The Body Economic

by Basu, Sanjay, Stuckler, David

  In this situation, there were few options left for Greece’s Health Ministry. Its health budget had been cut by 40 percent. But there was a political alternative—the democratic option. One way to protect citizens even when foreign investors clamor for their money is to follow the path set by Iceland. There the public voted to delay the IceSave debt repayments and pay them back slowly over time, protecting essential budgets like public health, sanitation (the garbage hadn’t been collected in many parts of Athens for weeks), and other essential services.25

  And so, in November 2011, at the time the HIV outbreak became clear, Prime Minister Papandreou tried the Icelandic solution. He announced a referendum on a second round of austerity measures from the IMF and the European Central Bank. It was plainly apparent to the Greek public that the austerity program was not working. In spite of all the budget cuts, government debt continued to rise—to 165 percent of GDP in 2011. But under pressure from the troika and other European political leaders to pay back German and other investors quickly, Papandreou was forced to call the referendum off. While the referendum initially had support from the Greek cabinet, EU leaders voiced their opposition, and the prime minister faced a no-confidence vote in the Greek Parliament. Papandreou was forced to resign. Ironically, just as Europe praised democracy on the southern shore of the Mediterranean, having helped oust Libya’s dictatorial Colonel Muammar Gaddafi, it was blocking democratic voting on the northern shore in Greece, the birthplace of democracy.26

  Unlike Iceland, where the health minister resigned in protest at the IMF’s proposed budget cuts to the health system, the Greek health minister, Loverdos, tried to weather the storm. The challenge was immense. In 2009 alone, the public health budget fell from 24 billion euros to 16 billion euros, and the next bailout was set to cut even more. And that was why the Greek Health Ministry had no spare funds to deal with the emerging HIV and malaria outbreaks.

  At a conference in Athens in March 2012, we presented the Hellenic Centre’s data to the Ministry of Health on the alarming rise of HIV. We called on the government to expand their needle-exchange programs. To our surprise, the ministry’s representatives seemed entirely unconcerned. Their view was that these statistics were just due to North African and Eastern European immigrants who had traveled into Greece with HIV. When we then pointed out that the data showed that the majority of those affected were people of Greek origin, they had no comment.

  In the subsequent weeks, we saw this pretense of ignorance morph into outright denial. When our research on health in Greece was published in The Lancet in March 2012 (after peer-reviewers had found the data analysis appropriately conducted, important, and alarming), Greek health system officials attempted to dismiss it. After we reported that overall suicides had risen by 17 percent, for example, a member of the health minister’s staff wrote that this was a “premature overinterpretation” of the mental health crisis in Greece, even though the data had actually come from the Health Ministry itself. Our findings were then replicated by independent scientists from other universities. Meanwhile, suicide and depression rates continued to rise significantly, as verified by many Greek and international sources.27

  In the week before the May 2012 elections, Minister of Health Loverdos himself responded publicly to concerns about the country’s worsening health problems. But his response seemed to have little to do with the nation’s health and much to do with the election. He resorted to xenophobia and scapegoating, arguing that immigrants were the country’s major problem, a “burden” on the healthcare system. He would clamp down on “welfare fraud,” claiming his plans would save Greek taxpayers 230 million euros.

  Both immigrants and ordinary Greek citizens suffered from the large dose of austerity that followed Loverdos’s remarks. budget cuts in 2009 and 2010 had already eliminated a third of the country’s healthcare services for immigrants. Further cuts from the second bailout in 2012 left the programs crippled. These programs were being overrun by demand: not from the immigrants for whom they had been designed, but from Greeks. The “street clinics” run by the Greek chapter of Médecins du Monde (which normally operates in low-income countries) estimated that the proportion of Greeks seeking medical attention from their clinics rose tenfold from 3 percent before the crisis to 30 percent. And to pick up the pieces of the crumbling Greek healthcare system, another international organization, the Nobel Peace Prize–winning Médecins Sans Frontières (Doctors Without Borders), launched emergency relief programs for the Greeks, even though they normally devote themselves to operating refugee camps in war-torn regions of the world.

  In our eyes, the Greek austerity crisis was undermining the ultimate source of the country’s wealth: its people. But not everyone agreed. In November 2012, the economist Lycourgos Liaropoulos wrote a letter to the editor of the British Medical Journal to report that there was “no tragedy in health” in Greece. He acknowledged that “Many are without cover” and the churches, non-governmental associations, and others are “rallying to help” but claimed that there was “no evidence of denial of services to patients.” But he was ignoring substantial evidence: the continuing results of HIV surveys, the EU Statistics on Income and Living Conditions surveys, the malaria control reports, the suicide data, and, as we found, the data his team reported.28

