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Greece: The Reality of Austerity

11/09/2015 16:05 BST | Updated 08/09/2016 10:12 BST

When the new Greek finance minister, Euclid Tsakalotos, turned up to a make or break euro summit in July without a new bailout proposal, my hopes of flying to Greece the following week seemed unlikely. A hotel notepad scribbled with a few vague bullet points on Greece's latest offer was not enough to convince me that Eurozone leaders would find common ground in time to prevent a Grexit before my flight. Yet, when it transpired that Alexis Tsipras and his government were prepared to offer significant tax increases and pension reforms during all night talks on July 12th, things appeared more promising. Even so, boarding the flight to Kefalonia two days later, I was prepared to find an island in chaos and disarray, drowning in the gloom of severe austerity.

It turns out I needn't have worried. "How's things?" I ask an English expat at a car hire firm who has lived on the island for 20 years. "Same old...nothing changes here. No shortages, shops fully stocked, there's even petrol in your car this year." The full tank really is a first. In Argostoli, the island's capital, it was business as usual. "You see, I told you...nothing's changed," confirmed the waiter at our favourite restaurant, in response to an anxious text message I'd sent a week before our trip. "I'm more optimistic now we have a deal...I think there will be more opportunities for Greeks as a result." Spiros, an American-Greek who owns three major supermarkets across the island, held a similar view: "You know what we're like over here - of course nothing has changed! Whether we deal in Euros, Drachmas or even beans, we will have a good time. Sure, the banks are shut, but no one has any money in them anyway so who cares?" It appears that over the past few months most locals have either transferred their savings to another European account or are hiding their cash under the mattress.

Watching the hustle and bustle of Argostoli, with markets, fisherman and butchers continuously trading, the reality that they are part of an economy in crisis is far from obvious. Nevertheless, some locals are feeling the strain. Nikos, a young barman who lives half the year in Kefalonia and half in Athens, is ready to leave. "It's game over here, and it's only going to get worse. No one I know is staying in Greece, they're all leaving; to England, Germany, Norway..." He is set on coming to London in pursuit of work, stressing that no one can live on €2.30 an hour. Despite claiming to be a party resolutely against austerity, Syriza has failed to meet the promise that largely sealed their election, a fact that has tainted Tsipras's image. "This crisis is not our fault!" cries Jerry, a local restaurateur. "Tsipras took advantage of the situation. We now have a bailout deal that is harsher than the one Greece voted on - it's absurd. Tsipras only held the referendum to secure his position, not for the good of Greece."

The deal agreed by Eurozone leaders was partly clinched after Tsipras gave in to pressure on increased tax and pension reforms, both of which will in time damage families across the country. "I used to get €600 a month," says Makis, a retired fireman. "Half of that went to my ex-wife, leaving me with only €300 to get by on, which is now going to be cut even further." This reality, coupled with tax rises, makes one wonder how the poorest can possibly survive. Many foods across Greece have been raised to 23% VAT, which locals will have to account for. Within a few days of my visit, menu prices unsurprisingly changed. "VAT went up yesterday," acknowledges another restaurateur. "We had to decide, should we pay the excess ourselves, or raise our prices?" The choice was obvious.

Although Greece is now in the grip of a far more punishing bailout programme than the country has ever experienced before, the optimism that epitomises the Greek spirit never appears to fade. They are a people who stick together through times of need, who see the light in the darkest of days and who will inevitably find a way to cope with the reality of life under austerity. It could be argued that Greece should never have been allowed to join the Euro given the fragility of their economy, but now in, most Greeks are desperate to stay. Faced with the choice of dealing in Drachmas or Euros, the latter is understandably their preferred currency. However, many Greeks feel betrayed by the tactics played by Tsipras and his European counterparts in their quest for a new bailout deal. He was a prime minster intent of abolishing austerity, yet the alternative looked far more damaging than even he could risk creating.