Greek Radical Left on the March
How the far Left plans to “renegotiate” the debt obligations of the bankrupt country.
Greece is once again at the center of the European Union storm. Following the failure of the Athens parliament to elect a president in late December, Syriza, aka The Coalition of the Radical Left, is poised to assume the reins of power. “The future has already begun,” party leader Alexis Tsipras, the man most likely to become Greece’s Prime Minister, told reporters as the nation prepared for the early elections constitutionally required when presidential polls fail. “You should be optimistic and happy.”
The presidency is largely a ceremonial position, but Greek law requires a backing of 180 members of parliament to nominate a president. Current Prime Minister Antonis Samaras failed to garner that number, forcing the parliament to dissolve. The election for a new parliament (and Prime Minister) initially scheduled for June 2015 has been moved up to Jan. 25.
The rise of Syriza is nothing the short of stunning. For the last two decades, the party and its far left predecessors had only polled above 5 percent in national elections on rare occasions. Last May 6, riding a wave of discontent among Greeks angered by what they perceive as an unjust austerity program imposed by foreign governments, they gained 17 percent of the vote, putting them just two points behind Greek’s largest and conservative New Democracy Party. Following a week of negotiations, during which Tsipras refused to join his opponents in forming a government if it meant the loan agreement Greece signed with the European Union (EU) and the International Monetary Fund (IMF) continued to be honored, Syriza gained even more ground. They moved past the New Democracy Party (NDP) to become the nation’s most popular political party.
Tsipras, 37, is no newcomer to the political scene. At 15 years of age, he joined the Communist Youth of Greece during a high school revolt in 1990, just after the fall of the Berlin Wall. That revolt was engendered by education reforms of Conservative Prime Minister Constantine Mitsotakis. Tsipras emerged as a leader against them, insisting in a series of interviews that students, parents and unions be included in talks. The standoff precipitated months of shutdowns at schools and universities, and the ultimate resignation of the education minister.
“Tsipras is a product of the post-dictatorship Greek society,” Stathis Kalyvas, a professor of political science at Yale University, who grew up in Greece during the same period, told Bloomberg News. “He came of age during a period of great political and economic turmoil in Greece with lots of riots, demonstrations, terrorism, and political instability.”
In 2006, Tsipras failed in his bid to become Mayor of Athens, but two years later he was elected president of Synaspismos, the biggest of the parties that comprise Syriza. He became a member of the Greek parliament in 2009 during the onset of the EU debt crisis, when Greece’s budget deficit hit 15.4 per cent of GDP following a series of revisions revealing the country’s economy was in far worse shape than previously admitted. The initial bailouts began the following year, when it became apparent Greece could no longer borrow money from the financial markets. Syriza gained 13 seats in the 300-seat chamber.
Last May, Greek voters rewarded Tsipras with 52 seats leaving him only 130,000 voters short of placing first and receiving the extra 50 bonus seats granted under Greek law. Those seats went to the NDP and rival leader and current Greek Prime Minister Antonis Samaras, 61. He gained 108 seats, but failed to form a coalition.
Hence the January 25 election. Tsipras’s position and that of his party is the ultimate pipe dream. He does not want Greece to return to the drachma, a highly unpopular idea Greeks overwhelming reject. But he insists the so-called massive cuts in government spending, better known as the “memoranda” to which Greece agreed in order to get bailouts, are far too onerous. Instead, Greece will “write down on most of the nominal value of debt, so that it becomes sustainable,” Tsipras said during a Jan. 3 speech made in Athens. “That’s what was done for Germany in 1953, it should be done for Greece in 2015.” A day earlier Samaras warned that a victory by Syriza would engender default and Greece’s exit from the 19-member euro region.
