The spatial impacts of the bailout deals forced on Greece have yet to be fully assessed. However, the early indications are that they will have negative impacts on small and medium sized enterprises which are so important in small towns and rural regions, and also on local food networks.
One of the requirements of the bailout saga which has not received much coverge in the main media concerns milk. Amidst all the controversy over the Greek referendum, and the subsequent enforcement of a further dose of austerity, there has been little reporting that the so-called “troika” acting for the banks, is concerned about milk, but they are. Indeed there seems to have been no comment at all on how the troika’s actions will impact on local food networks and food miles, or on regional development in general.
When is milk “fresh”?
In Greece, milk has been produced locally and delivered quickly to the consumers. It’s the kind of spatial relationship that embodies the long-standing EU aspiration for urban-rural relations that can deliver economic benefits by supporting rural employment, while also reducing travel distances and transport emissions. This idea of a win-win urban-rural and economic-environment outcome through spatial planning was central to the once-hailed European Spatial Development Perspective, and has been echoed through the two subsequent Territorial Agendas for the EU. You might even call it “sustainable development”.
The ability of a member state to decide how fresh it wants its milk to be might also be seen as part of “subsidarity”, another key aspect of EU orthodoxy on territorial governance that seems to have drifted out of fashion. In 2014, the troika began to tell the Geeeks how they should describe their milk! The Greeks were told to stop calling their fresh milk “fresh”, and to extend the permitted shelf-life of milk beyond five days. Why? So that there can be fair competition between the local producers and the big milk producers in the Netherlands and other far-away member states. So is milk fresh when it has come yesterday from a local producer, or when it has travelled half-way across Europe?
Yogurt, bread and spatial development
Similarly, demands have been made for changes to Greek Yogurt. Instead of being made from fresh milk, the demand is that use of powdered milk be permitted. There have also been demands for the Greeks to redefine what a “bakery” is and to remove restrictions on the way that bread is sold. Again it is not too difficult to discern the large, international commercial interests behind these enforced changes.
This enforced opening up of Greece’s food economy to international competition seems sure to have spatial impacts. At the city-region scale it seems likely to reduce urban-rural synergies through breaking the supplier-consumer chain. As Greek agriculture feels the pressures of competition, there will be fewer jobs on the land and less incentive for those in working age groups to remain in declining rural regions. With austerity enduring, they should move to London, Paris or Munich if they want to get on. At pan-European scale it is also likely to mean that producers based in the north of the continent boost their share of the Greek market, widening the north-south divide in terms of jobs and GDP per capita.
Tax changes and SMEs
The way the bailout will affect SMEs is concisely explained by Joseph Stiglitz in an article in the New York Times this weekend, where I also found the story about “fresh milk”:
“In an economy where the financial system is not functioning well, where small- and medium-size enterprises can’t get access to credit, the troika is demanding that Greek firms, including mom and pop stores, pay all of their taxes ahead of time, at the beginning of the year, before they have earned it, before they even know what their income is going to be. The requirement is intended to reduce tax evasion, but in the circumstances in which Greece finds itself, it destroys small business and increases resentment of both the government and the troika.”
What Stiglitz does not go on to say, but what we know from European research through the ESPON programme, is that SMEs tend to be a more significant part of the economy in rural regions and small and medium-sized towns than they are in the big cities. Thus again there is a case for inferring that the austerity programme, which now extends into the almost infinite future for Greece, will hit these kinds of places particularly hard. Similarly, it is easy to see that the removal of VAT subsidies for remote islands will deflate their fragile economies, and prompt out-migration.
This is the third blog I have written about Greece in recent weeks and I make no apologies for that. What is happening there is important to spatial planners for a number of reasons. First, as I argued in the first of this trilogy of blogs, the treatment of Greece undermines the principles of territorial cohesion. It’s not just a matter of solidarity. As the examples of “fresh milk” and yogurt show, the idea that regional diversity can be a strength is now replaced by the requirement that large companies should be able to ensure that their products dominate every supermarket from Porto to Tallinn.
Greece also matters as it is the “extreme case”. This is not to deny that there are some distinctively Greek aspects to the protracted crisis, as I argued in my second blog, or that in the end, notwthstanding the “fresh milk”example, each country and each region is unique.
However, the determination with which the bailout has been forced upon Greece and the disregard for territorial impacts, shows in a pure form the spatial future that financiers and their political acolytes hold (maybe unwittingly) for the European territory. It is a landscape of networked high intensity urban nodes based upon financial services that will be sustained by taxpayers both in terms of key infrastructue, and also through rescues when the next banking crisis comes. These urban areas provide huge and lucrative potential markets, not least in infrastrucuture and services, as well as public assets that can be privatised.
Elsewhere, in places where markets are dwindling and delivery costs per capita are higher, there will be disinvestment by both the public and the private sector, outmigration and demographic ageing. They will be useful places to park the less productive members of the European family, those unable to meet the market cost of land and property in the core cities. Territorial cohesion in this scenario means the removal of local barriers to global producers, and the replacement of local networks and “strength in diversity” by a common European economic space.
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