Greeks Vote Left, Was it the Right Decision?

by Stellina Michalopoulou and Millie Radovic, first year students of BA International Relations at King’s College London.

Disclaimer: While we wrote this together, we want to stress that any opinion seen in this article was put forward by me, Millie. Stellina is Greek – she has provided invaluable insight into the topic, but will not be putting forward her personal views here.

  • A week ago, in its general election Greece voted in Syriza, its radical left-wing party. Expected or not, following the mandate of the New Democracy Party, this is a major turnaround for Greece.

    Year of Elections       Syriza’s share of the votes
    2009                                  4.6%
    2012                                  16.8%
    2015                                  36.3% (149/300 seats)

    Looking at the numbers, Syriza did not get a clear majority with a landslide victory. They’ve gone into a coalition to make up for this, with the populist right-wing AMEL (Independent Greeks) party. While odd at first sight, this decision actually makes sense. With only 13 seats AMEL are not likely to make any major decisions, but they provide a balance and reassurance for those Greeks wary of a socialist government. Certainly for now, Syriza seems to be taking all the right steps.

    Its leader, the new Prime Minister, Alexis Tspiras, has also been a relatable figure throughout the campaign. Coming from a middle class family, a state school, and being so young for a leading politician, Tsipiras provides a breath of fresh air into Greek politics. I have to say that so far I feel inclined to like this guy, I’m almost desperate myself for him to be the real deal.

    Moreover, in the past year Syriza has made some excellent points. Five of its key aims are:

  • Reducing unemployment
  • Increasing the provision of power for the working classes
  • Writing off international debt
  • Scrapping of property tax
  • Closer relations with Russia

I could talk about these in detail, like how the party is promising to bring in 300,000 jobs, and 300kWh of free power to 300,000 households under the poverty line. But as this is an IR blog, I’ll focus on their policies most likely to affect the rest of Europe and these are certainly the closer relations with Russia, and the debt write-off promises.

It is not by accident that the first thing Tspiras did after being sworn in on Monday was visit the Russian Ambassador. By also condemning the EU for providing a statement on the Ukraine crisis that Greece had no input in or agreement with, he’s sending a message: Greece does not want to be in as strained a relationship with Russia as the European Union is.

I wouldn’t say that this means there’s some anti EU alliance forming in Eastern Europe. But I would say that this is not surprising, given that Syriza is a far-left party. It is also not surprising because there is an underlying common ground between Russia and Greece that is often not taken into account: religion. Neither country gives out a particularly religiously devoted image, because they’re not. But, both states are mainly populated by those of the Christian Orthodox denomination and this has always provided for a certain bond.

This was most obvious in the 19th century when Russia provided support for Greek revolts under the Ottoman Empire, not just to weaken the Ottomans, but also because of this emotive bond that has always made the Balkans a sphere of influence for Russia.

What does this mean today? It means that in the far-fetched case that Greece leaves the EU, it could possibly seek a much stronger partnership with Russia. Countries like Serbia, who are also Orthodox and outside the EU may very well decide in this case that a membership is not their best bet. Again, I don’t imagine some major power or ‘alliance’ shift happening in that case, simply because that’s not how the international system works today. But it would still be interesting to see what the macroeconomic effects – especially in terms of trade – would be of a change like this.

Speaking of macroeconomics, Tspiras’s second controversial aim is to restrict, if not get Greece’s entire debt written off. You can see how this would make some EU members angry, and frankly if I was German I too would be saying “things that Greece itself won’t do cannot be shunted onto the taxpayers and employers in neighbouring states.”

This may make Germany seem inconsiderate and overly competitive, with Michael Lewis’s quote “Germany longed to be near the shit, but not in it” coming to mind from his book on the 2008 crisis, Boomerang. But actually it is entirely understandable. Not only because it shouldn’t be fair to expect Germany to come to the rescue every time an EU member is in trouble, but also because of the picture that the Germans receive from Greece.

