GREECE CAUSES A TREMOR

I was expecting an earthquake followed by a tsunami but in the event the 17 June Greek election only made the ground move a fraction and there is no sign yet of any dam breaking. The anti bail-out Syriza, led by vigorous Alexis Tsipras, greatly increased its 6 May poll from 16.8% to 26.9% but was pipped at the post by conservative New Democracy with 29.7%. New Democracy won 79 seats as against Syriza’s 71 but under the Greek system gets a bonus of 50 seats to 129 as the highest polling party. It looks as if New Democracy will get active or maybe only tacit coalition support from PASOK (33 seats) and Democratic Left (17 seats) to give it a working majority with 179 seats in the 300-seat parliament.

Seats in May 2012 and June 2012 elections

The mood in Athens is rather flat – the return of the same old incompetent and corrupt gang of ND and PASOK is hardly inspiring. People in the shops shrug their shoulders and say Syriza will get there next time, but who knows? There was certainly a huge “Stop Tsipras” campaign in the Greek media, from the political and business elite, egged on improperly by Brussels and Berlin. Many ordinary Greeks too were fearful of a Syriza victory: typically a neighbour voted New Democracy even though her pension had already been cut 30% - she feared losing it completely. If ever FDR’s dictum that “you have nothing to fear but fear itself” applied, it was to the wavering voters of Greece on 17 June.

Contradictions still abound. The Greeks say they want to stay in the Euro. They desperately need the large bail-out subsidies grudgingly released in dribs and drabs by the EU/ECB/ IMF “Troika” yet fight against the pre-conditions. The tax measures have been imposed but privatisations are moribund. No action has been taken on reducing the minimum wage down to Spanish levels (the Left and the unions, poor dears, would be offended). Worst of all, the government payroll has not been cut by even one pen-pusher. There are 760,000 state employees. Greece promised to fire 15,000 in 2012 (a fleabite) and a total of 150,000 by 2015 (a substantial enough number but hardly likely to be missed in the dysfunctional Greek bureaucracy). Anyhow, precisely nothing has been done – with PASOK, Syriza and the Left rambling on about “lines in the sand”. A reality check has long been urgently required. 

Leaders of the Old Gang, Antonis Samaras and Evangelos Venizelos

Syriza says it will operate as a vigorous and challenging Opposition, although how loyal that opposition will be is an open question – there will be plenty opportunities for mischief-making and the Greeks have liked a good punch-up since the Nika Riots of AD 532. The New Democracy leader Antonis Samaras has had a career thus far distinguished only by turning his coat and changing his mind – once an opponent of the bail-out, now a supporter. His mettle will be sharply tested in the coming months – can he get better terms from the Troika or even a soft landing if Grexit is inevitable? Proceedings in the normally somnolent Greek parliament may turn loud and nasty as the new boys on the block are 18 members from unsavoury neo-Nazi Golden Dawn, unlikely to abide by any code of good manners.

Although the Greek election caused no more than a tremor, it certainly concentrated minds in many chancelleries. Is unremitting austerity the only proper medicine for over-indebted states? Can Eurozone countries in surplus recycle automatically some of this surplus to those chronically in deficit?  All the rhetoric from Berlin and Brussels firmly maintains that exit from the Euro by Greece or anybody else is an impossibility – “Ever closer Union” is the catchphrase. Yet every respectable economist has been saying for months that Greece, at least, must leave the Euro to survive at all. The Eurozone countries are too disparate to form a coherent currency bloc – even within Germany 40 experts have just written to Mrs Merkel advocating a Northern Euro (the Thaler) for Germany, the Netherlands and other like-minded states leaving the existing Euro to readjust for the benefit of Southern Europe.

For the sake of the world economy, Germany above all has to address these questions with real thought and argue its case with compelling conviction. In Greece the populist vision of Mrs Merkel has her as a Queen Bee sucking in the life-blood of her drones in Greece and elsewhere. The truth is more complex and movement on these great issues of the day is urgent.

SMD 20.06.12 

 Text Copyright Sidney Donald 2012