In Athens in mid-January, two weeks before the election that would make 40-year-old engineer Alexis Tsipras Greece’s new prime minister, a bunch of cleaning ladies explained to me why they planned to vote for his party, the Coalition of the Radical Left (Syriza, for its Greek acronym). We met where they had lived, at least part of the time, for the past 16 months: among tents on the sidewalk in front of the economics ministry in downtown Athens. The 595 Agonizomenes Katharistries, as they call themselves, had been laid off from the nearby finance ministry in September 2013 as part of a plan devised by the so-called Troika of multinational institutions to help Greece clear its mountain of debt—which now stands at $350 billion, almost twice the country’s GDP.
The Troika consists of the European Central Bank, the European Commission, and the International Monetary Fund. All of them see the kind of high-paying, low-skilled government job the ladies had lost as an example of mid-twentieth-century clientelism that will put any country on the road to poverty, and risks Greece’s newly won spot in the club of developed countries. The cleaning ladies, in turn, believe this is so much pseudo-economic baloney. They were victims of a heartless, pointless, counter-productive cutting-for-cutting’s-sake that, as they see it, has shrunk the Greek economy by a quarter, handed over good jobs to illegal immigrants willing to work for a euro an hour, humiliated a proud country, and undermined Greek democracy to benefit rich people.
But now the ladies are on their way back to work. Syriza has taken power at the head of a two-party coalition, sweeping away the country’s carefully built austerity program and its four-decade-old party system. The whole of Europe may be shaken to its core. It is not certain that is a bad thing.
Wallet half-empty
Greece’s problems are formidable. A quarter of workers are unemployed, with all the human toll that implies. One meets journalists at top national dailies who have not been paid since last summer, and clerical workers in their 40s who have returned home to live with their parents. The country produces almost nothing of export value besides tourism and olive oil.
Corruption is as endemic as people say. Greece has been in default for half the years since its independence in 1832. Nor did it ever really establish a properly functioning democracy after the end of military rule in 1974. Since 1981, two parties, the Panhellenic Socialists (Pasok) of the Papandreou family and the New Democracy (ND) of the Karamanlis family, have alternated in power. Pasok has received interest-free loans from the government; ND added 150,000 government employees in its last five-year stint before the crisis. The Oxford professor of law Pavlos Eleftheriades has written about other rackets. Until recently a lawyers-and-judges pension fund was entitled to collect a 1.3 percent tax on all property transactions. Doctors got a 6.5 percent take of the drugs they prescribe. Unionized utility workers had similar deals. The arbitrariness of such exactions does not escape the notice of those meant to pay them. Tax avoidance has been rife.
State finances built this way are rickety. Greece’s did not survive the rattling they got from the U.S. subprime crisis of 2008. In May 2010, Greece ran out of money, and in 2012, the Troika wrote its stringent recovery plan—the Memorandum of Understanding. In some ways the Memorandum is making matters worse. Authorities relied on a new property levy, called Enfia, which overnight took the country from among the lowest property taxes in Europe to among the highest. The middle class took it on the chin. The tax was progressive, hard to evade, and broad-based, since Greeks had high rates of home-ownership. Soon people were selling off homes their families had owned for centuries—and family homes had been the backbone of an informal Greek welfare system. Syriza campaigned on changing the tax. Once the party looked likely to win, people stopped paying it altogether. Revenue is down 70 percent since last January, according to one outgoing ND official.
The new taxes were meant to backstop a program of free-market reforms. The cleaning ladies were not the only state employees fired. Wages were cut. Rights to unionize were stripped. There was something arbitrary about these policy recommendations. Taxi services were liberalized, but Athens was already aswarm with taxi drivers. It even has Uber. And it is hard to see why requiring Sunday shopping in a relatively pious country should be the business of foreigners. “No employers’ association asked for it,” a Pasok aide complained to me of a plan to deregulate other professions. “No other country has it.”
