Greece’s political party leaders have come to the end of a constitutional roadmap without being able to form a coalition government through direct talks. They now stand, along with the rest of the country, on the brink of an abyss.
A final meeting of party leaders with the country’s president is thought unlikely to yield results. After that, an emergency government will have to take the country to repeat elections.
Disoriented at this stage in its complicated and expensive bailout by the European Union, Greece can easily slip into default and penury, and abandon the euro. The loss of market trust in the currency would reverberate throughout the eurozone, possibly destabilizing its other troubled economies and toppling the euro itself.
The political impasse came late Friday, when the radical-left Syriza refused to join socialists and conservatives in a government of national unity. The two traditional political powerhouses are self-proclaimed Europeanists, sworn to keeping Greece in the euro. They have ruled as a coalition since November, but were crippled with the loss of more than half their combined strength in this month’s election.
Across the aisle is a swelling contingent of communists and radical leftists who have seen their combined showing rise from 34 seats in the 300-seat Parliament to 97. However, even with other anti-austerity forces they cannot command a majority either.
Chief among them is Syriza, which considers Greece’s bailout usurious, and wants the country to default on its external payments in favor of internal ones to pensioners and salaried employees. It disputes the €355 billion debt figure and wants this audited by a firm of international standing. It would reverse pension and salary cuts, and even extend health and unemployment benefits the economy cannot pay for. Its plan involves taxing the rich at 75 percent and nationalizing banks.
This uncompromising platform catapulted Syriza from obscurity to second place in last Sunday’s election, just 2 points behind the conservatives. Two polls this week suggest that it would make further massive gains in a repeat election.
Syriza interprets that result as a de facto abrogation of Greece’s memorandum of austerity by popular will. “It is not Syriza that rejects this plan,” party leader Alexis Tsipras said after walking out of last-ditch talks with the socialists on Friday. “It is the Greek people who rejected it with its verdict last Sunday.”
“Increased popularity means greater responsibility,” the visibly angry socialist leader, Evangelos Venizelos, later declared. “Arrogance and party political calculations with an eye to the next election do not befit the gravity of the moment.”
It has become a mantra of Syriza officials to say that Greece’s budget is balanced—except for its obligations to international lenders. This is simply not true. Greece did pay lenders a whopping €15 billion last year, but it also had a primary deficit of more than €4 billion.
Nowhere is the unemployment rate worse than in the westernmost Athens neighborhood of Perama. In this rustbelt of dying shipyards, joblessness runs as high as 50 percent.
The €200 billion bailout currently allows Greece to balance its budget over two years rather than two weeks. But European officials have said that Greece will not benefit from this package unless it abides by cost cuts and reforms. To make the point, the European Financial Stability Fund, which is bankrolling Greece, withheld a €1 billion payment into state coffers this month, and disbursed only funds earmarked for the servicing of loans.
The trouble is partly unbridgeable ideological differences and partly the fact that the physics for a compromise are simply not there: two parties are behaving opportunistically while voters are in flux. The radical-left Syriza sees its chance to make history by uniting the famously fractious left at the core of a coalition of bailout denouncers; the conservative New Democracy hopes that the threat of chaos will help it coil its rope of voters in the guise of a bailout renegotiator.
There are signs that Syriza’s leader, Alexis Tsipras, was never earnest about forming a coalition. Earlier in the week he invited the socialist and conservative leaders to write to the heads of the European Commission and European Central Bank, renouncing their commitments to austerity measures. If they didn’t do that, he said, there would be no point in his even talking to them.
If political matchmaking turns into a rematch, Tsipras is banking on increased support from voters who have reached the end of their tether. His party carried the day in the greater Athens area, where unemployment has skyrocketed. It now stands at 21.7 percent against an EU average of 10.2 percent, and it is nowhere worse than in the westernmost Athens neighborhood of Perama. In this rustbelt of dying shipyards, joblessness runs as high as 50 percent.
It is here that George Koumbouros, in his mid-70s, now regularly avails himself of food and medical aid handed out by Doctors of the World. The outreach center was originally set up for immigrants, but 90 percent of its beneficiaries are now Greeks, doctors there say.
George is the father of seven and grandfather of 14. He says neither he nor any of his children have been able to find work for two years.
“My son set out the other day in his car to pick up recyclable goods from dumpsters. He couldn’t find any. Even that has been claimed before we can get to it,” he said fighting back tears. “What are we supposed to do? Our only options are to become criminals or kill ourselves.”
Malamo Voulgaropoulou, a former singer now in her 80s, is one of many pensioners who rummage through dumpsters for food. “I find eggplants, tomatoes, zucchinis, and greens,” she says. “I wash them very thoroughly and boil them for a long time.” She and her husband avoid gleaning after farmers’ street markets, she says, because the competition is intense.
Dramatic changes in peoples’ way of life are taking place even among the middle class. Haralambos Lambropoulos, a retired Air Force commander, lives in the central neighbourhood of Neos Kosmos. His pension has been cut in half over two years, to €1,200 a month. That is more than enough for him and his wife, Vasiliki, but in this family-oriented society pensions often subsidise the young. Haralambos and Vasiliki help support two sons and daughters-in-law who have also lost jobs and are struggling to raise four children.
Against this backdrop, many Greeks are convinced that the bailout is a cure worse than the disease.
A repeat election would almost certainly favor Syriza for three reasons. First, the party did best in the large urban constituencies of Athens and Thessaloniki. The Interior Ministry is scheduled, at the end of this month, to award those constituencies a greater number of seats, reflecting population growth over the past 10 years.
Second, voters now identify Syriza as the anti-austerity champion, and polls taken last week suggest that the party is set to concentrate more of the protest vote.
Third, any pro-bailout government has to cut at least €11 billion from health, social programs, and civil-service costs from the 2013-14 budgets in June. Syriza has vowed not to do so. If it prevails, the EFSF won’t pay Greece a massive, €28 billion tranche of its bailout, a large part of which is designed to refinance the banking system and help restart the economy.
Greece is already set to lose a fifth of its 2008 economy by the end of the year. The Bank of Greece recently revised its recession figure from -4.5 percent to -5 percent. The European Commission has just revised it to -4.7 percent. With such political instability, matters can only get worse for Greece and the euro zone.