After the Oxi landslide many Greeks are fearful. ‘I am scared. But if we leave Europe we are alone. Turkey, Syria, Russia, the banks are closed and our economy in crisis. What we do?’, one friend asks
It was the young who, overwhelmingly, gave Alexis Tsipiras the Oxi vote he said he needed to drive a better bargain with the European Union and the International Monetary Fund. They have borne the brunt of the last 6 years, and saw no end to a process that had delivered almost 60 per cent youth unemployment and masses of university graduates with no job. Many of the most skilled and highly qualified have gone abroad. Like Ireland, though to a lesser extent, Greece exports its youth unemployment.
How will Tsipiras play the hand Oxi voters have dealt him? To many on the European left he is the new romantic hero, with a whiff of Che Guevara, Fidel Castro and Hugo Chavez, about him, leading his plucky people by raising two fingers to the capitalist EU and IMF creditors.
A reality check. Syriza’s January election victory was seen as a breath of fresh air and a challenge to the prevailing EU orthodoxy. The first alarm bell sounded when Tsipiras chose to form a coalition with the 13 strong ANEL – the populist, anti-EU, anti-migration right wing party – rather than social democratic Potami party who had 17 seats.
The second concern was how quickly the political capital that came from his election victory dissipated when Tsipiras and his finance minister Yasnis Varoufakis arrived in Brussels. A lot is made of the flamboyant, insult-laden negotiating style of Varoufakis, but it has finally cost him his job and could have cost his country a lot more.
Syriza’s problems go beyond style. It is hard to understand why Tsipiras and his government were so ineffective at dealing with tax evasion, worth €20bn a year, or, for example, cutting defence spending, which is still one of the highest in Europe.
Desperate as most Greeks now are to stay in the Euro, it is clear they should never have joined in the first place. They did so because the Greek elites, of all parties, the EU and Goldman Sachs were complicit in demonstrating a case for convergence.
It was a fiction. The national deficit was well beyond the 3 per cent required by the Maastricht Treaty. It was well known that tax evasion was a Greek national sport, and bureaucracy and public services were more preoccupied with their own welfare than that of the citizens they were supposed to serve.
Entry into the Euro brought cheap money, but a recipe for disaster. In the first ten years of this century labour costs went up by 30 per cent, against Germany’s 5 per cent; public employees saw a 117 per cent wage rise; and prices rose by 30 per cent more than the EU average. By 2011 public debt had spiralled to 170 per cent of gross domestic product.
The austerity imposed on Greece by the right in Europe has made things worse for the most vulnerable, but has left many of the powerful and rich unscathed. By January 2015 the economy was recovering, but it was too little, too late and the majority of Greeks have by now lost faith. The Oxi vote was a gesture of despair and a cry for a new approach. The reality check was the decision of the European Central Bank to limit the cash it could advance to Greece because the country was once again in recession. For this to have happened just as the tourism season is beginning will prove to be a disaster. To the patient on life support, this was akin to turning off the power.
The Syriza government has been politically brilliant, but economically irresponsible and incompetent. However, it takes two to tango, and the EU leadership must also shoulder its share of the blame. As Thomas Piketty, the French economist has argued, what the EU needed at the start of this crisis was a new Marshall plan for Europe. Germany, now Europe’s strongest economy and apparently intent on a punitive approach to Greece, had debts of 200 per cent of GDP after the war. The cancellation of 60 per cent of its debt set the country on the road to becoming the economic giant it is today. Piketty and others are calling for a European debt conference and a restructuring of EU debt, not just Greece’s.
We are now eight years away from the financial crisis of 2008. It is hard to imagine how the EU’s indebted countries will flourish without a deal on debt and the creation of a fund to stimulate jobs and growth. Eighty years after the great depression and Roosevelt’s New Deal, European parties of the right have learnt nothing and continue to promote economic policies that drive countries into recession. It will fall on the European social democratic left to take up the call for a European New Deal. Can they rise to the challenge?
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Giampi Alhadeff is chair of Labour Movement for Europe