THE decision of the Greek Prime Minister, George Papandreou, to hold a referendum on the latest austerity package has met with some understandable concern, but also with a lot of ill informed comments about Greece and some frankly racist Greek stereotypes being trotted out ("Greek PM reignites euro fear", The Herald, November 2).

We are told by certain parties that Greece is in this situation because of extravagant public spending, early retirement and long holidays. This is simply not true. Public spending as a percentage of GDP in Greece is about the same as Germany and lower than Britain and France. When one takes into account the much higher amount of public spending that goes on servicing the debt, the Greek government spends much less on public services as a proportion of GDP, never mind per capita, than those who criticise it.

Similarly the notion that Greeks retire far too early and take too many holidays is also not true. While many civil servants given sinecure positions as a result of political patronage have enjoyed this, the average Greek worker does not. A study a couple of months ago showed that Greeks on average work longer hours and retire later than Germans. That kind of fact is not likely to be featured in German tabloids, but it does not make it any less true.

So what has caused Greece’s difficulties? In short the neo-liberal policies that are being forced upon it as a supposed solution. The Greek government bought into the notion that lower taxes will encourage growth and led to greater revenue in the long run and subsequently cut taxes and made little effort to crack down on tax evasion. In the short run it thought it could plug the gap with revenue from privatisation. This did not work and it cannot sell those assets again and no longer has the revenue from the profits they generated.

So to force more neo-liberal policies upon Greece as a condition of the bailout is absurd. The last bailout failed because the austerity measures caused deep recession that caused tax revenue to fall further. To force even greater austerity will compound the problem and make default certain. If Greece accepts the bail-out it will default anyway so it might as well do so now before it is in an even weaker position. The harsh nature of the bail-out was made clear by the Irish Finance Minister Michael Noonan, when he said he would never accept such a deal in return for a write-down of Irish debt and explicitly stated that Greece got a bad deal. If the eurozone wants to prevent a Greek default, its first priority must be to grow the Greek economy, and increase the tax revenue from it. Crippling the economy will only end one way.

Iain Paterson,

6 Methven Avenue, Bearsden.

THE Greek Premier’s shameful announcement of a referendum is just the latest in a series of signs that the deal cobbled together by President Sarkozy and Chancellor Merkel was far from watertight.

The fact that last week President Sarkozy went cap-in-hand to Brazil and China to ask that they finance a “feeder-fund” to pump yet more cash into the £870 billion bailout package exposes the inherent weakness of the entire scheme.

Brazil rejected the proposition even before the ink was dry on the eurozone leaders’ declaration.

China may yet accept, but only in return for an end to the current EU arms embargo. No doubt the French President would be more than happy to oblige, as long as French arms companies benefit from fat contracts. Never mind that such a deal would destabilise the Far East and un-nerve China’s neighbours like Taiwan, Japan and Vietnam.

So far, the eurozone bailout saga has demonstrated little more than a general reluctance on the part of EU leaders to show responsible and decisive leadership in the face of an unprecedented crisis. From Mr Papandreou’s bizarre abrogation of fiscal responsibility for the future of a deal supposed to bail out the spendthrift people of Greece, to Mr Sarkozy’s willingness to beggar Europe’s financial future for a dubious future controlled by Beijing, Eurozone leaders are showing again and again that they lack the will to behave responsibly in a way that will wrap up the mess they’ve made. So, even if the Greeks get their act together and somehow agree to approve the latest bail-out, we can safely predict that Portugal, Italy, Ireland, Greece and Spain will be queuing up behind them for lavish debt haircuts, so that they too can escape from the consequences of their own profligacy.

Struan Stevenson,

Conservative Euro MP for Scotland,

The European Parliament, Rue Wiertz,

Brussels.