How the 2004 Olympics Triggered Greece's Decline

The cost of the games helped push Greece into a fiscal black hole
Athens: Aug. 13, 2004 Philippe Desmazes/AFP/Getty Images

As they watch the London Olympics, many Greeks may wonder how their country went from the international glory of the Athens Games in 2004 to the recriminations of today’s crisis. Hosting the event cost almost €9 billion ($11 billion at today’s exchange rate), making the 2004 Games the most expensive ever at that point. Greek taxpayers were on the hook for €7 billion, which did not include the cost of extra projects such as a new airport and metro system.

Within days of the closing ceremony, Greece warned the euro area that its public debt and deficit figures would be worse than expected. The 2004 deficit came in at 6.1 percent of gross domestic product, more than double the euro-zone limit, while debt reached 110.6 percent of gross domestic product, the highest in the European Union. (Today, Greece’s debt is 165.3 percent of GDP.) Greece became the first EU country to be placed under fiscal monitoring by the European Commission, in 2005.

With public debt totaling €168 billion in 2004, it’s clear that the Olympics alone did not bring about an economic collapse. Yet the Athens Games epitomized the structural problems that bedeviled the country for decades. It’s not just a question of how much money was spent on the Olympics, it’s also how it was spent and where it came from. After a period of austerity to tighten up its finances and qualify for euro entry in 2001, the Greek government loosened the purse strings once it entered the single currency. The games were just one of several areas where public spending was unchecked and funded by unsustainable borrowing.

Although hundreds of thousands of visitors came to Greece in 2004 to be a part of the games’ return to their birthplace, in the following years Greece’s share of the tourism pie grew smaller as visitors opted for other countries, such as Croatia and Turkey, which benefited from lower prices and better marketing. Many of the stadiums and facilities built at such huge cost fell into disuse. In southern Athens, a 2 kilometer seafront promenade linking three stadiums used for the games has become a dumping ground for rubble and trash. The government is renewing its efforts to sell one nearby Olympic site—the 620-hectare area at Hellenikon—after failing to develop it profitably.

“For Greece, hosting the games meant investing in infrastructure, people skills, and branding,” says Stratos Safioleas, who was head for international media for Greece’s Olympic Committee and has worked as a consultant for bid cities since 2004. “Unfortunately two consecutive governments refused steadfastly to capitalize on Greece’s Olympic legacy.”

During the Athens Games, one volunteer welcomed visitors to the Olympic Stadium with a loudspeaker announcement that urged them to “Enjoy yourselves. When will we ever see days like these again?” Mired in economic depression, distrusted by European partners, their future in the euro hanging by a thread, Greeks can only dream of beating the odds once more.

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