It cannot have been hard to miss – the Greek voters have spoken using the ballot, and their opinion was loud and clear. Syriza, more formally known as the Coalition of the Radical Left, were elected with 149 out of the 300 seats, two short of an absolute majority. Governing with the support of ANEL (another anti-austerity party), it is clear which intended economic direction Greece is taking.
But what does this mean for the Eurozone, the EU, and, to a lesser extent, the world economy?
Well, Angela Merkel, the German Chancellor, has made it clear that Greece will not be offered further debt ‘forgiveness’ by its creditor countries (nations that it owes money to). We should bear in mind that this situation has arisen due to Athens’ insistence in bypassing the so-called ‘troika’ (European Commission, European Central Bank & the International Monetary Fund). So for Merkel, who, in essence, constitutes a major role in the determination of the economic policy of the EU, to publicly deny that any leeway would be given to Greece due to the election of a new government is significant, and will only further cement the clear divisions between Brussels and Athens.
Syriza themselves have described ‘austerity’ as a failed experiment,triggering an immense backlash against the path of action. It is clear in the eyes of Syriza and its voters that targets set by the so called ‘troika’ have been immensely unrealistic, especially considering the dire performance of Greece’s economy, coupled with the 27% unemployment rate.
On the face of it, with Merkel’s public rebuttal, it is seemingly the case that in reality austerity measures in Greece won’t change considerably. However, Syriza’s election certainly demonstrates an insatiable appetite for reform – if not reversal – of measures determined in the boardrooms of Brussels, with anger particularly focussed upon the level of severity of these austerity measures. Certainly, it is unfathomable that the same (or vastly similar) deficit-reduction targets can be implemented on vastly different economies – one only has to look at the noticeable North/South divide within the Eurozone in terms of economic reactions to austerity to validate this point.
The recent protests in Madrid by supporters of an anti-austerity party similar to Syriza highlight the point that protests and active dissatisfaction against Brussels-imposed austerity is not just restricted to the economically-destroyed nation of Greece, but across the Mediterranean nations, who have been disproportionally affected by the belt-tightening process being carried out across the continent. What is certain, as evidenced by the prevalence of anti-EU parties doing particularly well in last year’s European elections across the continent and the popularity of anti-austerity parties (even within the relatively sheltered UK, and the rise of Green party), is that the current economic direction that the EU is encouraging has been increasingly unpopular. Syriza’s ascent into power can only act as an inspiration to other anti-austerity parties, and, depending on how negotiations unfold between Athens and Brussels, this inspiration could transfer to the European electorate to vote for these parties, thereby unravelling the austerity measures peddled by Brussels.
Regardless of the outcome of these negotiations, there will certainly be a wider impact on the global economy. The former head of the US Central Bank, Alan Greenspan, has predicted that Greece will leave the Eurozone, suggesting that any renegotiation of Greece’s bailout terms will only be resolved if Greece exits the single currency, which seems logical, considering Berlin’s unwillingness to alter any terms of Greece’s debt strategy. This prediction is further credited with the news that George Osborne is readying contingency plans for a potential Greek Eurozone exit.
It is clear that being in a position of power is fundamentally different to campaigning to be in one, and in many cases throughout history promises have been watered down or even ignored to reflect the realities of political office. It is none more apparent than with Syriza, who in face of opposition towards their policies from many in the European community, have promised to phase in their anti-austerity plan, rather than introduce it all straight away. This announcement is an obvious acknowledgement from Tsipras (the Greek Prime Minister) towards international creditors in an attempt to placate them – politics is all about compromise (or, more cynically, foregoing your principles) and, in winning power, Syriza have had to compromise, rather than idealistically introduce policies that may not be economically viable.
Of course, if Greece were to be given leeway on its bailout conditions, there would be historical precedent. Ironically, the Germans under the rule of the Nazi Party have been claimed to owe Greece around 160 billion euros – or half of Greece’s debt – by Tsipras who, in his first speech as Prime Minister, claimed that the Greeks had a ‘moral obligation’ to actively seek reimbursement from Berlin for damages to the Greek economy caused by the Nazis, centred on a loan forcibly taken from the Nazi occupiers from the Greek Central Bank. This point undoubtedly will aggravate further the strained relationship between Brussels and Athens, and raises further questions over how long any potential reclamation of income can remain unclaimed, especially if they were, in this case, not included in any peace treaty of the time.
In essence then, whilst the recent political developments in Greece may not initially seem too serious for the immediate future of the Eurozone, with Merkel’s refusal to compromise on any financial leeway for the stricken nation coupled with the level of compromise already conceded by Syriza, leaders in Brussels have to decide which scenario is more preferable: do they risk allowing an already beleaguered economy to slide further into trouble, especially with a lack of financial backing for Syriza’s sweeping policy changes, or do they achieve a compromise with Athens, but risk allowing renewed hope for other anti-austerity parties and their supporters across the continent, particularly focussed in the Mediterranean areas with its prevalence of large, fragile economies such as Spain or Italy?
Whichever path European leaders & negotiators choose to take, one thing for certain is that there will be a highly uncertain immediate future for the Eurozone – a rocky road.
Feature image by George Thorn.