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Economic storm hits Greek farmers

Mark Mardell | 06:00 UK time, Thursday, 29 January 2009

BOIOTIA, central Greece

There are no speeding cars, not a single lorry on this stretch of the main Athens-Thessaloniki highway. Instead, in the centre of the four-line highway, there's a group of about 50 men milling around and chatting. They're farmers and their small tractors are neatly parked on both sides of the road.Greek tractor protest

This blockade is now in its tenth day and it's a very well-mannered and relaxed sort of protest at the moment. The farmers are not literally blockading the road, just standing ready to do so, to move their tractors into place. But there's no real need. The police are diverting drivers off the motorway long before.

It's been a different story in other parts of Greece, particularly , where lorries have been queueing for days trying to cross.

I came here expecting to hear a simple demand for more money from the government at a time of economic difficulty, but the picture from the motorway is both more specific and more general. The men are genial and generous with their hospitality, but as we talk their very real anger becomes apparent. Greek farmers debating

On our way to the protest we pass by a large body of water - Lake Iliki. One of the farmers' main complaints is about the lack of irrigation. "We still get our water like they did in the pharaohs' time," says one man. They are also angry about low prices and high production costs. There is surprisingly little talk about the euro, but they are furious that their products are undercut by cheap wheat from Ukraine and potatoes from Egypt.

When I suggest that they want bigger subsidies one man interrupts angrily: "No, no, not more money, no!" It is a surprising intervention. But he continues to tell me, as they all do, that in the past Greek governments have thrown money around when there is a crisis, but don't plan for the future. "We want planning, for the sake of our children." A blockade for structural reform? Perhaps.

Most of them seem to think their problems have little to do with the worldwide financial crisis, but instead blame a series of lacklustre governments.

But Greece is one of those countries rudely nicknamed the "PIGS" economies. Portugal, Ireland, Italy, Greece and Spain have all had their credit ratings cut recently, and this makes borrowing more difficult and foreign investment even less likely.Greek farmers standing on blocked road

A few - and at the moment they are pretty rare - voices are raised to suggest that these economies are suffering from membership of the euro. Some argue that one or more of these currencies could be forced to leave the euro and they might have been in a healthier state if they had never entered the single currency.

While all the economists I have spoken to regard this as nonsense, they do think Greece is in a poor economic state and it will get worse before it gets better.

The European Commission's recent report suggested that, although there would be no recession, growth would be sluggish, driven exclusively by domestic demand. In particular, the pillars of the Greek economy - shipping and tourism - will be "vulnerable".

But the chairman of the government's council of economic advisers, Dr George Sfakianakis, is almost upbeat when I talk to him. He says Greece "is in a relatively better position than almost any other country in Europe.

"The fundamentals of the financial system in Greece are very healthy. We have no risk of any bank failing. Still, in order to safeguard the competitiveness of the Greek financial system we have implemented a rescue plan, because without it there would be a comparison between Greek banks not being protected and banks in Europe being protected. We think this is going to enhance liquidity in the economy.

"It was not a case of saving banks, but it was about ensuring that there is adequate credit in the economy, so that enterprises and households keep their standards."

He admitted that the credit downgrading was a negative verdict from the markets, but suggested that the publication of tomorrow's latest growth and stability forecasts would reassure an international audience.

But what about the euro?

"Despite the competitiveness problem it means there is no question of a devaluation. You see what happened in Hungary and Latvia, where they had to call in the IMF because they did not have the single currency. I do not believe in devaluations - they lead to a vicious circle of inflation and further devaluation. The euro has helped Greece very much."

You can hear my reports on the Greek economy on Radio 4's World at One and ³ÉÈË¿ìÊÖ1's News at Ten today.

But if you live in Greece or any of the other "PIGS", or know those countries, or even if you don't, what do you think?

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