While Greece’s debt has not grown much in absolute terms, its GDP has shrunk so rapidly that the debt-to-GDP ratio has run out of control, to 177 percent. “The debt will never be repaid,” one international economist told me in January. Almost everyone agrees. After a debt forgiveness of a quarter of a trillion dollars in 2012, Greece is still paying 4.4 percent of its GDP to service the debt that remains. That is less than Portugal is paying, but it is so crippling a burden that some economists have said Greece’s best move would be to default once it starts running a primary surplus (that is, when it can cover all of its expenses except for interest payments). It is running one now.
One of Tsipras’s campaign promises was that “democracy will return to Greece.” Whether one likes the Memorandum or not, it humiliates the country politically, demanding that a government grow more efficient while shedding half its personnel. It reportedly requires some 800 political actions a year, to which the government can do no more than assent meekly. So the Memorandum undermines Greece’s self-determination and its pride, something Tsipras talked about through the campaign. And being a member of the European Union means a large encroachment on national prerogatives to begin with. That renders more sensitive a problem that is often mentioned in countries bankrolling bailouts (such as Germany) but less often in the context of countries receiving them (such as Greece): their dubious legality. When the euro was set up in the Maastricht Treaty of 1992, Article 123 forbade “monetization of debts” (printing money to pay off deficits, a policy that the European Central Bank began in mid-January) and Article 125 forbade bailouts. But EU officials have deemed the common currency important enough to be governed via emergency measures. As with much of the Obama agenda, authority is found in the it’s-only-just-this-once and it’s-so-important clauses of the constitution.
Leveraged bailout
To a man of Communist background like Tsipras, such constitutional ad-hockery probably looks like the sign of a power structure beginning to wobble. He has laid out an agenda so sweeping—a minimum wage, a restoration of unionization rights, rehiring of government employees, reconnection of utilities for those cut off for nonpayment, a new food stamps program—that it amounts to a repeal of austerity. Tsipras has claimed he does not wish to risk Greece’s good standing in Europe’s common currency, but many of his economic advisers are quite willing to run that risk. Tsipras himself has clearly made a calculation that the EU needs to keep Greece in the euro more than Greece needs to stay in it. After all, there are other debtor nations, and a Greek exit or expulsion may cause a financial contagion.
There has always been an affinity between leftist politicians in Greece and Iberia. Spain and Portugal got rid of their military dictators in the mid-1970s at the same time Greece did. Syriza is very close to Spain’s similarly anti-austerity, similarly university-centered leftist party Podemos. Its leader, Pablo Iglesias, who will run in Spanish elections in December, even hit the campaign trail with Tsipras. Podemos was founded only about a year ago. Drawing more than 20 percent of likely votes, it is closing in on being the largest party in Spain. This creates a dilemma for the European Union. A successful Syriza departure from the euro could create a precedent for Spain and other high-debt countries. On the other hand, any concession the EU offers to keep Greece in the euro will be claimed by other countries, too.
If European Union and German officials have thus far taken a hard rhetorical line against Syriza, it is because they believe Tsipras will be driven to compromise.
First, he does not have the leverage he thinks. In a sense he is frozen in the world of five years ago, and certain of Tsipras’s advisers seem to realize this. His finance minister Yanis Varoufakis—a professor in Athens, Austin, and Australia, as well as a prolific blogger and an in-house economist for the video-game streaming company Valve—recently published a book arguing that Greece should have defaulted in 2010, but keeping quiet about whether it should do so now. Back then, Greek debt was held by French and German private banks. European authorities were spooked by the possibility of another Lehman Brothers event, in which hard-to-quantify interlocking debt obligations led to bank runs. But in the ensuing years, those banks did not roll over Greece’s loans. It was the EU’s national governments that put their taxpayers’ savings on the line, and these include countries that are poorer than Greece—like Poland, Hungary, and Latvia. The IMF is involved, too, and the agreements were made enforceable under British, not Greek, law. In a sense this is a vindication of the leftist position: The Troika’s “rescue” was a rescue not of Greece—look at the lowly estate of Greece now!—but of the big banks of the European core.
