GR Political Economy Digest #14

  1. Greek finance minister says deal with EU will be done, ‘even at eleventh hour’, by Angeliki Koutantou and Karolina Tagaris | Reuters, Feb 14 2015
  2. EU states in unforgiving mood on Greece | The Irish Times, Feb 14 2015
  3. Deepening Ties Between Greece and Russia Sow Concerns in West, by James Marson | The Wall Street Journal, Feb 13 2015
  4. Reforming Greek Reform, by Dani Rodrik | Project Syndicate, Feb 13 2015
  5. White House warns Europe on Greek showdown, by Ambrose Evans-Pritchard | The Telegraph, Feb 13 2015
  6. The agony of Greece, by the Data Team | The Economist (Daily Chart), Feb 13 2015
  7. Yanis Varoufakis: ‘If I weren’t scared, I’d be dangerous’, by Helena Smith | The Guardian, Feb 13 2015
  8. Greece and Europe: No bail-out, no deal | The Economist, Feb 13 2015
  9. Greek Debt Standoff Awaits a Decisive Move, by Landon Thomas Jr. and Jack Ewing | The New York Times (Dealbook), Feb 12 2015
  10. Everybody be cool, by Yiannis Mouzakis | Macropolis, Feb 12 2015

GR Political Economy Digest #12

eikonaki Once SYRIZA was elected in power (with the help of ultra-nationalist Independent Greeks), the international media were on an ecstatic frenzy. A historic win for the Left, coupled with the fact that it was achieved by a past underdog under the direction of a very young new leader, Alexis Tsipras, seemed like the perfect story for the media. Today, five days after the Greek parliamentary elections, the tone has turned from almost delirious to extremely worrying. It seems that everyone – including SYRIZA’s supporters – were betting on a softening of the party’s stance, once it came into office. But SYRIZA has shown no intention to tone down its rhetoric and move away from its worrisome programmatic pledges. In fact, SYRIZA has remained adamant in its pre-electoral promises. Although this is a fresh feeling for the Greek society, which is very much used to the U-turns of politicians once they get elected, it is also an evident cause for alarm – due to the nature of Syriza’s promises and intentions.

Greece has to fulfill its running obligations with its international lenders within the next few months, it needs to receive the last chunk of bailout money in order to pay salaries and pensions starting this month, and more than anything, it needs to implement the necessary structural reforms in order to open up the state and market within the country, changing the existing clientelistic political system, combatting the oligarchic structure, and tackling the problems arising from the extensive shadow economy and crony capitalism in place. Yet, what we have seen in the first few days of SYRIZA’s rule is not exactly close to ‘promising’ in bringing substantial change to the country. SYRIZA has pledged to re-hire about 10,000 former workers in the public sector (who have been fired due to its downsizing); it has announced that it would block all further privatizations pertaining to the biggest port in Greece, the Peireus Port, and has assumed a similar stance in regards to the country’s multiple regional airports; it has jeopardized the (unusual!) consentual agreement of all member states of the EU in regards to the sanctions against Russia after further aggressions in Ukraine; and it has stated (via the current Minister of Economics, Yanis Varoufakis) that Greece ‘does not need the last 7 billion euros’ coming from the final loan disbursement.

SYRIZA is playing an extreme form of hardball with the TROIKA and the totality of our European family. As things look now, it either has some extraordinary cards under its sleeves (an agreement with our European counterparts about debt-relief of some sort is quite possible. Straightforward debt-reduction seems highly unlikely.), which it will present in a sugarcoated manner to the Greek people in the upcoming weeks; or it is actually more honest than all of us expect, is prepared to collide with Europe, and ready to gamble the fate of the country within the EU/EZ, even if it does not have enough firepower to fuel a ‘heroic exodus.’

My prediction is that SYRIZA will perform a magnificent ‘kolotoumba’ soon (if it has not already, unofficially, under the table with the other Europeans). It is not a matter of where the party stands normatively in their economics or ideologically in their politics. It is a matter of hardcore realism. And when Varoufakis and Tsipras are faced with the fatal question of “how are we going to pay up for the salaries and pensions of millions of people,” the dilemma of playing hardball or joining the chorus of former Greek leaders who performed eloquent ‘kolotoumbes’ in order to save the country’s economy will (hopefully) disappear.