How massive have those austerity cuts been? Last August, an article in Bloomberg View authored by Leonid Bershidsky revealed EU austerity in general is a complete myth. With regard to Greece, this graph reveals total government expenditures as a percentage of GDP increased in that nation by a substantial margin between 2007 and 2013. The biggest increase occurred in the first two years, followed by a relatively modest shrinkage over the next two. A fiscal epiphany? Hardly. As Bershidsky explains “spending didn’t go down as much as the (EU) economies collapsed.”
Syriza’s determination to stem the shrinkage of government partly explains their popularity. A study by Public Issue reveals that 22 percent of Syriza voters are state employees, and their Occupy Wall Street-type rhetoric also appeals to those aged 18 to 24, over half of whom are unemployed. Overall, almost 26 percent, or 1.5 million Greeks are unemployed, 3 million are facing poverty, and the vast majority unable to pay their bills. This despite the reality the nation has technically emerged from its six-year recession.
As explained by Spyridon Mitsotakis, today’s radical leftists, who share a common identity with Andreas Papandreou and his Pan-Hellenic Socialist Movement (PASOK), a Marxist-oriented administration that increased the size of government to two thirds of the economy, employed 20 percent of Greece’s workforce–and quadrupled the national debt – have re-emerged. And as Mitsotakis further explains, it is unsurprising that Tsipras has expressed an affinity for Russia, denouncing the sanctions imposed against them and insisting that Greeks and Russians are linked by a “tradition of common struggles of our peoples, common religious convictions, with common political and cultural roots in our history.”
And while Syriza’s political stance on debt renegotiation is popular in Greece, it may fall on deaf ears among the EU’s ruling class, who twice bailed the nation out with over 240 billion Euros over four years, leaving the nation 318 billion Euros of debt, a number that represents 175 percent of GDP. Yesterday, the European Central Bank (ECB) insisted that access by Greek banks to funding past February is contingent on completing a final bailout review – and reaching a deal with its EU/IMF lenders. Even now, as a December meeting in Paris of the “troika” comprised of the European Commission (EC), the ECB and the IMF revealed, Greece has fallen about $2 billion Euros short of fulfilling its commitment not to exceed a budget deficit of 3 percent of GDP. Moreover, German Finance Minister Wolfgang Schäuble believes a third bailout is necessary to maintain the nation’s stability.
With the emerging strength of Syriza, there is increasing talk of a “Grexit,” as in Greece’s exit from the EU. And while the EU insists the terms of the package are supposedly non-negotiable, Greece’s ostensible account surplus may give the newly-elected government other ideas. By contrast Germany, the EU nation most responsible for propping up its Southern European neighbor, may be unwilling to embrace the moral hazard of allowing Greece to borrow billions and subsequently demand renegotiation on far easier terms.
Syriza’s negotiating position is enhanced by the fear of contagion, a reality that could precipitate billions of Euros in additional bailouts as many Europeans would undoubtedly attempt to withdraw their savings from the banks and put them in safer currencies. And while Greece might be able to make a go of it based on the aforementioned account surplus, the overarching statist aspirations that drive Syriza and Tsapris would almost certainly lead the country to ruin once again.
“Many European officials believe a Greek exit would be manageable, and in contrast to 2010-2011, we wouldn’t see the same cascading effect on countries like Spain or Ireland,” Fredrik Erixon, director of the European Centre for International Political Economy in Brussels told Bloomberg News. Peter Bofinger, an independent economic adviser to German Chancellor Angela Merkel, had a different take. “Even if the situation cannot be compared with the other Euro members, a genie would be let out of the bottle that would be hard to control.”
It is a genie that could have catastrophic consequences for a European Union that has been an artificial construct from its inception. One that has now given rise to Communist impulses being promoted as economic populism, utterly irrespective of mathematical reality. What ultimately happens is less than three weeks away, but the situation calls to mind the immortal words of the late Herbert Stein, chairman of the Council of Economic Advisers under Presidents Richard Nixon and Gerald Ford. “If something can’t go on forever, it won’t,” he said. Whether that refers to the nation of Greece’s fortunes or those of the entire European Union remains to be seen.
Originally published at FrontPage Magazine.
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