Starting off again from the ruins | Special Issue European Elections 2019

The Greek crisis and SYRIZA's government: conflicts and agreements with the EU in Tsipras's Greece

Five years ago, when the last European elections were held, Greece was governed by a coalition of New Democracy (ND), member of the EPP, and the Panhellenic Socialist Movement (PASOK), member of the PES. The discourse at the time, not surprisingly, was not about the MEPs that would represent electors in the European Parliament. It was about whether people trusted the incumbent government and all it stood for, or not.
The 2014 European election was a turning point for the country’s political status quo. The Coalition of the Radical Left (SYRIZA), member of the Party of the European Left, led by Alexis Tsipras, won a clear victory over New Democracy, with a difference of almost 4%. Europe was not exactly part of the debate, but the bailout programmes –that Greece had agreed to– were; and the answer was clear: Greeks did not like them. SYRIZA’s core argument was that the bailout, accompanied by austerity measures, was imposed on Greece by outside forces with malevolent intent, and was to be rejected by the Greek people.

The 2014 European election was a turning point for the country’s political status quo, with Syriza's victory over New Democracy

Five years later, Alexis Tsipras and his party SYRIZA are in government. In fact, they came to power a few months after the 2014 European elections, where they remain to this day. This time, New Democracy is leading the polls, and is expected to win the elections in May’s suffrage. Politico estimates that according to the latest opinion polls, New Democracy is roughly 9.5% ahead of SYRIZA. PASOK (Kinima Allagis) is expected to get about 7,4% of the vote and retain the support of loyal voters, despite severe pressure from SYRIZA. The extreme right Golden Dawn is expected to get 7.2%. Since national elections are to be held in October at the latest, the results of the two ballots could come to reflect a similar political reality. A distant observer might think that all this looks like business as usual. But one should have been living under a rock to have missed what happened in Greece the last five years.

SYRIZA's government and its conflicts with Europe
All of Europe and beyond were watching, when, in the first semester of 2015, SYRIZA’s government clashed with Greece’s creditors. The country’s banks were shut down overnight and capital controls were imposed on all accounts, a measure still widely in force today. When Greece became the second country in history not to honour its obligations towards the IMF in June 2015, the whole world stood in amazement. The referendum that was held within a period of less than a week –on a draft proposal for a new bailout not even translated in Greek– created a profound national schism. A few days later, the Greek Parliament adopted the third bailout, perhaps the harshest of all, which would have been unnecessary, had the country stayed on its 2014 track. Four years of heavy taxation, the highest unemployment rate in Europe, part-time-only job opportunities, capital controls and brain-drain followed. A significant part of the population saw its living conditions worsen during that period, notably people from the middle class. In fact, the middle class itself, every liberal democracy’s backbone, continues to face severe pressure, perhaps to the brink of extinction. The few new jobs available are primarily part-time opportunities, requiring low skills and offering even lower wages. Almost half a million Greeks, most after 2014, have left the country to seek a better life, present and future abroad.

SYRIZA’s government, after its spectacular negotiation of 2015, has chosen to stick to the bailout programme and did not clash with the EU again

SYRIZA’s government, after its spectacular negotiation of 2015, has chosen to stick to the bailout programme and did not clash with the EU again. The EU on the other hand, has been a lot less demanding on structural reforms, allowing flexibility to the Greek government for it to formulate its own high-taxation fiscal policy, under the unsaid condition that it would keep deficits down and continue repaying its creditors. This gave the ground for the government to implement its policies and hire tens of thousands of temporary civil servants, as well as proceed with the hiring of more permanent ones.
The exorbitant long-term primary surpluses, agreed in the context of the third bailout (2015-2018) and beyond drained the already dry Greek economy. The government went even further, demonstrating a phenomenal zeal towards taxation, overcoming the surplus targets agreed with its creditors.  Simultaneously, it has been engaging in the process of granting ad hoc allowances to targeted social groups such as pensioners, while leaving others – for instance, the unemployed, without. During that period, the country’s Public Investments Program has shrunk significantly, while payments from the public towards the private sector are systematically postponed as much as possible.

The Greeks and the EU
Obviously, a lot has changed in the country these last five years. It became the centre of attention for all the wrong reasons and has since remained a liability for Europe. It got its first radical left government (with a pinch of the far-right Independent Greeks) and its third bailout programme. This programme ended in August 2018, but the daily life of citizens and businesses has seen no actual improvement. A few days earlier, the catastrophic fire at Mati, a few kilometres from Athens, had claimed the lives of more than a hundred people, leaving a deep scar on the nation.
When it comes to Europe, traditionally, Greeks have been – in principle – very much in favour of the European project. One can clearly see this in older Eurobarometer surveys. This was partly altered during the crisis, and a significant number of respondents have become more negative towards the EU. In the last 2018 Eurobarometer, a record breaking approval for the EU was documented by Europeans as a whole, while Greeks were found to be the ones trusting the EU the least. While a majority of Greek respondents had a negative perspective in the former four surveys (from autumn 2016 to spring 2018), in the survey of autumn 2018, the situation seems to be getting better. There, 94% of Greeks consider the country’s economic situation as bad, securing the first place in the EU. Support for the euro remains strong and has recovered after the 2015 clash.

Greece's fall and rise
With the expected political changes for the country, international attitude towards the Greek economy has improved, especially during the last months. New Democracy is widely anticipated to win the coming national elections and form a government that will push on structural reforms and attract the so-much-needed foreign investment. The markets too seem to be cautiously optimistic. Notably, in early February, Greece issued a 10-year bond, for the first time after the 2010 default, which was relatively positively received by the markets, with a 3,9% interest rate. A revival of the construction and housing sectors, that were obliterated during the crisis, seems to be on the way. After several shocks since 2015, the Athens Stock Exchange appears to be recovering in 2019. Especially the banking sector, which was reduced to ruins in 2015, seems to be gaining momentum, but estimates remain conservative.

Especially the banking sector, which was reduced to ruins in 2015, seems to be gaining momentum, but estimates remain conservative.

Greeks will vote in May, as will all Europeans. They will most probably vote for the national party they would like to win the national elections, even though these are the European elections. It is not the first (and surely not the last) time this will happen, nor an only Greek phenomenon. But this time, the country is not the same. Greece is bound to Europe and Europe is bound to Greece, in a truly unique way. There has been quite some negative sentiment towards Europe in the last five years. Such sentiment appears to be in retreat, but part of the population is still very sceptical. The EU will certainly face significant challenges in the coming five years. In Greece, extremist parties are expected to win a non-negligible share of the vote, but their influence will be limited – compared to what is anticipated in other EU countries– for now. Greece’s populist forces seem to have come to a cul-de-sac, as their policies were tested and failed to improve the lives of citizens. This could be a turning point for traditional parties and a return for the “mainstream”, moderate politician. As long as Greece’s future in the EU remains secure, that is.

A special thanks to Angelos and Nikos
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