In any case, here is what you need to read about the Greek political economy today:

  1. Greece and its discontents, by the Charlemagne | The Economist, Jan 31 2015
  2. Greece and the euro’s future: Go ahead, Angela, make my day | The Economist, Jan 31 2015
  3. Europe’s Greek Test, by Paul Krugman | The New York Times, Jan 30 2015
  4. Portugal Won’t Join Greece in Debt Renegotiation |  Capital.gr, Jan 30 2015
  5. Greece awaits EU finance meeting; eurozone deflation deepens (With live updates), by Angela Monaghan | The Guardian, Jan 30 2015
  6. Greece really might leave the euro, by Matt O’ Brien | The Washington Post, Jan 30 2015
  7. Greece’s Political Chimera, by Nikos Konstandaras | The New York Times, Jan 30 2015
  8. Fitch: Greece-Troika Deal Still Possible but Risks Are High | Reuters, Jan 30 2015
  9. Greece looking for common ground with European partners, by Stelios Bouras and Alkman Granitsas | The Wall Street Journal, Jan 29 2015
  10. Greece Steps Back Into Line With European Union Policy on Russia Sanctions, by Andrew Higgins | The New York Times, Jan 29 2015
  11. Global Economy: Greece, EMU and democracy, by Antonio Fatas | Fatasmihov.blogspot.com, Jan 28 2015

Judgement time for Syriza

Yesterday, after a very brief yet polarized pre-election period, the Greek people went to the polls and voted for their new government. Regardless of personal preferences or ideological inclinations, the result was an astounding victory for the Left in Greece. SYRIZA, the Coalition of the Radical Left, officially won the parliamentary elections falling one seat short of outright majority. As many supporters of the party chanted until the early hours of Monday morning: “It’s SYRIZA’s time.”

Many things can been said about the party, its Leader, its programmatic pledges, and the views expressed by a number of its (former and new) MPs. Since 2010, SYRIZA has adopted a highly inflammatory populist rhetoric, and has surged at the top of the “anti-austerity” camp in Greece. It’s elected representatives have criticized excessively – often, using highly derogatory language – both the previously elected Greek governments, and the Troika of lenders responsible for overlooking the bailout packages received by Greece. They have attacked the former parties of the establishment (New Democracy and PASOK), they have pledged to overthrow the existing oligarchic power-structure in place, they have vouched to overturn all of the policies decided by the previous (democratically elected!) governments, and they have insisted over and over again that they would not honor the agreements made between Greece and its international lenders.

In crisis-ridden Greece, it is no wonder that they turned themselves from a fringe party in the margins of Greek politics to the official opposition party in the parliamentary elections of 2012, to coming first in the European Elections of 2014, and eventually forming a government after yesterday’s elections. By strategically capitalizing on the anger and desperation of the Greek people, they have managed to propel themselves at the forefront of the political scene. In order to do so, they have followed a smart tactic of excessive promise-making and pledges that are not only unfeasible (given the current financial situation of Greece), but also deeply destructive of any prospect of recovery from the country’s current state. Playing favorites with the unions, embracing a statist approach in decision-making, and proposing a host of anti-liberal and anti-reformist economic and social measures, SYRIZA does not seem to grasp the fundamental issues at the crux of the Greek downfall, and does not offer a viable progressive-reformist plan to move forward.

SYRIZA has promised many things. Most of all, however, it has promised new ‘hope’ to the people of Greece. Even its main pre-election slogan was “Hope is coming.” It has elevated tremendously the expectations of the domestic population, but it has also managed to put itself in the center of international debates about austerity and economic growth – especially within Europe.

All eyes are on Tsipras and his party now. There is no scapegoating this time around, nobody else to blame. It is them, now, that will have to take the difficult decisions about the country. It is them that will have to meet face-to-face with the Troika of lenders, with foreign Ministers of Finance, and with the person they have demonized the most in the past 3 years: Angela Merkel, the German Chancellor. They will now become the new government – albeit with the help of the ultra-nationalist, anti-liberal, far-right party ANEL (Independent Greeks). In a sense, maybe this is the most appropriate of all setups: both SYRIZA and ANEL have championed an anti-austerity, anti-memorandum, and even anti-European rhetoric. They have both starkly opposed any and every attempt to reform Greece in the past few years, and have made no concessions whatsoever. Now, they are both in power, together.

I am not very optimistic about what tomorrow brings for Greece. Especially after SYRIZA reaching out to ANEL for a coalition government, rather than any of the other two center-left parties (PASOK, the old party of the establishment; and To Potami, a new party created early 2014 by a former journalist). One could say that this was to be expected, and I fully agree. But I was also hoping for a better ‘kolotoumba’ (i.e. somersault, in Greek) than this.

We will witness, of course, many ‘kolotoumbes’ in the upcoming months, especially as they pertain to the programmatic promises of SYRIZA about the economy and our existing agreements with Troika. Let’s hope that they happen soon. And once they do, let’s hope that they are enough to keep this country afloat.