Never bark at the big dog. As I explained on numerous occasions before the Greek elections, the outcome would be: a) a destabilization of the Greek parliament with the likely consequence of new elections very soon, and b) the Greek euro membership would be in grave danger.
Greece’s Status in the European Union has once again been thrown into doubt, after Coalition of the Radical Left [Siriza] leader Alexis Tsirpas – who was handed the mandate to form a coalition government late Tuesday – vowed to rip up the nation’s bailout agreement with its debtors and cancel all austerity cuts and reforms. … Most analysts though believe that none of the parties will be able to form a government and re-elections would be needed by the end of the month.
I stand by my warnings about the parallels to Weimar Germany. The parties that stand to gain the most from a re-election are the fringe parties, the ones who have little respect for the parliamentary system and for Greece’s obligations to the EU. It is very unlikely that Greek voters will change their minds in a few weeks and all of a sudden give power back to the parties that, in their minds, brought about the crisis in the first place.
A strengthening of radical socialists, communists and Nazis would also have direct implications for Greece’s participation in the common currency. The second-biggest party, Siriza, is about as hostile to the euro and the EU as the smaller communist party, KKE, and the Golden Dawn Nazi party. With a new election looming on the horizon, the European Central Bank is showing signs of panic over the prospect of losing a member state. If one country leaves the ECB would look weak and reactive; in order to avoid the embarrassment associated with a Greek secession from the euro, the ECB has decided to come out strong and protect its authority. In an interview with the influential German newspaper Handelsblatt, Jörg Asmussen, member of the board of directors of the European Central Bank, makes very clear what Greece’s alternatives are:
Griechenland kann nach den Wahlen nicht mit einer Bereitschaft der EZB rechnen, sei Sanierungsprogramm neu zu verhandeln. „Griechenland muss klar sein, dass es zu diesem vereinbarten Sanierungsprogramm keine Alternative gibt, wenn es Mitglied der Euro-Zone bleiben will“, machte Asmussen deutlich.
In other words:
Greece cannot expect to have an agreement with the ECB if it wants to renegotiate its austerity program. ‘Greece must understand very clearly that there is no alternative to the current austerity program, if they want to remain a member of the euro zone’, Asmussen made clear.
This will in all likelihood only embolden the anti-EU sentiments in Greece and send radical, statist and even anti-democratic parties surging in the polls. Effectively, the old, mainstream political parties in Greece have effectively put the country in a situation where their only choice is between an ever more austere, ever more authoritarian EU, and the prospect of a totalitarian future under communism or fascism.
Greece is now beyond the point where the country can get the right kind of government reforms done. There is no longer any time for, let alone political interest in, reforms that structurally dismantle the welfare state. There is not even time or interest enough to put Greece on a more traditional tax-cutting trajectory to growth. For all its tragedy, Greece can at least serve as a stern warning to other countries to do the right thing now, or face the same consequences as Greece. However, given how deeply most of Europe’s politicians are committed to the welfare state – and to preserving it at all cost – it is very unlikely that they will hear the alarm bells in Athens.
What some clueless European commentators have called “a Greek spring” looks like the beginning of a new European nightmare.