.34) apiece. Kotropoulou was a temporary worker at the local municipality but her contract was recently terminated as part of spending cuts demanded by Greece's euro zone partners who approved a 130 billion euro bailout this week. "We no longer buy any new clothes, we no longer go out for coffee or dinner. Day in, day out, my only concern is how to feed my children and my family," she said. SELLING 24 TONS IN 12 HOURS Katerini, a once prosperous town and local hub for agriculture, transport and tourism, has been hit by the crisis as hard as any other in debt-laden Greece. Streets are full of shuttered shops. Pawnshops offering to buy jewelry are mushrooming. Just like everywhere else in the nation, unemployment has climbed to record levels. The Pieria Volunteer Action Team, a group of local activists, decided to use the Internet to help people get cheap food. They first contacted a potato grower in northern Greece with surplus stock and a license to sell directly to customers. Then they invited members and friends to place their orders on the Internet. "Within 12 hours, 530 people ordered 24 tons of potatoes. We had to stop taking orders," said Elias Tsolakides, a 54-year old member of the group. Saturday morning marked the first time the buyers gathered under the initiative. Most came in their cars, a few filled their bicycle baskets, behind them the snow-capped summits of Mount Olympus where Zeus, king of the Gods, sat on his throne according to ancient Greek mythology. Some of the clients, like doctors and other well-off buyers, came not because they were starving but because they wanted to make a statement against what they said was the failure of authorities to crack down on price fixers. "This is a symbolic move - everybody's income is falling but prices just don't," said Constantine Parastatides, a pensioned engineer. According to the EU and the IMF, oligopolies, transport bottlenecks, rigid market rules and inefficient policing are key reasons why prices in Greece are not falling as fast as they should to help restore the country's competitiveness. Under Greece's bailout plan, prices will be more tightly monitored and the competition authority given more teeth.

"There is shameless profiteering in the market. Market police, competition watchdogs, the authorities - nothing works," said Vassilis Anagnostopoulos, a 38-year-old firefighter whose wages have been cut 40 percent. As soon as the Katerini initiative gathered pace, local supermarkets slashed their potato prices by half - to as low as 34 cents per kg, residents said. And now another 10 towns hope to follow suit. The initiative also makes sense for Greek farmers. Normally squeezed by wholesalers, supermarkets and cheap potato imports from Egypt, potato grower Lefteris Kesopoulos found himself doing good business at the parking lot on Saturday. "I've made a bigger profit and I got my money in cash - not in funny checks from some wholesaler that might bounce," the 40-year-old said behind the makeshift desk in front of his truck, from where he was busy signing receipts for customers. "I will definitely do it again." (Reporting by Harry Papachristou; Editing by Alessandra Rizzo)

German tax collectors volunteer for duty in Greece

Sat, Feb 25 2012 By Erik Kirschbaum BERLIN (Reuters) - More than 160 German tax collectors have volunteered for possible assignments in Greece to help the struggling Mediterranean country gather tax more efficiently, the Finance Ministry in Berlin said on Saturday. The offer risks fuelling resentment among Greeks who have already reacted angrily to earlier German calls for the appointment of a "budget commissioner" to monitor the Greek government's management of its finances. German media published news of the possible tax advice mission two days before the German parliament is due to vote on whether to endorse a new 130 billion euro ($175 billion) bailout package for Greece. International lenders say the public debt burden that forced Greece to seek a bailout two years ago has burgeoned partly because many Greeks evade the tax net. The German government says it wants to help Greece develop a modern tax administration and has started recruiting volunteers for Greek duty. More than 160 German tax officials with