When you walk into Athens, you don’t see an impoverished miserable city run down by the financial crisis. You see people going out, shopping, eating, and all in all enjoying themselves. And as a member of the Troika, surely you wonder – where is this money coming from? Where is it going? How on earth does this spending resemble a crisis?

I’m afraid I can’t give an answer to that. But what I can say is that it very well resembles the Balkan mindset that even in crisis, people will find some sort of way, whether through borrowing or whatever it takes, to keep their lives as comfortable as possible. This mindset is the polar opposite of a country like Germany, who would resort to saving instead. And this stark contrast shows just why Greece’s membership in the Eurozone is not working out as well as that of other states.

As for Greece’s point of view, it is obvious even looking on from London that the citizens of Greece do not feel “bailed out” themselves. Their living and working situation remains far bellow the standard of the rest of the EU:

Average wage             €600
Unemployment            25% (almost 50% for youth)
Economy size              Since the Eurozone crisis, shrunk by 25%
Debt to GDP ratio       175%
Troika Loans                €240,000,000,000

In addition to these figures, the Independent makes a very good point on why the austerity reforms have not been so effective:

“One of the problems for the Troika is that it is the very fact change was being imposed by abroad, and most notably by Germany, which delegitimised necessary reforms.”

greece 3

Not only did Troika’s influence and presence undermine the reforms it was there to implement, but also it undermined the authority of the government in place, and thus Greece’s internal sovereignty, certainly contributing to the waning of support for New Democracy. It is here that Tspiras’s claim that Greece will “not continue a policy of subjection” makes sense as it gives its citizens, many of whom look to have given up, hope. It is also here that a paradox occurs.

One cannot undermine the help that the Troika has provided, and keeping in mind the Greek mindset, its presence seems most necessary to implement effective change. But at the same time, it is so very obvious that this very presence is hindering any effective change from coming into place. This is further proof of the fact that such major change must come from within, and also an indicator as to why EU assistance cannot work every time.

Syriza’s claim that it will not default, but that it will negotiate a write-off hinges on one particular argument: if Germany was forgiven half of its war debt, why can’t Greece be forgiven this debt? Is their crime greater than that of the Second World War? And would Germany even be in a position to lead the EU if this hadn’t happened?

These are certainly questions worth asking.

Still, the calls for a debt write-off, and western warnings that Greece must stick to its repayment plan have sent the investors into frenzy – seeing the situation as one where the new government looks to be at great odds with its creditors, they have begun to pull their investments back. The Athens Stock Exchange Market General Index has hit its lowest level in more than 2 years. Meanwhile, Greek bank stocks already by Wednesday lost more than a quarter of their value forcing the Euro at an 11 year low against the dollar.

Not only are they pulling out of Greece, but there are significant fears that if Greece defaults, investors will start pulling out of other less well off countries, especially those with rising radical parties.

However, this opinion is not unanimous – certain investors believe that Eurozone could be stronger without Greece, so long as no other big country followed it out the door.

Personally, I at least slightly agree with this. Not only could the Eurozone be better off, but also Greece itself could be better off as this may be the pivotal change necessary to pull it out of the dumps.

I have absolutely no fear that other big countries would follow Greece out of the Eurozone, let alone out of the EU itself. Why? Again, there is this emotive ideological connection dating back to the Treaty of Rome (1958), the first founding one of what came to be the European Union. It would be a lot easier both geographically and culturally for Greece to leave the Union, than for one of its founding members as after all its very existence is a result of their cooperation and vision.

Yet most importantly, what needs to be remembered is that neither Syriza nor anyone in the EU has indicated a ‘Grexit’ in the near future. So while I think that it wouldn’t be the end of the world, I also don’t think it will happen soon. It is only human to exaggerate, dread and fear the unfamiliar. That is exactly what Syriza is. So before we let panic drive worst-case scenario speculation, let’s give them what they’ve earned – time. Let’s see whether a new party, and a new voice of Greece can lead it in a new better direction. Ultimately no matter where we are or what we are doing the very dynamics of a globalised macroeconomic system mean that a state doing better can only be positive for those around it, so rather than fearing the worst, the international community must at this time, hope for the best.

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