The Prodigal Greek

The Greek crisis through a different prism

Drinking from the bitter cup

with 5 comments

Out of all the visits to my homeland during the crisis, the trip at the end of summer of 2011 was the one that gave me the sense that Greece’s social fabric was close to tearing point. In June of that summer, the protests of thousands of Greeks outside Parliament were met with extensive repression and police brutality. The scenes of clouds of tear gas remained in people’s minds and the distinctive smell lingered for those who participated in the protests. It was evident that Papandreou’s government had lost all contact with society.

In early September of that year, the disagreement over how to rectify the fact that the deficit had deviated from set targets led to the hasty departure of the troika, Greece was entering a long period of uncertainty and that summer was the most tumultuous period of the crisis in social terms.

My next visit was at Easter last year, when the country was heading for national elections on May 6 and the mood had undoubtedly changed. The anticipation of elections gave the people the sense that they would have the ultimate democratic right to express their views on the policies the country was obliged to follow. And express themselves they did: Greece’s two traditionally dominant parties, PASOK and New Democracy, only managed to collect a combined 32% of the vote (compared to 77% in 2009), with New Democracy getting the first spot with under 19%. A new party emerged as a political force in Greece: Leftist SYRIZA went from 4.6% to just 2% less than New Democracy.

The mood during my trip last summer is captured in this post. The coalition government led by Samaras was in the middle of negotiations with the troika, which concluded in December, and it had become apparent that a heavily frontloaded austerity package was in the works.

If I were to choose one word to encapsulate what I take back from my recent visit during Easter, it would be resignation. Greeks are on the receiving end of another austerity package as heavy as in previous years. It is worth 9.5 billion euros – 4.8 billion of which is coming again from pensions and 1.1 billion from the public sector wage bill – unemployment has reached 27%, over 800,000 Greeks have now been unemployed for over twelve months having lost eligibility for benefits and medical coverage and 400,000 families across the country do not have a single economically active member in employment. In spite of this, Greek society is showing remarkable levels of tolerance. There are hardly any protests on the streets and those that do take place do not have the levels of participation of 2011. The social fabric has not torn.

What makes the level of social cohesion even more notable is the fact that society remains disengaged from Samaras’ coalition government. It is clear to every single person I have spoken to, from a large and varied sample, that Samaras is not following the same austerity policies he raged against as an opposition leader because of some kind of enlightenment, but as the result of a calculated political ploy to get him into office.

The mood is no different when it comes to the overall perception of the coalition government and the respective parties pre-election declarations of “renegotiation” of the memorandum with the troika. The three partners have hardly managed to meet any of the pledges in the policy framework agreed amongst them. The government was obliged to even continue levying through electricity bills the much-loathed property levy, a decision that has the blessing of Finance Minister Yannis Stournaras as the tax collection system is deemed too unreliable.

This inexplicable social cohesion has nothing to do with the bailout tranches that have flowed into the country since December last year, the government’s efforts to court positive publicity, the reassurances that growth will return towards the end of the year, the projections that Greece will return to the markets in the spring of next year, credit rating agency upgrades, the Greek 10-year yield falling below 9% or the primary surplus reported in the budget execution. For the majority of Greeks all this is a parallel universe that has nothing to do with their daily struggle to make ends meet.

Most evident is the overarching perception that no credible alternative has been presented so far. SYRIZA is struggling to find its identity as a mainstream party and a true candidate to lead the country in the future. The legacy of its past and the number of its politically diverse factions, means it has not managed on a number of occasions to articulate a coherent position, which gives the impression that it spends as much effort on finding its own internal balance as it does on forming a credible alternative to exiting the crisis. The polyphony on the party’s stance on the memorandum and Greece’s euro membership is exactly the weak spot that the government makes sure it exposes with every opportunity. Furthermore, it does not help that on a number of structural reforms SYRIZA seems to maintain the same rhetoric that it had when it was a party at the periphery of the political spectrum, with a flavour of the radical left.

This is reflected in the fact that SYRIZA has not managed to capitalise on the challenges that the coalition is facing and as much as it alternates with Samaras’ New Democracy for the top spot in opinion polls, it does not seem to be able to build any momentum nor change the overall perception that Greece would be in a worse position with a leftist government.

At the moment, Greece finds itself with a coalition government where all three participants are aware that no matter how unhappy the marriage might be at times, the alternative is disastrous for each and every one of them. A political survival instinct has taken hold and they seem to be putting aside differences to reach the common ground the troika requires. The main opposition, meanwhile, would in private admit to needing more time to find its identity, perhaps after its July conference when many of its internal differences are due to be settled. However most importantly, a society short of alternatives is showing impressive signs of tolerance and seems determined to stoically drink from the bitter cup down to the last drop.

The only factor that would upset this sensitive balance is the troika itself. If Greece’s lenders realise there is no room for further spending cuts and do not come to Athens for the autumn review with the intention of asking for an additional 4 billion [Corrected from 8 billion after clarification from Commission spokesman] euros in savings for 2015-16, as the European Commission report this week suggested would be needed, there is a possibility that Greece could see a period of relative stability for the remainder of the year.