  Liaropoulos’s letter was published shortly after Dr. Samuel R. Friedman, director of HIV/AIDS research at the National Development and Research Institutes in New York, described the situation in Greece in July 2012 as alarming: “What they [the Greek government] are doing is creating an epicenter for the spread of the virus [HIV] in Greece and beyond.” Liaropoulos’s letter also coincided with the visit of Dr. Marc Sprenger, director of the European Centre for Disease Control and Prevention, who had just ended a two-day trip to Greece’s hospitals and clinics. His conclusions made international headlines. “I have seen places where the financial situation did not allow even for basic requirements like gloves, gowns and alcohol wipes.” Dr. Sprenger’s conclusions were damning: “We already knew Greece is in a very bad situation regarding antibiotic resistant infections, and after visiting hospitals there I’m now really convinced we have reached one minute to midnight in this battle.”29

  When we looked into Liaropoulos’s background, we began to understand why he was defending the indefensible. He was one of the troika’s chief Greek advisers on austerity implementation, receiving numerous large grants from Minister Loverdos in the process. He was also responsible for reporting Greek health data to the Organization for Economic Cooperation and Development (OECD). Ironically, the reports his own subordinates submitted to the OECD came to rather different conclusions than he did: that there had been a 40 percent rise in infant mortality and a 47 percent rise in unmet healthcare needs between 2008 and the latest available year of data in 2010 and 2011, respectively. Liaropoulos’ team was responsible for the reports, but he appeared not to have agreed with the data inside them.

  More official denials came from the Ministry of Health. Following reports that Greeks were having difficulty getting healthcare and giving up necessary doctors’ visits because of long waiting lines, distances to clinics, and excessive treatment costs, the ministry proudly claimed the hospital budget reductions were “a positive result of improvements in financial management efficiency.” In theory, this might have meant that it cost less to treat more people. In practice, it cost less because fewer people were receiving care.30

  People on the front lines knew that austerity was hazardous to health. A mayor of one of the malaria-affected towns, the physician Jannis Gripiotis, responded in frustration at the Ministry of Health’s prevarications. He said ministry officials hid data about the malaria outbreak until independent international authorities observed the spread of disease and reported it. Instead of acting, Greek officials “decided to cover it up,” said Dr. Gripiotis. “They called me crazy.” Doctors Without Borders program director Apostolos Veizis was enraged by the health situation and the failure of the Ministry
of Health to respond: “What do you have to do to ring the alarm bell?”31

  The Health Ministry continued to avoid collecting and publicly disclosing many standard health statistics, so investigative journalists began filling the gaps. They broke stories that drug users were deliberately infecting themselves with HIV to get access to public subsidies of 700 euros per month, that some parents were abandoning their children because they could no longer afford to care for them, and that for the first time in decades there were cases of mother-to-child transmission of HIV, as routine screens for maternal HIV were no longer being conducted on pregnant women.32

  Investigative journalists also exposed another assault on the Greek people’s health, in a move we had encountered with the McArdle family in Scotland. The government was rewriting eligibility rules for disability and welfare support to exclude more and more Greeks—addressing “welfare fraud,” in the words of the health minister. Tucked away in a small note on p. 129 of the July 2011 IMF report was a provision designed to reduce government spending: “The objective is to reduce the disability pensions to not more than 10 percent of the overall number of pensions. For this purpose, the definition of disability and respective rules will be revised by end-August 2011.” Andrew Jack of the Financial Times translated what this revision meant for those in Greece with long-term disabling health conditions. He interviewed a Greek restaurant worker named Mrs. Zoi Gkezerva. Before the crisis, she had received 4,500 euros each month to help treat her daughter’s rare genetic disorder, epidermolysis bullosa. The condition, which leaves a child with extensive skin blistering similar to burns, requires frequent and costly treatments using sterile needles and advanced dressings to prevent wound infections. Mrs. Gkezerva was cut off from any assistance for her daughter’s care under the new welfare and disability “fraud” rules. “We don’t have much time left; we’ve already used up almost all our savings,” Mrs. Gkezerva said. Responding to her case, Dimitrios Synodinos, director of the Greek Alliance for Rare Diseases, noted that “Quite a number of rare disease patients have had their disability percentage reduced so much that they are in very, very difficult situation.”33

  Austerity was wreaking havoc on the health of the Greek people. The city of Athens was trying to cut health spending from 10.6 billion euros in 2009 to 7 billion in 2012—in the middle of an HIV outbreak, a massive increase in homelessness, and a rise in suicide, among other problems. In February 2012, doctors held a one-day strike to protest the massive cuts. George Patoulis, head of the Athens Medical Association, explained that the radical government reforms to the healthcare system created chaos. No one even knew which patients would be covered for which services. Pharmacists went on strike for two days over arrears from social insurance funds, arguing government cuts to social welfare meant that they would close their doors.

  The IMF’s attack on the Greek body economic continued as the Greek government ignored the mounting misery. As collecting and analyzing public health data were clearly not a priority, the troika continued enforcing new austerity policies. In late November 2012, the IMF and its European partners agreed to its third austerity program with Greece—with 2 billion more euros being cut from the nation’s healthcare system.