English language skills have signed up and about a dozen also speak Greek, a spokesman for the finance ministry said. The respected magazine Wirtschaftswoche quoted finance ministers in two states, North RhineWestphalia (NRW) and Hesse, saying they were ready to send German tax officials to Greece even though it was unclear whether such assistance was wanted. "Greece's problems today are even worse than the problems faced with former East Germany in 1990," said Norbert Walter-Borjans, NRW finance minister, referring to the period after German unity when west German tax officials went to the ex-Communist east of the country to help improve tax collection. "There was resistance then among some eastern Germans against western (tax collectors) but that's nothing compared to the reservations Greeks will have against Germans," he added. German criticism has reopened wounds in Greece dating back to World War Two. Protesters in Athens burned a German flag earlier this month and Greek newspapers have portrayed German Chancellor Angela Merkel in Nazi uniform. "BOTTOMLESS PIT" The Germany finance ministry spokesman said the preparations for a tax advice mission were being made under the auspices of the European Union and International Monetary Fund. He said it was unclear when or if the German civil servants would be deployed. Germans, who are making the largest financial contribution to the euro zone bailout for Greece, are growing increasingly impatient with what Finance Minister Wolfgang Schaeuble described as a "bottomless pit" in Greece. At the same time, there is a growing awareness in Germany, Europe's leading economy, that its own prosperity is at risk as the debt crisis sucks in other countries and stifles demand within the currency bloc for German exports. But a recent flurry of acrimonious exchanges between Athens and Berlin reflect deepening doubts among mainly northern members of the 17-nation euro zone about Greece's ability and willingness to overhaul its economy to satisfy lenders' demands. Schaeuble and other German government leaders have repeatedly offered to help Athens improve tax collection and he has complained the offers have not been accepted. A report by the European Union's task force in November said that Greece has 60 billion euros in unpaid taxes due to tax avoidance and lack of compliance - an amount equal to around 25 percent of Greek gross domestic product (GDP) Last month the Greek government published a list of 4,000 top tax dodgers including a famous singer and basketball star as part of a new policy to get evaders to pay up.

Most of the German tax collection volunteers come from NRW, Germany's most populous state, Wirtschaftswoche said. But Hesse, one of the country's richest states where the financial capital Frankfurt is located, has also recruited many volunteers. "When it comes to helping Greece we should also think about the possibility of re-calling retired German tax collectors who had experience helping (east Germany)," Hesse's finance minister Thomas Schaefer said. ($1 = 0.7428 euros) (Reporting By Erik Kirschbaum; Editing by Ruth Pitchford)

Relief vies with shame on streets of Athens

Tue, Feb 21 2012 By Lefteris Papadimas and Karolina Tagaris ATHENS (Reuters) - Greeks resigned themselves on Tuesday to a 130-billion-euro EU/IMF bailout that won their country a last-minute reprieve from bankruptcy at the price of a decade of austerity and humiliating foreign scrutiny of national finances. Agreements among euro zone ministers during all-night talks in Brussels secured a second rescue package since 2010 in return for a new round of spending cuts that have already cost thousands of jobs and eroded public services. Relief mingled with a sense of shame on the streets of Athens as Greeks who in two months could be choosing a new government digested what the deal means for a country now being treated as the sick patient of the 17-nation currency union. "We are like drug addicts who have just been given their next dose, this is what they've reduced our country to," Ioulia Ioannou, 70, a retired nurse, said of the country's politicians. "I don't know who I will vote for. I'd vote for a new party if someone had the courage to create one," said the life-long voter for the ruling Socialist PASOK party, whose popularity has been hammered by the crisis. "For the first time, I'm embarrassed to say I'm Greek." Fellow pensioner Vasia Angelou, born to Nazi occupation of Greece during World War Two and who saw harsh junta rule during the 1960s and 1970s, said the deal at least averted the risk for now of Greece leaving the euro and even the European Union. "I'm relieved," the retired advertising firm employee said.

