The “vicious circle of austerity is over,” said Alexis Tsipras, Syriza leader and Greece’s likely new premier, after his party won a stunning victory in yesterday’s general election. It would be replaced, he added, by “a politics of hope, solidarity and co-operation.” He and his senior colleagues say this is true for the EU as a whole.
As Sunday evening unfolded it was clear the Syriza victory was less comprehensive than that of early exit polls suggesting a 12% lead over New Democracy, the outgoing ruling centre-right party of Antonis Samaras. In the end it was 8.5%, with Tsipras, armed with some 149 seats, just shy of an absolute majority of 151, gladly forced to rely on coalition partners.
The outcome is, nevertheless, extraordinary and not just because Syriza, a left/democratic socialist party, won just 4.6% of the vote five years ago. It sends several clear and dramatic messages to the EU and its ruling elite in Brussels, Berlin and other European capitals – not least Madrid where Podemos, Syriza’s ally, is riding high in the polls ahead of the elections later this year.
One is that long-suffering voters can no longer stomach self-defeating austerian policies that result in a country losing a quarter of its national output, its young people either emigrating in droves or forced to be, like 50%-plus others, jobless and without a future, its pensioners lose 40% of their income, its middle class unable to buy medicines – and its rich squirrel even more of its wealth overseas and pay no tax. This six-year Sisyphean effort to meet with the conditions imposed with the €240bn bail-out programme has pushed up public debt to 175% of GDP – when it is supposed to reduce it.
Another is that the “alternatives” offered by traditional social democratic parties – at best mitigating the worst effects of austerity but essentially accepting the need for “structural reforms,” aka internal devaluation – are unacceptable. Pasok, which ruled throughout the 1980s and, not least, during the post-2008 crisis, has just about survived with a dozen or so seats and less than 5% of the vote but the new party of George Papandreou, its ex-leader, is out. These parties fail because they have run out of ideas and offer little or no hope.
It is the case, however, that Syriza and its youthful leader, aged only 40, have a tortuous course to follow even with the wind of popular acclaim in their sails. First, they have to keep the people on their side rather than spreading disappointment and disaffection from early on – as many left parties do. The threefold agenda set out by Yanis Varoufakis, the Athens economics professor and potential finance minister, of a €2bn “end the humanitarian crisis” welfare programme, of tackling anti-social oligarchs and, not least, renegotiating economic policies with the Eurozone, has to get off to a positive start. The absence of an absolute majority and need to rely upon/willingness to embrace coalition partners helps here.
Numerous commentators have also made plain that the ultra-ambitious Tsipras is not the “far left” hard-liner painted by the neo-liberal media – “Euroschreck” or “eurohorror” in the Bild Zeitung headline – but a pragmatist, albeit to the left of Labour/PS/SPD. The Financial Times asked (rhetorically) last night if he is a Lula or a Chavez, with its reporters consistently painting him as the former.
Second, the talks with Eurozone ministers – which, effectively, kick off informally at the eurogroup/ecofin meetings starting today – will be extremely tough. Unsurprisingly, German centre-right politicians and the Bundesbank President, Jens Weidmann, have been unwelcoming: “I hope the new government won’t call into question what is expected and what has already been achieved,” Weidmann told German public TV last night. Wolfgang Schäuble, finance minister, said coldly: “The agreements reached with Greece remain valid.”
But demanding further structural reforms now misses the point, let alone the democratic will of the Greek people. There is a certain complacency behind such remarks since Germany itself cannot simply rest on the labour market reforms of Gerd Schröder ten, 15 years ago and needs to put its own house in order. Tsipras is not alone in pointing out that debt relief/write-off – agreed at the 1953 London conference – lay behind West Germany’s economic revival post-war (along with central bank independence, monetary reform etc).
Some market commentators argue that, because Germany has effectively been forced to concede quantitative easing by the ECB, it will dig in its heels over concessions on debt to Greece – partly to avoid a backlash from its own voters. But, as Paul De Grauwe and others have pointed out, denying the reality of the impossibility of servicing sky-high debt simply “condemns Greece to many more years of misery and will encourage extremist political movements in the country even further.” And, we might add, not just there but all over Europe.
Tsipras, in his victory speech last night, sounded a positive note about the EU and negotiating a mutually beneficial outcome – not imposed from the technocratic centre but via a national demos. The outlines of a deal may be, some suggest, debt relief via longer maturity, lower interest, agreed measures to stimulate productive growth linked to serious administrative reforms and, above all, more jobs generating more tax income.
All of this is for later. What matters now is that, for the first time in Europe since the global financial crisis began in 2008, voters have opted to challenge the rather cynical, hopeless mentality and policy-fix of the EU political elites and reasserted democratic sovereignty inside the European house.
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