And this tells us something about how democratic the European Union is. Its leaders are more solicitous of markets than of voters. The Greeks are often told that the below-market interest rates at which they are borrowing are a sign of the good financial treatment they are receiving, but it is taxpayers, not capital markets, that are subsidizing those low rates. “The threat to a Syriza government will not come from the markets,” Varoufakis has said. “Remember: Greece is bankrupt and is not borrowing from private investors. When you do not borrow, you do not care about the interest rate!”
The euro is an important symbol for Greek voters. Greece is a Christian country, but it is a Middle Eastern country, too. It has more in common with, say, Lebanon and Armenia than with Poland and Holland. Its citizens are wary of Turkey, the main reason why Greece perennially has one of the top 10 military budgets per capita in the world. While Greece is in NATO, the EU provides added security, and 74 percent of Greeks want to stay in it no matter what. “If we get out of the euro,” one economist told me, “we go to Africa.”
Greek politicians, knowing their voters, have been quick to compromise with the EU in the past. Antonis Samaras, the outgoing ND prime minister who spent the last three years administering the Memorandum, was among the most strident opponents of EU bailouts until he entered office. Andreas Papandreou, the Pasok founder who came to power on a radical leftist, anti-American platform in 1981, soon became a loyal member of the Western alliance. His son George was bullied out of holding a referendum on whether to accept EU tutelage in 2011. Pasok’s inability to protect its empire of patronage led to its collapse. It fell from largest to seventh-largest party. But its government employees have gravitated to Syriza as their likeliest new patron. This means that around Syriza’s core of university leftists has grown a mass movement of retrograde voters accustomed to extracting rents from the state. Greece has a long tradition of revolutionary parties winding up the equivalent of old ones, under changed names. A lot of people have said that Tsipras will happily submit to the Memorandum as long is it can be called something like the “Development Plan for Greece.”
Syriza means business
The pooh-poohers of Syriza have been proved wrong so far. In its first days in power, Syriza has behaved like a radical party. Its key decision was to form a coalition with the Independent Greeks (Anel), a conservative formation that comes from the rightmost edge of ND and makes a fetish of national sovereignty in much the way the U.K. Independence Party does. The most foolish commentary in the wake of the elections has been that which describes Anel as an “unlikely ally” for Syriza, or a “strange bedfellow.” The two parties are unlikely partners only if one is thinking in terms of Cold War categories and irrelevant issues. In today’s Greece, in which the main issue is demands from Brussels, Anel is Syriza’s natural ally. The Anel party leader Panos Kammenos will be Greece’s defense minister.
A second mistake has been to describe Anel as a radical or extremist party. A much-blogged quotation, in which Kammenos is alleged to have fumed that Jews don’t pay taxes, has probably been either misinterpreted or misquoted. What Kammenos said was in the context of criticism of Samaras’s handling of the bailout: “His government took most of its decisions against the Church of Greece—cremation, civil partnerships for homosexuals and taxation just for the Orthodox religion. Buddhists, Jews, Muslims are not taxed. The Orthodox Church is taxed and in fact is at risk of losing its monastery assets.” While I don’t read Greek and don’t know the context of these references to cremation, Kammenos seems to have faulted the former prime minister for having sought to achieve austerity by targeting the Greek Orthodox church, as opposed to taxing on more general principles.
Greece does have a xenophobic right-wing party, the thuggish Golden Dawn, concentrated in the declining working-class neighborhoods of Athens. Several of its members are awaiting trial for the murder of a leftist activist last year, and the party took 6 percent of the vote this time around. The Independent Greeks are not affiliated with it.
Ten days before the election, I had lunch beneath the Acropolis with Panagiotis Kouroumplis, a blind parliamentarian who was among the first to make the switch from Pasok to Syriza and will be the new government’s minister of health. He started by talking about his relief that the left in Greece had got rid of many of its unproductive “obsessions.” The two that bothered him most were the “demonization of entrepreneurship” and the “internationalist outlook.” Kouroumplis, who was blinded as a boy by a land mine left after World War II, describes himself as a “peaceful patriot.” He is put off by the deindustrialization of Greece. “In the 1980s we had 10 electrical companies,” he complains. “Today all the appliances in my house are German.”