The key is what the coalition and the troika will use this period for. They have the opportunity to accept shortcomings and apply changes in certain areas where it is evident that the policy has failed. VAT in catering is one of those measures that turned out to be a complete failure, as from the anticipated 1 billion of incremental revenue expected for 2012, it brought in a mere 160 million and only contributed to the closure of hundreds of restaurants and tavernas, leaving thousands of people out of jobs. The increased consumption tax on heating oil is another disastrous measure that needs to be dropped, as it only contributed to Athens experiencing its own Great Smog and thousands of households being deprived of the basic necessity of heating last winter.

These are little moves that could bring not only a major shift in the overall mood in Greece and send a signal that at last common sense prevails when it comes to the design of the policy mix, but will also make a significant difference to the wallets and standard of living of the people. They also need to look in every nook and cranny to find sources of funds to address the menacing unemployment problem as seasonal jobs will disappear again from October.

The admirable tolerance levels of Greek society should not be misjudged or miscalculated either by the government or the troika. On occasion, even in the absence of alternatives, tolerance reaches its thresholds and should not be tested any further, especially when those under the cosh have very little or nothing to lose.

@YiannisMouzakis

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Written by Yiannis Mouzakis

May 15, 2013 at 8:55 pm

5 Responses

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  1. “The admirable tolerance levels of Greek society should not be misjudged or miscalculated….”

    Three points to add to that:

    First, this is not so much ‘tolerance’ (and certainly little support) so much as ‘biding its time’ until breaking-point. One outstanding reason for this is that the means to protest have all but disappeared under a coercive clamp-down on the population. The demonstrations of 2010-11 brought all segments of greek society on the streets. The demonstrations of 2012-13 have mostly been public sector unions and private victims of PSI, who were dealt with comparatively tolerantly by the government. A frightened government’s misuse of the police against the population from 2010 onward has meant that, increasingly, any form of demonstration was dealt with by tear gas, water cannon and unwarranted, indiscriminate use of truncheons against even non-violent protesters, including the elderly. (This despite the right to demonstrations being protected by the constitution.) The tear-gassing of 90 year old Manolis Glezos 40cm from his face was left unpunished by a tone-deaf government. So that’s all right then….

    Therefore – and this is crucial – there is almost no means for the majority law-abiding public to make itself heard except through media & blogs.

    Secondly, violence and the threat of violence has increased in Greece to the point that it comprises a new normal. On the one hand an over-use of the police against the population; undealt-with police abuses of which there are too many examples; the appointment of Academi to protect the government (it appears) from the police/ On the other hand, the activities of Golden Dawn, and the tolerance for GD violence by the coalition and police…to the point of allowing GD to set the agenda on treatment of migrants. Violence and coercion have become a fact of daily life. People think twice before reporting incidents to the police, and have ceased to see them as protectors.

    Set against this, the recent stand taken by the Athens Mayor against GD at Easter was a wonderful surprise and a reminder of a more decent time.

    Third, during the course of this government the population has had their worst fears confirmed by the present (old) coalition. While forcing the poor, the middle-class and the private sector to carry the 90% burden of debt repayment, with apparent shameless indifference to the consequences – against the objections of even the IMF – the coalition continues to obfuscate and abuse its power to cover up ‘elite’ financial crime and tax evasion; to reward their patrons; to appoint colleagues to well-paid posts regardless of fitness; to protect the cartels and reward illegal behaviour (Aegean Oil etc)….if we had any doubts before concerning their intentions, ie corruption and immorality, there are at least – and perhaps this is a blessing – absolutely none now.

    Finally, and most important, neither right nor left show ANY understanding that the future wealth of Greece depends 100% on its private sector. NOT oligarchs, but the totality of small businesses, SMEs, that make up a healthy capitalist economy.

    Eleni Gigantes

    May 16, 2013 at 9:17 am

    • No country’s future wealth depends 100% on their private sectors. The most performing economies are mixed economies with the government providing strong regulatory oversight, guaranteeing the provision of public goods, promoting social welfare, incentivizing activities in priority areas, and regulating fiscal and monetary policies.

      Another_Greekboy

      May 16, 2013 at 4:09 pm

  2. It is an indication of how reactionary, incoherent, and misguided SYRIZA is that even with a government coalition so corrupt and incompetent the opposition is not miles ahead in the polls. The reason, of course, is simple: SYRIZA is just a more radical, more irresponsible version of the same, clientelist political system. Essentially, it has supplanted PASOK in the role of the official protector of the hundreds of thousands of political appointees in the public sector who are earning a wage despite not contributing anything positive whatsoever to the economy and the country. (The protection of the organised interest groups of the private sector – from lawyers to truckers etc. remains with the parties of the coalition gov’t, especially New Democracy).
    The result of all this is stasis: Greece is running to stand still. With the – remarkable – tolerance of the troika, government and opposition alike have stalled, watered down, or reversed outright any reform efforts in the last three years. This means the productive capacity of the economy has not been improved, and leaves wage deflation as the only available tool to regain competitiveness.
    In the medium term, the only hope – that’s all it is – is the emergence of a modern centrist party which will take on the fight with organised interest groups and push for genuine, wide-reaching reform.

    Greekonomist

    May 16, 2013 at 12:26 pm

  3. […] Drinking from the bitter cup < what attitudes are like in Greece today […]

  4. […] Austerity the Only Way?: Calling into question the efficacy (and social cost) of the Eurozone austerity measures, it appears that deficit reduction has been more effective in […]


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