  With austerity came 28 billion euros in bailouts, yet Greece was still not recovering. Government debt levels continued to rise, reaching more than 160 percent of GDP in 2012. It seemed inconceivable that all that money wasn’t achieving the intended stimulus to the economy or shoring up government debts. The New York Times investigated and found that the IMF and European Central Bank were funneling money through Greece and straight back to the United Kingdom, France, the United States, and Germany, to creditors there who had contributed to Greece’s disastrous bubble. Greece’s bailout was using public funds not to help Greece but to rescue the poorly invested private money of the world’s banking elite.

  As in the crises in East Asia and Iceland, the IMF finally admitted, in 2012, that it had underestimated the harms that austerity could cause. One of the central arguments for austerity was the IMF’s assumption about the fiscal multiplier, the statistic describing how much economic stimulus is produced by each dollar of government spending. The IMF had assumed the multiplier was about 0.5—meaning that bigger budget cuts would help spur economic recovery. But the actual economic data from the austerity program turned out to be far worse than the IMF predicted, and the Fund was forced to admit its calculations had been wrong. In February 2012, the IMF set their chief economists to the task of re-estimating the multipliers. Those economists ended up getting the same results as we did, finding that the fiscal multiplier was greater than 1. In the words of the Fund’s chief economist, “we underestimated the negative effect of austerity on job losses and the economy.” So all this “help” from the financial community was followed by a negative spiral of worsening job losses, less money to spend at businesses, and declining investor confidence throughout Europe—ultimately the foundation for a public health disaster.34

  Not only was austerity a mistake, but the worst possible kind of austerity was implemented. Public money invested in healthcare can be put to good use much more quickly than money invested in many other sectors. Indeed, healthcare is one of the few economic sectors that have been growing amid the economic downturn in Europe and North America. Healthcare investment leads to new jobs (nurses, doctors, technicians) and technological development (laboratory research, innovation), providing a much deeper stimulus to the economy than almost any other kind of government spending.

  Imposing hardship on Greece wasn’t an economic recovery strategy as much as a political strategy. Such a message sent a warning to the rest of Europe, indeed to the world: play by the rules of the banking elite, or else. The German Chancellor, Angela Merkel, talked of the Greek bailout package as a lesson to the rest of Europe. “These countries can see that the path taken by Greece with the IMF is not an easy one. As a result they will do all they can to avoid this themselves.”35

  Greece’s tragedy has shown that austerity will not save a failing economy. Rather than being part of a solution, it is part of the problem.

  There are alternatives to austerity. The most notable is the Icelandic solution. That country said no to radical austerity, increased social spending, and its economy began recovering. Iceland increased its health spending by 20 percent in the middle of the worst banking crisis in history. Ironically, even some German political leaders, though demanding that Greece immediately repay German investors, recognized the economic folly of cutting social welfare budgets. In 2009, Germany had implemented a 50 billion euro stimulus to its economy, totaling 1.5 percent of GDP. At the 2012 World Health Summit in Berlin, the conservative German health minister Daniel Bahr praised the results, arguing that investing in social protection systems was vital to helping a country’s economy grow.36

  Conversely, while Europe was bailing out the banks that drove markets to the worst crash since the Great Depression, it imposed penalties on the Greek citizens who had little control over their government’s accounting frauds or economic strategy. The economist James Galbraith called the treatment of the Greek people a form of “collective punishment.” This level of punishment was unprecedented in Europe. Even Germany after World War II had benefited from large-scale investment as part of the Marshall Plan to reconstruct its broken economy.37

  Unsurprisingly, the Greek people are furious and desperate. One of the most dramatic riots in the country, in October 2012, was sparked by the arrival of Chancellor Merkel. Six thousand police were mobilized for her protection, firing pepper spray and stun grenades at protesters who threw stones, burned Nazi flags, chanted “No to the Fourth Reich!” and hoisted banners reading “Merkel out, Greece is not your colony,” “This is not a European Union, it’s slavery,” and “They’ve turned our lives into hell.” The irony of Germany’s insistence on austerity in Greece even though Germany itself had been “bailed out” by the US and the rest of Europe after World War II was not lost on t
he Greeks.38

  Beyond the economic damage, the harms wrought by austerity policies also destroyed Greece’s social cohesion (a factor vital to Iceland’s health stability). The Greek political scene witnessed a return of radical far-right parties, just as the politics of austerity did in post-Depression Europe. The neo-Nazi Golden Dawn Party stepped in to plug the hole in safety nets left by the troika. On the streets of Athens, they began serving hot meals to the hungry, at least to people who could show a Greek national identity card. Racist attacks have risen, as troops of Golden Dawn members prowl the streets to “purge” immigrants. The purges have now expanded to include gays and lesbians. The circumstances are eerily reminiscent of the Depression-era politics that paved the way for fascism and World War II in Europe. Blaming foreigners for the crisis became so popular that Golden Dawn claimed twenty-one seats in the 300-seat parliament in the May 2012 election.

  Unquestionably, Greeks are not merely the victims of foreign mistakes. Many lived beyond their means, evaded taxes, and cooked their books. But the Greek government’s response to the recession turned a bad economic situation into a public health disaster. Whereas Iceland’s health looks more like that of the US in the New Deal, Greece’s health has begun to resemble that of Russia in the aftermath of Shock Therapy and mass privatization.