Opinion

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What does the election of Syriza mean for Greek and EU politics?

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📥  Public Policy

As the head of Greece's far-left Syriza party is sworn in as prime minister, set to lead an anti-austerity coalition, our researcher Dr Theo Papadopoulos from our Department of Social & Policy Sciences, writes about what their election means for Greek and wider EU politics.

Over the weekend, Theo was active in the national and international media commenting on the elections. Read Theo's article for the Conversation UK 'Why the Greek election is so important?'

What is the significance of Syriza's victory in the Greek elections? Dr Theo Papadopoulos comments.

What is the significance of Syriza's victory in the Greek elections? Dr Theo Papadopoulos comments.

It is a historic moment for Greek and European politics. Syriza, a broad coalition of left-wing social democrats, radical socialists, environmentalists, anti-globalisation campaigners and human rights advocates, won the election with 36.4 per cent of the vote, getting 149 seats in a 300 strong parliament. Together with an anti-austerity, right-of-centre, party called ‘Independent Greeks’, they will now form a government that will have the difficult task to re-negotiate with the so-called troika (EU, European Central Bank, International Monetary fund) over the terms and conditions of loans received to serve the Greek sovereign debt. Syriza will also try to implement a programme of modest spending towards those who were hit the hardest by the recession and austerity measures and towards stimulating the creation of jobs.

How bad are things in Greece?

UN reports characterised the situation in Greece as a humanitarian crisis and this is the term that Syriza repeatedly used to describe it both domestically and outside Greece. As a result of austerity measures and the prolonged recession Greece has seen its GDP shrink by nearly 25 per cent over the last 4-5 years (this is worse economic performance than that of the US during the great depression of the 1930s). At the same time with nearly a third of the labour force unemployed and youth unemployment reaching nearly 50 per cent, many Greeks, especially those well-educated, are leaving Greece to find jobs abroad in Europe and other parts of the world. Finally, nearly a half of the Greek population is now below the poverty line as a result of the economy not generating new jobs. Hundreds of thousands of small businesses have closed down while the publicly funded infrastructure is crumbling, due to lack of investment and the loss of thousands of public sector employees due to cost cutting measures.

Is the coalition of Syriza with the centre-right party ‘Independent Greeks’ going to work?

The two parties have many differences but they were both outside the political ‘establishment’ and they share the same anti-austerity views and a discourse of patriotism agaisnt what is perceived as the humiliation of a country run as a colony by the troika. It is also clever of Syriza to make a political opening to the right. It needs to present itself as a government of all Greeks and have a better relationship to the military and, to some extent, the police who traditionally tend to vote more conservatively. With this move Syriza wants to avoid the creation of a ‘left-right’ split among the Greek electorate and, thus, galvanize wider political support for the tough negotiations ahead.

Is the Syriza-led coalition going to take Greece out of Euro?

The majority of Syriza representatives want to avoid having to take Greece out of the common currency The current leadership of Syriza has made numerous statements that it does not intend to destroy the euro or force Greece out of the eurozone. But they also mentioned that they are not willing to keep Greece into the eurozone at any cost. If Greece leaves the euro under Syriza, it will happen not because its leadership wants to but because it will be forced to.

What are the implications for Europe?

Syriza’s victory can potentially have very important implications for Europe.  Syriza has stated its political ambition is to change Europe as well as Greece. It cleverly refused to accept the narrative of Greek exceptionalism when it comes to sovereign debt arguing that it affects many other countries in the EU. For example, it called for a European summit on debt. In this way it opened a political space both for itself and other European political forces to change the dominant economic narrative in the EU.  Syriza’s election clearly brings a change in the political dynamics of Europe. Its sister-party Podemos is now polling first in Spain while already various social-democratic parties across Europe have declared its cautious support and willingness to co-operate with Syriza. The stakes are very high and obviously Syriza’s opponents will not like to see it succeed. But, on the other hand, austerity has clearly failed economically and socially, sovereign debt is rising and the costs of forcing Greece to leave the euro are impossible to calculate. The weeks ahead will show how far Syriza’s ‘audacity of hope’ will translate into substantial change for Greece and Europe.

