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Growing Opposition to Continued Greek Austerity Measures

Greek Prime Minister Antonis Samaras began his six month tenure of the EU Presidency in January with a speech criticising the continued imposition of austerity measures. This has meant four years of harsh spending cuts and a tight fiscal policy, which he said the country could no longer tolerate. His is now a leading voice in the growing opposition against renewed austerity measures, which have been imposed on states in economic crisis across the EU [1]. Greece has felt the sharp end of the EU currency and debt crisis and has already received €250 billion in bailout funds. For many leading politicians and the majority of the public alike, enough is enough.

For the Presidential handover ceremony in Athens, trouble was expected. Over 5000 police were drafted in to ensure peace was maintained and there would be no disruption. This did not stop many Greeks coming onto the streets of the city to let visiting EU officials know what they thought. Neither left nor right wing party leaders attended, but the point was made. Outside the ceremony, demonstrators and police clashed and crowds were forced back with tear gas; inside, the new EU President presented an equally clear message that Greece was exhausted by austerity and that although the government’s economic reforms were having an effect, there should now be a new agenda to stimulate growth and create jobs.

Greek Finance Minister Yannis Stournaras said: ‘Greece does not want to have any more fiscal conditionality. It is out of the question because it is already too tough.’ He spoke for many. Years of depression, mass unemployment and wage cuts that have left even those lucky enough to have a job to struggle on around a third of their former incomes, have left the country exhausted. With the news coming at the beginning of February of an unexpectedly large primary surplus, the Finance Minister has criticised the Troika’s earlier pessimistic forecasts, which had expected a €3 billion shortfall in the 2014 budget. He said that if he had agreed to the lenders’ demands for greater austerity measures, the Greek economy would now be facing ruination. Greece has worked hard to eradicate the structural problems in the economy and the huge current account deficit that had been the two major causes of the crisis, but admitted that ‘the other side of fiscal consolidation is a decline in living standards’ and that it would take some time ‘from the moment that figures improve until the moment that people will see some money in their pockets.’

Priorities and difficulties

On 15 January, Prime Minister Samaras outlined Greece’s priorities for the next six months. Measures to promote economic growth and improved social cohesion will be set in motion, and solutions to the serious problem of youth unemployment [2] must be a part of these. The first signs of economic recovery may be visible, but one of the aims of any set of recovery measures must be the prevention of a repetition of the crisis. The Prime Minister said that the crisis and the response to it had proved that the EU can be effective, and he recognised the solidarity shown by the people of Europe. Looking towards the May 2014 European and municipal elections, he said he wanted ‘to make sure that citizens won’t vote with the bitter taste of crisis in their mouths.’ This is a serious concern, as recent polls have shown Prime Minister Samaras’ New Democracy government falling behind the opposition Coalition of the Radical Left (SYRIZA), and that it may even be in danger of fighting for second place behind the neo-fascist Golden Dawn party.

The New Democracy government’s shrinking majority in parliament has made passing some of the tough economic measures demanded by the Troika’s bailout conditions increasingly difficult, which Finance Minister Stournaras has criticised as being unrealistic: ‘The majority is very slim, so we have to  be very careful. There are things that can be done and things that cannot be done.’ Official discussions of a third bailout package can start only after the May elections; but if unofficial discussions are able to show any positive signs before then, Samaras may be able to gain some ground on the SYRIZA coalition, which rejects completely the terms of the previous bailout agreements. SYRIZA’s leader, Alexis Tsipras has said he would renege on the agreement, withholding at least 60% of the debt, which would create a further crisis that could drive Greece out of the eurozone and leave it bankrupt. However, New Democracy itself has said that it cannot repay the €250 million owed to the banks, while setting aside a bill that would provide debt relief for households that have fallen into difficulties only because of the government’s austerity measures – the cuts to wages and pensions, and tax increases. This apparent insensitivity cancels out any goodwill created by any new people-friendly agenda or optimism about recovery, and does them no good in the polls.

The focus of resentment

For many of those protesters in Athens, the EU is the main architect of the social and humanitarian crisis in Greece, and German chancellor Angela Merkel as its dominant figure. Economic recovery in itself does not prompt people who have suffered years of hardship to forget their resentment against those who have managed the crisis, however successful they might be. This is a familiar scenario whether a given leader is popular or despised: the electorate will complain during the hard times, but then get rid of them after they’ve delivered success. As the US financier George Soros has said of the current situation in Europe: ‘The acute phase of the financial crisis is now over. Future crises will be political in origin.’ He sees the crisis as having crucially altered the relationship between the countries of the eurozone, from a ‘voluntary association of equal states’ to ‘a relationship between creditor and debtor countries that is neither voluntary nor equal.’ This is borne out by Chancellor Merkel’s popularity at home, where she has won a third term in office, and the increasing resentment felt towards Germany, and Merkel in particular, within the countries that have suffered the hardships of the EU bailout agreements. In an EU summit held last December, during the first week of Merkel’s new term, she found herself trying to push through a new policy for enforcing structural reform on eurozone economies against united opposition of all elected European leaders, including even her usual allies, and the plan was defeated.

Unpopularity is the price of power. Personalizing the crisis in this way may give a satisfying focus to people’s anger, and elected leaders may feel compelled to reflect this, but it is not necessarily wise politics if your focus is a better future for Europe. Merkel’s plan was seen as dictatorial, a view that was probably influenced by the power of her position. Structural reform is painful, as seen during the undoubtedly difficult years of the Greek bailout, but it has led to signs of recovery. If Merkel had been successful, the European Commission would have been empowered to police structural reforms, but it would also have partially subsidized them. Merkel’s view was that €3 billion spent on immediate changes was preferable to €10 billion spent after unnecessary delay. These changes may or may not have helped the Greek economic recovery, but it’s certain that without the support of the previous EU bailout agreements the country would be in a much worse economic position. Part of the fallout of the eurozone crisis has been the loosening of commitment to the EU and its principles by many people in the countries worse hit by the crisis – including their politicians.