Greece’s new government with an uphill task

The polls were right in Greece. The Coalition of the Radical Left (SYRIZA) won well, with 36.3% of the vote, 8.5% clear of the centre-right New Democracy. Another five parties cleared the 3% threshold for representation, but none of them by much. (Compare Saturday’s preview here.) The neo-Nazi Golden Dawn was in third place, but its 6.3% was down from the 2012 result and a far cry from the days when it was showing twice that in the polls.

With the 50-seat winner’s bonus, SYRIZA has 149 of the 300 seats – tantalisingly short of an absolute majority, but for practical purposes almost as good. It gave SYRIZA its choice of coalition partners, and it chose the right-wing Independent Greeks (ANEL), an anti-austerity breakaway from New Democracy, which won 4.7% and 13 seats.

That suggests that for the new prime minister, SYRIZA leader Alexis Tsipras, confrontation with the European Union and the European Central Bank is at the top of the agenda: he certainly doesn’t have a lot else in common with ANEL. Prior speculation had centred more on new centrist party To Potami (6.0% and 17 seats), but its pro-EU position was evidently too much for Tsipras.

What happens next, however, will depend at least as much on decisions taken in Brussels and Frankfurt as on the new Greek government.

It’s not controversial to say that the EU is at something of a crisis point. Still languishing economically and beset by voters who seem to be deserting the mainstream for populists, Eurosceptics and the extremes of right and left, its leaders desperately need to find a way of settling things down and reassuring their public. But it’s not at all obvious just how to go about this.

Offering Greece generous terms to avoid an explicit default and keep it within the euro zone risks sending the message that other troubled economies can get away without complying with their agreements, fuelling a stampede away from economic orthodoxy. But confrontation with Greece risks sending the message that EU democracy is a sham and that countries are better off going it alone without the stranglehold of German-imposed discipline.

As a sympathetic critic of both the EU and the euro, it seems to me that the second danger is the more serious one. I think it’s more important to keep Greece – and parties like SYRIZA – within the tent and to tell EU voters that their democratic choices will be respected.

Writing just before Sunday’s voting, here’s how Paul Mason at Channel 4 put it:

What would make Mrs Merkel override her former finance minister Wolfgang Schauble and the rest of the ECB hawks?

The threat of losing half of peripheral Europe to Syriza-style leftist governments is one part of the answer …

The other part of the answer is the threat of a right-led breakup of the eurozone and the EU, with Britain’s Ukip, the Front National in France and Geert Wilders’ Freedom Party in the Netherlands all profiting from the eurozone’s stasis.

But suppose the ECB and the European Commission, in this dream scenario for the left, gave the green light to a Greek debt write off: they would effectively be executing the Greek political centre and putting their money on Alexis Tsipras and the Syriza leadership to become a left-technocratic modernising force.

This is Syriza’s secret hope …

I think that’s right: for all its anti-capitalist rhetoric, SYRIZA wants to be inside the tent. It and other parties like it are not inherently anti-European. If Merkel and the others force them to become that way, they will narrow the support base of the EU to a possibly fatal extent.

But seen from the EU leadership, Greece looks small and far away; the temptation to just cut it loose will be strong. And if Tsipras overplays his hand he could well force them to do just that.

Both sides have an interest in reaching a deal. But that doesn’t mean it’s going to be easy.

 

*ADDENDUM (1pm Tuesday)*

In a post that I’ve just read (written on Saturday), British political scientist Dan Hough reaches similar conclusions to mine about SYRIZA’s prospects, from studying the history of left parties’ participation in government:

However, although these parties have found governing hard, they are by no means alone in this.  Left parties’ policy decisions generally haven’t rendered them ‘unelectable’ next time, and they certainly haven’t fallen apart.  Left parties, in other words, have behaved in remarkably similar ways to parties of other stripes. Given what we’ve seen elsewhere, this would indicate that Syriza is likely to move more in the direction of the mainstream, taking tough decisions and then struggling with the consequences.  If there is a self-destruct option, Syrzia is very unlikely to take it.

One thought on “Greece’s new government with an uphill task

  1. Why would it be self-destructive for Greece to leave the Eurozone? Isn’t 25 percent unemployment and 50 percent youth unemployment destructive enough? Female doctors are restorting to prostitution to survive. A generation of young people cannot marry, leave their parents’ house, or develop a career, all because of the economy’s failure to generate enough jobs for everyone. None of this will change for as long as Greece’s monetary and fiscal policies are dictated by Germany and the German-designed ECB.

    It is better to face a difficult situation with policy sovereignty than to endure relentless misery with no power to change anything. Even if the debts were written off, the constraints of the Eurozone would prohibit the government spending that is necessary for an economic recovery. THe Greek Government’s best option is to leave the Eurozone, issue a new currency, redenominate all debts into the new currency, and spend heavily on job creation, infrastructure, and social services.

    Like

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