A Farewell to the Aegean: The EU, the IMF and the Destruction of an Ancient Sea

Much of the debate around the economic, political and societal crisis gripping Greece has overlooked the role of the European Union in fueling the crisis. Quite apart from the distortionary effects on the competitiveness of peripheral states precipitated by the introduction of the Euro and the subsequent lack of adequate oversight, it was misplaced EU subsidies that resulted in a lack of competitiveness in many sectors of the Greek economy, and misplaced EU subsidies that allowed the dramatic growth of the Greek public sector following the election of Andreas Papandreou as Prime Minister in 1981.

One glaring example of the consequences of such subsidies is the more than twenty year old and on-going dispute on the diversion of the Acheloos river from western Greece to Thessaly, an issue that is currently being adjudicated in the European Court of Justice in Luxembourg. Greek environmental NGOs fighting the case claim that the projected diversion, which has already cost millions of Euros, is being carried out without proper environmental feasibility studies, and thus contravenes an EU directive that forbids the transfer of water between riverbeds without proper analysis. As Oliver A. Houck reports in his recent book Taking Back Eden (Island Press, 2010), the total cost of the diversion and related projects has been estimated at anything between 1.4 and 6.5 billion Euros, depending on what exactly is included in the calculation.

The EU has not provided financial support for the diversion of the river itself, but, as part of the Common Agricultural Policy, it long subsidized the highly water-intensive production of cotton in the Thessalian plain. Artesian wells and other water sources are now running dry, but rather than funding the shift to alternative forms of agricultural production, the Greek government insists the diversion must proceed. The main beneficiaries will not be the farmers of Thessaly, as EU cotton subsidies are now being reduced. Rather, it is the members of parliament of Thessaly and the parties they serve that stand to profit; they are seen as mediating to procure EU patronage. Most of all, of course, the benefits accrue to construction companies that in turn provide much of the funding that oils the Greek political system. Many similar examples could be given.

For the reasons set out by Dionyssis G. Dimitrakopoulos ( external pageGreece's exit from the Eurozone a poisoned chalicecall_made, Open Democracy, 28 June 2011), the Greek Parliament may have been justified in voting through the second Memorandum as requested by the EU and the IMF. As George Provopoulos, governor of the Bank of Greece put it, this was a “suicide vote”. But this coerced vote leaves more questions unanswered than answered. To meet the demands of the EU and the IMF, Greece is supposed to raise 50 billion Euros from privatization proceeds. As a report in the Financial Times (based on research by Privatization Barometer) makes clear ( external pageGreece faces ‘fire sale’ shortfallcall_made, 28 June 2011), Greece has only 13 billion Euros of assets ready to be sold. The shortfall has to be covered through the sale of state land; in particular Greece needs to add “more prime land and cultural heritage to its sales list”. In other words, the EU and the IMF are requesting the sale of coastal land on a unprecedented scale throughout the Aegean. These will be fire sales at a tiny proportion of the actual value of the properties concerned. They will be used to reduce the rate of increase of Greece’s debt as a percentage of GDP. Once sold and constructed, the nature of the Aegean will change for ever.

How will such a policy help Greece? In the very short term, it keeps Greece going for another day. The IMF will provide the next 12 million Euros in loans and a disorderly default in July will not occur. In the medium term, however, the benefits of the policy are ambivalent at best. Construction may provide a boost to the economy, but – as the case of Spain with seven hundred thousand unsold second homes reveals – there is no guarantee that the demand for such second homes exists. What’s more, there’s no need to comment on the impact of such construction on water use in a part of the world that is already suffering the effects of climate change.

Precisely because widespread environmental destruction and construction on “prime land and cultural heritage” sites was one of the policies that characterized the Junta (1967-1974), the twenty fourth article of the constitution of the newly democratic Greek state protects the environment. Though widespread illegal construction has taken place due to the lack of a proper land registry (and external pageTransparency International Greececall_made has proposed ways of resolving the issue), one of the results of this constitution is that Greece today can attract high quality tourism to its islands (unlike its cities, where destruction of architectural heritage has been much more widespread). Indeed, it is remarkable that despite paralysis in Athens, the Aegean regions of Greece have not so far been affected. Instead of traveling through Athens, visitors land directly in Crete, Rhodes and other islands, hence ensuring that this sector of the Greek economy is growing (the external pageincrease in tourist arrivalscall_made has been estimated at up to 10% for 2011). Thus construction won’t make the Greek economy more productive. In fact, it will have the opposite effect. By destroying Greece’s environment, it eliminates one of the few sources of productivity that Greece has so far relied on to attract high end tourism. Rather than reform the Greek state for good, EU and IMF policies seem to be intent on undermining even those sectors of the Greek economy that do in fact work.

Various attempts could and probably will be made to by-pass the obstacle posed by the Greek constitution: short of rewriting the constitution itself, the land could be leased rather than sold; however, if the rule of law is upheld, these will in due (delayed) course be shot down in the Council of State, the country’s highest administrative court. It’s not inconceivable that the rule of law won’t be upheld; pressures on the Greek state and on the judges involved in any decision will be enormous. It’s reassuring to see that Greek NGOs and civil society (for example the external pageSustainable Aegeancall_made program) are already gearing up for the battle against this attempt by the EU and the IMF to undermine alike the rule of law, and the Greek, or, perhaps, more accurately, the European environment.

In short, EU and IMF policies on the sale and construction of the Aegean constitute a form of colonialism: primary resources (in this case land) are being extracted for the benefit of foreign interests served by a highly corrupt class of state servitors. Stephanos Manos, Greece's former Minister of Economics, well respected in business circles and leader of the neo-liberal party Drasi, has issued a external pagestatementcall_madecondemning the policy as “a return to the urban planning of the Junta”. Instead of solving the problems of a corrupt Greek state, EU and IMF policies are now made to purpose for the construction sector and its acolytes – in other words, benefiting those sectors that are most responsible for the political and economic crisis faced by Greeks today.

The irony is that the Prime Minister, George Papandreou, whatever his other faults, has thus far stood out for his commitment to the environment, creating a Ministry of the Environment, and promoting known environmental activists within his party, at some cost to his political standing (Anthony Barnett and Mary Kaldor, external pageCan Greece Lead the Way?call_made, Open Democracy, 9 November 2009). He is now being forced by the EU and the IMF to take responsibility for the worst man-made environmental destruction in the history of the Aegean.

The government may have been right to vote through the second Memorandum. It now has a duty to future Greeks, and indeed to humanity, to ensure that the provisions of the second Memorandum with regard to sale of state land to construction companies are not carried out. Rather it should delay land privatization as long as possible, redouble efforts to achieve a primary surplus within 2012, and then plan for Greece to default of its own accord. The peoples of Europe deserve no less.