Greece Still In The Eurozone – But Only Just


Based on Sunday night’s results, it seemed that traditional ruling centre-right New Democracy and its old centre-left adversary Pasok will be able to form a coalition. The country will stay in the Eurozone — for now.

Because the Greek political system delivers a 50 seat bonus to the winner of the election, New Democracy’s 30 per cent will be enough to win it government. That is, if social democratic PASOK plays ball.

But in the world of Greek politics, polarised by ideology and poisoned by the economy, Sunday’s election may not provide Greeks with the catharsis that all of the political parties have been promising.

"New Democracy and PASOK will join forces in order to gather 160-something MPs [out of 300]in order to continue to implement the necessary to get the money form the troika and pay back the wages and salaries and mostly the European banks," Theodore Pelagidis, an economics professor at Greece’s University of Piraeus told New Matilda.

"[But] there will be new austerity measures next June and a new wave again next autumn … We may face again a legitimacy crisis of the two parties pretty soon."

With the division between Left and the Right over economic issues greater than it has been for decades, some in Athens fear a return to the late 1940s in Greece when Greek communist guerrillas unsuccessfully fought a civil war against the American and British-backed Greek Army.

"I’m worried that there will be blood in the streets, about civil war or a military dictatorship," said Nick Zipolitis, an unemployed Syriza supporter. New Matilda met the 33-year-old former Oxford student at the party’s election booth outside Athens town hall on Saturday.

"People say: ‘Let’s get out our guns.’ I am against violence anyway. But I think their guns are bigger."

"If the Right — and by that I mean the two traditional parties — wins, I think in a month from now you will see riots in Syntagma, much bigger than anything we’ve seen before, because people have nothing left to lose," Zipolitis said.

Zipolitis and many Greeks like him claim this sort of anger and political division results from the memorandum, Greece’s debt agreement with the Troika (the EU, IMF and European Central Bank).

Austerity has delivered cuts in the minimum wage and social services, planned privatisation and increases in both direct and indirect taxation. Many Greeks argue that has fed through to increasing levels of indebtedness and unemployment. Last week, the country’s unemployment rate reached a new high of 22.6 per cent.

"People are in despair right now. People are getting put in prison because they can’t pay their debts, we’re all waiting for more bad things to happen," says Katarina, a conservative-voting English teacher.

"I have family in Australia and my sister cries every time she hears something about Greece on TV."

After three years of austerity, and almost five of crisis, the centre of the Greek capital is full of abandoned shops and starving and desperate people.

Beggars drooped unconscious on the pavement and junkies shooting up publicly were common sights during the first week this reporter spent based in the Greek capital for New Matilda.

On Thursday night as Syriza leader Alexis Tsipras spoke in his final rally at Athen’s Omnia Square, addicts took a fix in an adjacent park overlooked by riot police.

All of the Greek political parties argue that they are best placed to combat the impoverishment of Greeks. But they differ on how to do so.

Syriza argues the best way to solve Greece’s social crisis is to tax the rich and annul the memorandum it signed with the Troika.

"We think the only program to get Greece out of the crisis is our program. It’s not the austerity program that’s being applied now," argued Panos Trigazis, Syriza’s head of foreign policy.

"The only way to keep Greece inside the Eurozone is a program of social protection and a program of setting in motion the productive potential of this country."

That includes an increase in the size of Greece’s traditionally large public sector, taxation of what Trigazis calls Greece’s "one percent" — ship owners and wealthy tycoons — and expanding potential growth industries such as solar energy.

Yet New Democracy argues Syriza’s economic policies are fantasy.

"We are serious about changing the economic model of the Greek economy, which now is more or less state-oriented and state-guided," said Dr Dimitrios Tsomocos, an Oxford economist who is also chief economic advisor to New Democracy leader Antonis Samaris.

"Their [Syriza’s] obsolete and archaic economic philosophy of nationalising and expanding the role of the state will convert … the economic landscape of the Greek economy into an economic desert."

Tsomocos wants to renegotiate the memorandum so that austerity measures are applied slower. But it wants still wants to stick to structural adjustment and privatisation. The new government led by the conservatives is likely to push for tax cuts and reverse the worst of the cuts to minimum wages and pensions.

Whether they will have the money to do so is moot. Heralding the result on Sunday, German Foreign Minister Guido Westerwelle declared himself ready to consider "the schedule" for implementation of the memorandum.

But Germany will not countenance substantial changes to the debt repayment plan, said Westerwelle.

Berlin’s statements will not make the likely new government’s task much easier. And it will strengthen forces in Athens arguing for a radical shift toward a statist model — even if meant the country exiting the Eurozone. Syriza and its supporters think only a complete economic U-turn will save Greece.

"This social holocaust that takes place in Greece now must be stopped. It cannot continue," said Syriza’s Trigazis.

"If you wanted me to describe the situation in Greece right now in one word, I would use the word: Fukushima."

Trigazis is only reflecting his party’s base with those remarks. Syriza voters come from the fallen middle classes, which have seen their livelihoods vanish. They are Greece’s indignados.

Yet New Democracy’s upper-middle class supporters are completely terrified. Many have taken out loans in euros. If the drachma were to return, they would be ruined.

This core sociological dynamic means that Greek politics is likely to remain fissured in the immediate future. In turn, Greeks’ already low opinion of the country’s traditionally corrupt political class is likely to only increase.

And demand for those perceived as political outsiders will only increase. So parties like Syriza and fascist Golden Dawn — now Greece’s fifth most popular party — are unlikely to vanish soon.

Launched in 2004, New Matilda is one of Australia's oldest online independent publications. It's focus is on investigative journalism and analysis, with occasional smart arsery thrown in for reasons of sanity. New Matilda is owned and edited by Walkley Award and Human Rights Award winning journalist Chris Graham.