Greece is stuck between a rock and a hard place. Next month it will go to poll – again – to determine who will govern it. The choices are not easy and it is quite likely that the result may be another hung parliament just like the one after the last election on May 6th.
Things are not going swimmingly for Greeks, as the conservative mayor of London, Boris Johnson, noted after a recent trip to the streets of Athens.
Come with me through the streets of Athens, not far from Syntagma Square, and your mind will reel with the horrified realisation that history is not a one-way ratchet, that human progress is not guaranteed, and that a proud country can be reduced – by years of torture and bullying – to a state verging on total political, economic and moral collapse.
The Greek voters have lost faith in their politicians. In the last election they voted thumpingly against the two parties – the centre right, New Democracy and socialist, the Panhellenic Socialist Movement (PASOK) – that have been ruling Greece since 1974, when the democracy was restored. Instead they favored anti-bailout groups on the left, Syriza. They voted for the fringe parties too – Communists and neo-Nazis. Matt Stoller of Naked Capitalism calls it a a wake up call to political elites.
This should be a wake-up call to political elites globally, because Greece could simply be the start of a trend of collapsing centrist politics and the rise of dangerous political actors
The political elites, though, in the EU are having different thoughts. They have a choice of either taking steps to allay the fears of Greeks and make their lives easier or they can give tough-love. They are leaning towards tough-love. They warned Greece against any changes in the bailout terms and, in a thin disguise, suggested who should Greeks elect in the upcoming June election.
In Berlin, German Foreign Minister Guido Westerwelle issued a blunt warning to Greek voters, indicating that the next election could be a referendum on their euro membership.
“The Greek people should know what they are voting about. It’s not about party politics, but about Greece’s future in Europe and the euro,” Westerwelle said in a statement.
“We hope and also at the same time expect that everyone in a decision-making capacity in Greece is aware of his responsibilities,” Westerwelle said.
Perhaps, it is working a little bit as the support for pro-bailout parties is increasing in Greece, but Syriza, the anti-bailout left party is still leading. Its leader, Alexis Tsipras, is throwing the gauntlet, saying that Germany must back off austerity and that the only way out is pro-growth policy.
If Tsipras wins election then he will abandon severe budget cuts imposed on Greece as a condition for international aid. EU has warned that such a move will force Greece out of euro.
On the other hand, Nouriel Roubini thinks that if Greece adheres to the current plan as demanded by EU then also it will have to exit the euro.
[..] with a new government committed to a variant of the same failed policies (recessionary austerity and structural reforms), will not restore growth and competitiveness
So it seems that whatever the outcome of the next election Greece will have to exit the single currency union. If the left, Syriza, wins then the EU will force Greece out. If the pro-bailout parties win then the cumulative impact of already failing austerity policies will enable a Greece exit.