Amid the eco­nomic crisis plaguing Europe, the prime min­is­ters of Greece (George Papan­dreou) and Italy (Silvio Berlus­coni) resigned last week. They have since been replaced with the appoint­ments of Lucas Papademos in Greece and Mario Monti in Italy — men with back­grounds in banking and eco­nomics. We asked North­eastern Uni­ver­sity com­mu­ni­ca­tions studies pro­fessor Richard Katula, an expert on Greek cul­ture and Euro­pean affairs, to ana­lyze the eco­nomic and polit­ical tur­moil in Greece and Italy and its impact on the Euro­pean Union. 

What has caused the drastic eco­nomic and polit­ical insta­bility that Greece and Italy are experiencing? 

There are sev­eral fac­tors at play here. First, Greece has dealt with issues involving cor­rup­tion. In March, Kath­merini, the country’s leading news­paper, even cited a study from the Athens Uni­ver­sity of Eco­nomics and Busi­ness that found one-​​third of Greeks polled said cor­rup­tion is the country’s worst problem. Greece also has few finan­cial reg­u­la­tions gov­erning gifts to polit­ical cam­paigns, so it’s dif­fi­cult for an ordi­nary person to run for office because those in office are so well financed by cor­po­ra­tions. Most people work for the gov­ern­ment, which has become so pow­erful that no one dares to chal­lenge it. This com­bi­na­tion has led many Greeks to turn their backs on the cor­rup­tion and gov­ern­ment itself.

Greece, which also has an aging pop­u­la­tion, has no social secu­rity system and a paucity of pri­vate pen­sion funds, so the majority of Greeks rely entirely on a government-​​run pen­sion pro­gram when they retire.

In terms of external dynamics, Greece and Italy are mem­bers of the Euro­pean Union. These coun­tries have not estab­lished sys­tems for sharing their wealth and their prob­lems through the redis­tri­b­u­tion of money from the richer states to the poorer. And Greece and Italy were cooking the books, making it look like their GDPs were close to the Euro­zone stan­dard. When it came to light that Greece and Italy were fudging their num­bers, it was too late.

In the wake of the res­ig­na­tions of Papan­dreou and Berlus­coni, will Greece and Italy’s new lead­er­ship help to relieve eco­nomic and polit­ical turmoil?  

The short answer is no. There is no escaping the eco­nomic real­i­ties of these coun­tries. Greece, for instance, has a total debt of more than €340 bil­lion ($485 bil­lion). And the bailout only covers their expenses not their debt. So, this is a tem­po­rary eco­nomic fix. The Euro­zone has simply “kicked the can down the road” as they say. Only a return to the drachma and the lira will help. It won’t pay the bills, and Greece and Italy will have to default, but it will pave the way for a future of an economy the inter­na­tional com­mu­nity and investor can trust. Polit­i­cally, Greece is just rear­ranging the deck chairs on the Titanic.

Going for­ward, what effects will these eco­nomic and polit­ical devel­op­ments have on the Euro­pean Union on the whole?     

The future looks bleak for the Greek and the Italian people. I have retired friends in Greece who will have to make car and mort­gage pay­ments while facing a 40 per­cent cut in their pen­sions. Remember, the gov­ern­ment pen­sion is the only source of sup­port for these retirees. Stores will close, people will live very fru­gally and life in gen­eral will become a dull, painful slog from day to day. Young people will post­pone edu­ca­tion, mar­riage and buying a house, and retirees will be out looking for work if there is any. The best and brightest will leave Greece. The Chi­nese and Ger­mans will buy or lease huge tracts of land. A whole way of life is about to change.