Nationalism and sovereignty have never been the bread-and-butter issues of those who come out of Trotskyism, but they are strangely important to Syriza. It is true, the party resists telling the public what it wants to hear on immigration. Greece has become a gateway for immigrants from the Middle East, and the EU policy of sending immigrants back to their country of first entry is a great burden to lands on the community’s southern borders. Samaras traveled to the Turkish frontier, praised the border fence that protects the territory from immigration, and accused Syriza of wishing to tear it down.
But aside from keeping quiet about immigration, Tsipras waged a campaign striking for its appeals to nation and state. That Greek pride is a big draw first became apparent in last spring’s European parliament elections, when 92-year-old leftist Manolis Glezos, a national hero since he removed a swastika from the Acropolis during World War II, won a seat for Syriza, getting more votes than any other candidate nationwide. Tsipras’s supporters wave Greek flags at their rallies. He has milked this patriotism (and used the word, too), even at the risk of anti-German xenophobia. The party is constantly needling Germany over World War II (that some of Germany’s own debts were forgiven by the United States, that Berlin imposed a “forced loan” on Greece during the occupation). On his first day in office, Tsipras paid tribute to the Greek victims of Nazism.
In his early hours as prime minister, Tsipras also made it plain that Greece would assert itself in foreign policy. When the EU issued a statement, drafted in the office of Poland’s Donald Tusk, that all 28 EU countries were considering “appropriate action” against Russia for recent pro-Russian rocket attacks in the Ukrainian city of Mariupol, Greece issued its own communiqué that the statement had been made “without ensuring the consent of Greece,” adding: “It is underlined that Greece does not consent to this statement.”
Although Syriza is only two seats away from an absolute majority, it gets more out of its coalition with the Greek right than meets the eye. It is not just that opportunists among Greek nationalists are trying to capture some of the new magic on the left. It is also that Syriza is drawing from new strength on the right. This has led to sympathy for the election result among people who don’t usually back Communists. Marine Le Pen applauded Greece’s “monstrous democratic slap in the face” to the European Union. Charles Moore, the conservative Telegraph columnist and official biographer of Margaret Thatcher, wrote that he would have been tempted to pull the lever for Syriza if he lived in Greece.
The glory that was Greece’s credit rating
Syriza’s rise is a sign that many of our political attitudes will need to be rethought. They are left over from the 1960s, when political opinions about markets and self-rule aligned in a predictable way. In the West back then the interests of money and of conservatism were thought to be congruent. People who liked free markets tended to like national sovereignty. People who distrusted free markets tended to like “one world government.” Almost no one perceived any conflict at all between, say, opposing communism and wishing for Polish independence.
These alignments are now less reliable. The biggest beneficiaries of today’s market (Gates, Zuckerberg, Buffett) are most interested in a set of international rules that make countries more transparent to investors—by making those countries less answerable to voters. Today’s titans of industry favor curtailing national sovereignty in the name of international agreements such as the Transatlantic Trade and Investment Partnership (TTIP), which would go so far as to require nations to indemnify corporations against laws that contravene free trade agreements. It used to be that “free-market” policies of the sort that the IMF built its “Washington consensus” around were meant to promote the sort of dynamism we associate with small businesses and entrepreneurship. But in Greece the Troika agenda is to promote gigantism and large structures—of the sort we used to associate with corporatism and socialism—because small business is linked to tax avoidance.
Greece is a particularly puzzling case. It has debts too large to pay. What usually keeps countries from welshing on their obligations is a concern for their reputation and their national honor. Yet Greece has incurred these debts as a way of staying in a union that aims, whether its promoters admit it or not, to do away with national feeling altogether. Greece, it would seem, is ephemeral. But Greece’s debt payments are meant to echo through the ages.
Christopher Caldwell is a senior editor at The Weekly Standard.
