Drinking from the bitter cup
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.