3 Responses to “What does the election of Syriza mean for Greek and EU politics?”

  1. Geof Wood on

    Very clear, sharp piece by Theo. Maybe slightly obvious comments from me. First, debtors can be in very strong relationships to creditors, especially if creditors very dependent upon 'some' debt repayment rather than nothing as a result of sovereign bankruptcy. Secondly, if I was in Syriza government, I would be disaggregating the debt portfolio and allocating responsibility for different parts across the lenders (they are not without blame here), Greek private sector (i.e. banks and rich tax defaulters), and only lastly the bottom 50% of ordinary taxpayers. But, thirdly, how to exercise monetary controls without one's own currency? Perhaps there needs to be a Greek Euro only for the purposes of avoiding leakage. Finally, fourthly, a Keynesian New Deal is a no brainer for Europe--but that means public investment, not QE for bank solvency. OK-fifthly-would strategic debt relief really encourage future delinquency? Surely the borrowing lesson has been learnt?

    Reply
    • Theodoros Papadopoulos on

      Thank you Geof for your comments.

      I agree with your first point - in fact this is what the Syriza government is arguing already. They also add that the sovereign debt is a EUROPEAN issue (including other states like Portugal, Italy, Spain, Ireland etc. but also the European banks and the financial sector) and, rightly in my view, never bought the argument of Greek exceptionality when it came to sovereign debt.

      Your second point-proposal is insteresting: Syriza's proposals expressed by Yinannis Varoufakis follow a similar line of thinking. But, this is not a simple 'game' of rational actors as Yiannis would have liked - political stakes, emotions and careers are at stake, so the 'game' can have unexpected twists and turns. The enxt two weeks are critical for Greece and the Euro.

      Your third point is also vaild - this is the crucial question. Can you control capital without one's currency? Not easy - the suggestion of the Greek Euro has been discussed by various Greek economists but did not go very far - the moment you introduce some form of convertibility between the two Euros the 'gini is out of the bottle' again. My suggestion, when asked, was to think towards the opposite direction: re-embedding Greece's local economies back into their regions by means of using complementary forms of currency that are not exchangeable to Euro, while Euro still circulates. Something like Nectar points for regions, where the total payment for a good/service or a wage comprise a combination of both. Say, a worker in Crete is paid a daily wage of 20 Euros and 20 Cretan 'nectar points'; only the latter can only be exchangeable for good and services of only within the Cretan region (in the same way that nectar points are only exchangeable in Sainsbury's shops only). For the purposes of exports of Cretan products or services the Euro part of wage costs are kept low but the welfare of local working population is kept high while the local economy and demand are boosted. The same principel can be applied to exchanges between small and medium enterprises - when in same region they could make exchanges partly in 'points' or raise capital while bypassing the banking sector, with minimal exposure to further debt. In this system the role of regional authorities is pivotal in supervising it, while the national state can play a co-ordinating role esp. in terms of securing the whole system against tax evasion. Crazy idea? Well, a variant of it is practiced in Switzerland since 1934 with great success by the so-called WIR Bank: 'The WIR Bank, formerly the Swiss Economic Circle (GER: Wirtschaftsring-Genossenschaft), or WIR, is an independent complementary currency system in Switzerland that serves businesses in hospitality, construction, manufacturing, retail and professional services. WIR issues and manages a private currency, called the WIR Franc, which is used, in combination with Swiss Franc to generate dual-currency transactions.' (from Wikipedia - http://en.wikipedia.org/wiki/WIR_Bank).

      Finally, I agree with you about you assessment regarding QE. Giving more money to Banks so that people and businesses borrow more and go deeper into debt is like pouring more fuel into the fire. More debt is not an answer to the needs of the real economy.

      Reply
  2. David Christian on

    While the Greek debt should be repaid, the EU exerts entirely too much power in the affairs of sovereign countries. The powers of the EU should be greatly curtailed.

    Reply

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