A New Leader Could Lift Greece—and Europe—Out of Crisis

A New Leader Could Lift Greece—and Europe—Out of Crisis

  • Monday’s parliamentary vote could signal an end to austerity
  • The social-democrats want to solve the humanitarian crisis first
  • Then stimulate the economy and bring jobs back to Greece

It’s all eyes on Athens this week. There have been many significant moments in the eurozone since it erupted in crisis fully seven years ago, but none has been sharper than the confrontation now playing out in Greece. Europe’s fate may hang in the balance. 

Immediately at issue is a parliamentary vote Monday for or against Stavros Dimas whom the government has nominated for the Greek presidency. If Dimas fails to win substantially more support among legislators than he now has, the constitution mandates national elections, and therein lies the crux.

Few Greeks want to go to the polls just now. But if they do, all surveys indicate they will choose Alexis Tsipras, leader of the Syriza party as their next prime minister. Syriza’s stripe runs along the left side of the social-democratic spectrum. Tsipras is a vigorous and articulate opponent of the austerity policies lenders have imposed on Greeks. His party was the big winner in elections to the European parliament last May.  

Related: Greece Faces Crucial Vote that Could Trigger Election

Under a Syriza government, hence, Greece would turn on a dime. And in short order, so would Europe. For weeks, the thought of “Prime Minister Tsipras” has inspired terms such as “menacing clouds” and “Grexit,” meaning the prospect of Greece simply leaving the eurozone to go its own way. 

Broadly speaking, a confrontation has been building for a couple of years between austerians and Keynesians who favor political rather than technocratic solutions to Europe’s crisis. Of late, French President François Hollande and Matteo Renzi, the Italian premier, have broken into open resistance to the tough budgetary and deficit restrictions Brussels and Frankfurt, seat of the European Central Bank, insist upon.

But Tsipras is of another order altogether. He is a 40-year-old civil engineer with a long record of political activism, notably in opposition to the neoliberal version of globalization. Emphatically populist, Tsipras displays little concern for the fate of bankers or industrialists, although he is now trying to calm bondholders. He has had a parliamentary seat since 2009.

Related: Greek Opposition Leader Accuses Government of Fear-Mongering

On Sunday, Tsipras published a much-noted opinion piece in Avgi, an Athens newspaper. Based on a Syriza press release, Bloomberg’s Nikos Chrysoloras put out an early curtain raiser Saturday, noting these points:

  • Tsipras’s top priority will be “a social spending program to alleviate the ‘humanitarian crisis’ in Greece.”
  • Social spending will require no new borrowing.
  •  The social outlays will not be open to negotiation.
  • Syriza’s intent is “to build consensus in Greece” and “pave the way for an alternative policy in Europe.”

Here is a little of what Tsipras sounded like over the weekend:

Syriza’s victory will be the start of a great national effort to save society and restore Greece—a national effort with international repercussions, since our historical responsibility is… turning a eurozone country from a neoliberal experiment to a model of social protection and growth.

Note the implied commitment to the eurozone. It’s real. Tsipras doesn’t want to take Greece back the drachma, but he views the nation’s $240 billion in public debt to its “troika” of lenders— the European Commission, the ECB, and the IMF—as unsustainable.

Related: Greek PM Offers 2015 Election Once Bailout Talks Complete

Missing not a trick, Tsipras earlier invoked the London Debt Agreement of 1953, by which lenders wrote off half of Germany’s postwar debt. “While generosity was extended to Germany, Germany refuses to extend the same generosity,” Tsipras told an Athens audience a few weeks back.

The path through the euro crisis was bound to lead to this, in my view. And the shove back against Germany’s inflation hawks and the technocrats to the north was bound to be stiffest in Greece. It has been years since we saw pictures of Athenians eating dinner out of dumpsters and former business executives running what Americans called hobo camps back in the 1930s.

Last month the economy finally climbed out of recession, but taking back the 25 percent it has shrank is a generation’s work. Unemployment, while down from its peak, is still just short of 26 percent; the International Labour Organisation recently warned of “a prolonged social crisis” unless a lot of jobs materialize quickly.

The troika and the European Union are having none of this, of course. The sum of their position is roughly, the bailout terms are the bailout terms. You’re stuck.

Related: ECB Weighs Weaker Eurozone States Bearing More QE Risk

Earlier this month, it was reported that Jean-Claude Juncker, European Commission president, said he wanted Greece’s next president to come from New Democracy, the rightist party Konstantin Karamanlis founded when the military dictatorship collapsed in 1974. Following Juncker’s inappropriate comment, Pierre Moscovici, a commissioner, traveled to Athens to lobby no fewer than seven government ministers, the central bank governor, and assorted others in the same cause.

Absolutely unconscionable. It is a perfect display of the E.U.’s indifference to politics and social issues, which is what brought the eurozone to this point in the first place.

More of the same now makes sense, does it?

What’s tough to figure is why Antonis Samaras, the conservative prime minister, decided to bring forward the election to replace Karolos Papoulias, the outgoing president, who was not scheduled to retire until next March. Syriza made clear its popularity in the E.U. elections. Athens and the troika are amid tough negotiations on further assistance, and the latter has agreed to extend aid only until the end of February.

Samaras gambled and Samaras now stands to lose. On Saturday, he pleaded with parliament on national television to give Dimas the 12 additional votes he needs to take office and avert elections.

In my view, there will be less than now meets the eye in the “catastrophe” of a Syriza victory, if it comes to one. Scrape away the politics and Tsipras wants a new deal for Greece because he wants jobs and growth. In three words this has been the anti-austerian argument from the first, austerity having plainly let many Europeans down. 

This should be everyone’s priority in Europe now. It is a mystery why bond investors and bank lenders can’t see what’s in their interest, too.

Top Reads from The Fiscal Times: