By Patricia H. Kushlis
Maybe Greece never should have become a member of the EURO-zone. But it did. Or maybe the EURO-zone should have been structured far differently so that it could deal with problematic states and regions such as Greece through transfers not loans. But this didn’t happen.
Maybe Greece’s political leaders should have behaved far more responsibly – immediately implementing at least major reforms that the Troika told them needed to be done two plus years ago to right the ailing economy. But they didn’t begin in earnest until a caretaker government took power November 11, 2011. The domestic political and economic costs were simply too painful for either of the two mainstream parties that have dominated the country's politics for years.
Maybe the Troika and Germany should not have declared that the May 6 election was one that would determine whether Greece would stay in the EU, a claim also made by the two major Greek political parties that have alternated in power. But it and they did.
Maybe the exasperated Germans should not have come across as imperialist overlords to the Greek populace – perceptions are important in a country’s psyche – but that happened too. That shrillness has resulted in untoward international consequences propelling what could and should have been contained as an internal EURO-zone dispute.
Instead the handling of the dispute has unsettled, once again, worldwide financial markets. Yet Greece’s economy, after all, represents only 2.5% of the Euro-zone total and is dwarfed by all the others.
And maybe the Greeks – and non-Greeks with capital in Greek banks should not be withdrawing their savings at a rate akin to a run on the banks. An average of $5.1 billion dollars has been flowing out of Greece every month since 2009 when the debt crisis first broke and since the May 6 elections, Greeks have “pulled nearly $900 million in savings from their banks,” according to the May 17, New York Times.
In whose interest is it?
But is it really in anyone’s interest – and this includes Germany, the rest of Europe and the US - for the country and its people to be treated the way they have been over the past two years and not expect untoward and dangerous political repercussions in the country?
Memories may be short elsewhere, but they’re not in Greece. It’s not that history is doomed to repeat itself, hopefully people learn from history’s mistakes and don’t repeat them, but when the political center hollows out as has just happened the radical fringes rise to the fore. Twentieth century Greek history, after all, alternated between democracy, right wing military coups and a nasty Civil War that followed a brutal Nazi occupation.
It wasn’t until 1975 when democracy returned to Athens after the 1967 Colonels’ Coup – and seemingly stuck. Nevertheless, in the overall scheme of things, 37 years of reasonably stable democratic government preceded by shorter democratic periods interrupted by military take-overs and the Nazi invasion is not long.
I recently completed Lorin Danforth and Riki Van Boeschoten’s controversial book Children of the Greek Civil War: Refugees and the Politics of Memory (University of Chicago Press, 2012) which brought back a flood of personal memories of Greece and Greek political history. Foremost, this book reminded me that the past is not dead, it lives on in the minds of those old enough to remember and, as importantly, in their stories – some more accurate than others - passed on to their descendants.
Troubled shores and streets
Yes, I’m immensely troubled by the outflow of capital from this beleaguered country because it makes today’s situation all that more desperate. The fact that the overly large state sector and its legal quirks that have favored the few weren’t seriously tackled until international economist Lukas Papademos took over the reins last November and the Greek government began to introduce the economic reforms dictated by its creditors.
Yes, I think it’s wrong that the protected professions continue to operate - now apparently skirting the law – despite the fact that they are in no one’s interest – except for those individuals who are, ahem, protected by them and who protect them.
And yes, I object to the political featherbedding and poor service that accompanies the over-hiring of political appointees that snowballed in the 1980s and 1990s – but since when was Greek politics not afflicted by the patron-client relationship that operated in the traditional back-scratching exercise we still see in far too many governments today including the US.
But it’s the country’s broader political history which concerns me the most. The May 6, 2012 election results indicate above all that two years of externally imposed austerity are playing havoc with the man, woman and child on the street.
A 52% unemployment figure among Greek youth is unconscionable. Economic history has shown that unemployed youth of any country will never catch-up with what might have been. Pensions for the middle class have been reduced as much as 30-40%. According to Philip Stephens of the Financial Times, public spending has been slashed and the country, now in its 5th year of recession, has lost one-fifth of its economic output. In fact, I understand, the slashing of public pensions had begun some time ago before the caretaker government was formed last fall.
Tuesday’s figures according to “France 24” showed that “the Greek economy slumped a massive 6.2% in the first quarter compared with the year before.” I have to wonder if the 6.2% decline was somehow related to the new government’s implementation of some of the austerity measures demanded by the international lenders.
Is it any wonder then that the voters deserted the parties that signed the loan agreements that brought this on and that Alexis Tsipras, a previously unknown charismatic young man on the far left led a coalition of leftist parties into second place on May 6? Charisma and populist platforms have all too often taken the driver’s seat in the struggle for Greek hearts and minds over the years especially in times of turmoil.
The EURO-zone leaders should be relieved that the worst didn’t happen or hasn’t happened yet: a coalition of Communist Parties (which could have occurred had the hardline Communists (KKE) agreed to join a coalition of parties of the left that surely would have led to the country’s exit from the EURO-zone and a total default on all loans and perhaps a reenactment of the turbulent 1960s when a two year political stalemate brought on the 1967 righist Colonels coup.
Yes, I know times have changed but the rise of New Dawn, a neo-fascist party representative of former 1960s juntist supporters on the far right which clocked in at 7% of the vote on May 6, that may well face off in extra-parliamentary ways against the far left led by a charismatic young man makes me nervous for the country’s future. A European country where the political center has hollowed out is a danger not just to itself.
A German rethink needed
Yes, Mrs. Merckel, Germany does need to rethink its commitment to austerity uber alles if it wants to continue to lead a united Europe. And the backlash to this failed economic diktat is not just in Greece.
Controlled quantitative easing (not run-away inflation which understandably unsettles German minds) needs to play a role in leading the continent back to economic health. So does re-evaluation of the profound weaknesses of a monetary union without corresponding fiscal restraints.
As my WV colleague John Dyer has been writing over the past year, shrinking government budgets and tax increases that hit the middle class the worst do not necessarily lead to increased government coffers and ability to repay loans. Quite the opposite. They create social havoc, a lost generation and the rise of dangerous political fringes. Will Greece will be the straw that breaks the camel’s back or the harbinger that sets off alarm bells in Brussels, Berlin, Paris and elsewhere in time for the EU to change course? That’s for the Europeans to decide.