As I explained after the June election in Greece, the outcome was nothing more than continued political and economic status quo. This is exactly what has happened: the government still has no plan for how to solve the country’s desperate fiscal problems. It is trying to walk an unsustainable line between austerity and the rising threat of totalitarianism. Precisely for this reason, time is running out for Greece, not only as a euro country but for the nation’s parliamentary democracy.
As the EU Observer reports, the EU keeps pressuring Greece into yet more austerity measures. The national government is caught between a rock and a hard place – they need to execute more austerity to get more cash from the EU and other lenders, but they also know what the consequences will be of more austerity:
Coalition partners in Greece have so far failed to agree the details of €11.5 billion worth of spending cuts required by international lenders to unblock more aid, just as a minister warned cash reserves are drying up. The three-party coalition led by Conservative Prime Minister Antonis Samaras was set to meet again on Wednesday (1 August) and try to reach an agreement, after failing to do so in the past few days. Samaras had given reassurances to the troika of international lenders (the EU commission, the International Monetary Fund and European Central Bank) on Tuesday that the cuts will be laid out in detail by next week, Ekathimerini newspaper reports. But Socialist leader Evangelos Venizelos – a former finance minister – opposes further cuts to salaries and pensions, for fear of further social unrest in the recession-hit country. He is backed by the smaller Democratic Left party, which is also a coalition member.
The political situation in Greece is already very fragile, after anti-democratic parties made large inroads into the parliament in June. As we will see in a moment, those anti-democrats have no compunctions exploiting the crisis for their own purpose.
This puts enormous pressure on the Greek government. But as the EU Observer story reports, so is the pressure from the EU:
EU commission chief Jose Manuel Barroso, during a visit to the country last week, told Samaras in front of reporters that “words are not enough” and the only advice he can give is “deliver, deliver, deliver” on the promises made. Meanwhile, a Greek deputy finance minister on Tuesday warned there is no time to lose as cash reserves are quickly drying up in the absence of the next tranche from the €130 billion bailout agreed in March.
Something has got to give. If we trust another story from the EU Observer on July 27, it won’t be the EU:
Greece must stop only talking about reforms but actually carry them out before its lenders’ trust runs out, EU commission president Jose Manuel Barroso said on his first visit to the country since it had to be bailed out. “To maintain the trust of European and international partners, the delays must end. Words are not enough. Actions are much more important,” he said Thursday evening (25 July) … Samaras, for his part, said: “I told Mr Barroso that we are determined as a government to move ahead with structural changes, privatisation and implementation of agreed measures.” The two also discussed the need to tackle … endemic tax evasion, to “drastically reduce” public expenditure, to change the business climate and better use EU funds. … Newspaper reports, meanwhile, have variously said that it would be impossible to get a third Greek bailout through parliament and that the IMF is not prepared to give any more money to the country.
But it does not look like the Greek people are going to give in either. They want their welfare state, and they are willing to take to extreme measures in order to keep it:
In Greece itself the three-party government has an uphill struggle to persuade citizens to stomach more austerity. It has tentatively agreed to see through a €11.5bn package of spending cuts for 2013-14, agreed months ago but held up due to elections in May and June.
And at least one of the totalitarian parties in the Greek parliament is wasting no time advancing its political agenda. Russia Times reports that Golden Dawn, a Nazi party, has been out in the streets…
…handing out food to Greeks coping with a worsening crisis. The event had a distinct nationalist odor, as people had to prove their citizenship in order to receive goods. Hundreds lined up outside Parliament, where the extreme-right activists were giving away potatoes, pasta, milk and olive oil. According to a Golden Dawn spokesperson, all the products were produced or distributed by local businesses. To obtain food packages, those in line had to present their ID card to validate their citizenship. The ultra-nationalist Golden Down, which many say is neo-Nazi, is notorious for constant assaults on immigrants. Last month the party threatened to remove immigrants and their children from hospitals and kindergartens. … Public support for the party has dramatically increased, twenty-fold, since elections in 2009. This May, Golden Dawn gained 7 per cent of the vote at the parliamentary elections, managing to pass the threshold for the first time.
The situation in Greece is extremely dangerous. It has three complicated features:
1. The EU needs to maintain its pressure for more austerity from Greece. It sees no other alternative to preventing a runaway budget deficit. A runaway Greek deficit constitutes a mortal threat to the euro. In other words, the EU needs to pressure Greece into more austerity in order to save the euro.
2. The Greek government sees austerity as a mortal threat to the country’s fragile social and political stability. More austerity could even bring about the end of parliamentary democracy in Greece. Yet they also know that they cannot pay for their welfare state unless they get more loans from the EU, the ECB and the IMF.
3. The Greek people are so addicted to their welfare state that they cannot fathom a future without it. That is why they will, at the end of the day, choose to vote for whoever convincingly promises them an end to austerity. That promise will come from one of the totalitarian parties, presumably Golden Dawn, and will include a promise of a Greek secession from the euro, perhaps even the EU.
Like everyone else with a sound common sense, I absolutely hate the prospect of a totalitarian government in Greece. Nevertheless, as things look now the Golden Dawn have more resilience and political fortitude than the EU. They will probably be the “winners” in this crisis, especially since time is on their side.
If it comes to that, the consequences for the rest of Europe will be earth shattering.