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Europe’s troubled south

Nikos Strovlos has worked for the National Statistics Service of Greece — as the head of the service’s accountancy office — for 21 years. He has seen some turbulent times, not least when desperate colleagues allegedly “cooked the books” that were used to parlay Greece into the eurozone in 2001.

world Updated: Feb 18, 2010 00:12 IST

Problems

Nikos Strovlos has worked for the National Statistics Service of Greece — as the head of the service’s accountancy office — for 21 years. He has seen some turbulent times, not least when desperate colleagues allegedly “cooked the books” that were used to parlay Greece into the eurozone in 2001.

Last week, as the chaotic state of Greek accounts and accounting became clear, and Europe’s single currency endured its first serious crisis as a result, the sound of disapprobation from Berlin and Brussels became deafening. But Strovlos is not about to apologise on behalf of the Greek government’s number-crunchers.

“I have worked here for a very long time,” he said last week as he left his office after yet another torrid day for the economy. “I have seen governments come and go and I can tell you that the service is the mirror image of the problematic Greek state. We’re very disappointed by what has happened but we’re not the ones to blame ...”

No one is trying to spin the figures now. Not in Greece, where savage cuts have been ordered by Brussels in order to reduce a budget deficit now standing at 12.7 per cent, more than four times the official euro limit; and not in the country’s southern European counterparts, where the fear of a domino effect stalks the indebted governments of Madrid, Rome and Lisbon.

Entry to the eurozone for Greece was seen as a national victory. “For Greeks this was a completely new experience,” says Stefanos Manos, a former national economy minister. “For the first time in their history they had a currency that was as good as anyone’s: it was stable and interest rates were very low.”

“After joining the euro they changed behaviourally. People who had always kept their money in the bank started spending and borrowing, putting refrigerators, cars, everything on credit cards,” the former minister told the Observer. “And the state did the same without ever thinking how the hell it was going to pay the money back.”

The economy might have improved with fiscal adjustments but a conservative government, newly installed in power in 2004, preferred the old, often corrupt, ways to reform and, pursuing the age-old tradition of jobs for votes, took state profligacy to new heights. During five years of centre-right rule, an estimated 75,000 new civil servants were recruited to an already huge public sector. But as Europe-wide growth continued and the euro thrived, the rotten core to Greece’s finances was easily masked.

Spain: Spain’s unemployment rate has hit 19.5 per cent — twice the EU average. There are now four million people out of work. More than a million homes have no breadwinner.

Spain is also the only major world economy still in recession, having suffered seven continuous quarters of negative growth. Even the government sees the economy shrinking further this year. Across the country, ordinary Spaniards are struggling to adjust.

When Spain’s housing bubble burst two years ago just as the global credit crisis hit, Montoya and many of his co-workers were sacked and now, at 24, he has a mortgage, a three-year-old child and no job prospects.