"We have lived through worse times in Greece and many people don't realize life would be much harder if we were kicked out of Europe. I have some hope at least my children's lives will be better," she said of two grown-up children studying in Britain. But the Demokratia tabloid that has run computer-generated pictures of Chancellor Angela Merkel in a Nazi uniform splashed the front-page headline: "130 billion in chains." "Salvation under conditions," ran the headline of the centre-left Ta Nea newspaper in a frontpage editorial. Austerity measures have already triggered mass street protests in Athens and street clashes between security forces and masked youths who this month torched dozens of buildings. "A NEW HELL" In a possible foretaste of tensions to come, dozens of fuel station owners and truck drivers blocked roads on Tuesday outside a finance ministry building with banners attacking international lenders to Greece as "thieves and smugglers." The country's two main unions, GSEE and ADEDY, called for protests on Wednesday and leftist parties enjoying a rise in popularity said the price of avoiding default was too high. "The other side of the coin is the disorderly default for the people," Aleka Papariga, head of the communist KKE party, told a news conference. "A new hell awaits them." Lucas Papademos, Greece's technocrat caretaker prime minister, had told lawmakers to back the deeply unpopular international financial rescue or condemn the country to "uncontrolled economic chaos and social explosion." Unemployment has leapt to 20 percent and street crime is up as the Greek economy has shrunk by over 16 percent since a 2008 peak, weighed down by spending cuts, the global downturn and the cost of servicing debt now at 160 percent of national output. The Brussels deal was only secured after private holders of Greek bonds agreed to take deep losses on their investments and after northern states led by EU paymaster Germany demanded, and won, unprecedented rights to inspect Greece's finances. The EU's executive European Commission arm said it would finalize arrangements this week to send in new officials from other European countries to monitor how Athens acts on agreed reforms, including in sensitive areas such as tax evasion. "I am embarrassed as a Greek citizen to have a permanent surveillance committee," said fruit vendor Raptis Michalis. "It is as if we don't have in Greece educated and able people to govern the country," he said, forecasting that Greece would still default on its debt a few months down the line.

A government spokesman said foreign officials would merely offer technical assistance and played down an agreement with lenders to set up an escrow account to ringfence bailout funds for debt repayment. But others were of a different view. "The escrow account suggests the country is not reliable," said George Koumoutsakos, a European Parliament deputy for the New Democracy (ND) conservatives in the ruling coalition. "But I would say that this is not the worst thing. The surveillance mechanism is much more degrading." ATTACK ON SCHAEUBLE In the lead-up to the vote Greece's president accused German Finance Minister Wolfgang Schaeuble of insulting his nation, reflecting growing public resentment of almost daily lectures from Berlin on the dire state of the Greek economy. "I cannot accept Mr Schaeuble insulting my country," said Karolos Papoulias, an 82-year-old veteran of Greece's resistance struggle against the Nazi occupation and who also played a part in the resistance to the junta. "Who is Mr Schaeuble to insult Greece? Who are the Dutch? Who are the Finnish?" he said in a speech earlier this month that captured the depth of feeling about foreign intervention in Greek affairs. Voters' disenchantment with politicians they blame for years of economic mis-management has sent ratings for PASOK and ND -- which have dominated politics since junta rule -- to record lows. A survey by pollster GPO carried out days after parliament's Feb 13 backing for 3.3 billion euros of new austerity measures, showed the two mustering less than a third of votes between them as small left-wing rivals gained ground. But separate poll findings that consistently show most Greeks want to stay in the euro zone, together with laws aimed at ensuring that elections create solid coalitions, could still favor the two big parties in elections slated for April. "Despite what the leftist parties are saying, even now almost 70 percent of the public believes we have to do everything to stay in the euro zone," said Costas Panagopoulos, head of the Alco polling group. "The only solution for a stable government will be this kind of coalition government," he said of a new PASOK-ND alliance, tipping the non-affiliated Papademos to emerge as the consensus choice for a new term. (Additional reporting by Deepa Babington, Matt Robinson, Lila Chotzoglou, George Georgiopoulos, Tatiana Fragou, Daphne Papadopoulou, Angeliki Koutantou and Harry

Papachristou in Athens; Robin Emmott in Brussels; Writing by Mark John, editing by Peter Millership)