Athens’ Last Stand

Flickr via donkeyhotey

Last Thursday, Greece was momentarily shaken out of its crisis funk when Alexis Tsipras announced that he was resigning from the post of Prime Minister and calling for new elections to be held on September 20th. Tsipras had only been in office since January, but he declared that his mandate had “exhausted its limits”. Having lost a third of his party’s support, the now ex-Prime Minister prefers to wager on the chance that a favorable majority will form by September rather than risk struggling with negotiating coalitions for the rest of his term.

Tsipras splintered Syriza, a radical left party, when he agreed to the bailout terms presented by the troika—the European Commission, the European Central Bank and the International Monetary Fund—just weeks after 61.3 percent of Greeks had voted against them on July 5th. Despite his drastic U-turn, polls still indicate that Greeks favor Alexis Tsipras as a leader over most other candidates. This popularity, however, is not very useful to a Prime Minister who faces a hostile parliament. Observers say that Tsipras had no choice but to agree to the creditors’ terms for another bailout. But for some, agreeing to the memorandum after holding a national referendum was the straw that broke the camel’s back. The party fractured itself between pro- and anti-memorandum partisans; the latter working hard to form stronger coalitions in order to oppose creditor conditions and leave the Eurozone to return to the Greek drachma.

On Friday, the former Energy Minister under Tsipras, Panagiotis Lafazanis, became the head of Popular Unity, a new left-wing party looking to bring together Syriza’s disenfranchised electorate and politicians. If the 25 Syriza MPs that defected to Popular Unity were not enough to cause a tight race, pressure is also mounting on the right. While radical socialists hurry to organize on time for elections and a caretaker government takes Syriza’s place, far-right party Golden Dawn is addressing the overlooked immigration crisis that Greece faces in the Aegean sea, at the expense of Tsipras’ and Syriza’s MPs.

Despite such active opposition, it  seems unlikely that parties, especially newly-formed ones, will have time to campaign and win over many new supporters. Tsipras’ idea that next month’s elections will allow for a more cohesive government to form is not senseless. The former Prime Minister has gained right-wing voters at the expense of left-wing voters. Even if this was unintentional, the shift from  radical ideologist to being perceived as a social democrat might work in his favor.

It is difficult to predict whether Tsipras is simply breeding more uncertainty for Greece’s future or if his resignation is a ploy meant to ensure stronger bargaining power on the national stage. Many say that Greece should be actively implementing reforms to meet the expectations of creditors, rather than putting Greeks through a new round of political brinkmanship. On the one hand, it may seem like Tsipras is stalling the implementation of strict austerity measures, but, on the other hand, he also appears to be heading in a direction that favors dialogue with the troika.

Tsipras’s new style of politics, which cost him a third of his party, is one driven by survival instinct.  Steering away from the idealistic (and reactionary) goals first set by Syriza, a Greek utopia that wanted to avoid austerity while maintaining the Euro, Tsipras is now appealing to wider political base.

A 2013 Pew Research Center poll indicated that a majority of EU citizens considered Greeks to be the least hardworking country in Europe. This kind of stereotype demonstrates the finger-pointing tendency that the Jacques Delors Institute warned against: “It is of crucial importance that backward looking criticism will be replaced by forward looking constructive dialogue on how to strengthen the euro”. According to the Institute, that aims to advise European Union leaders, the EU needs to customize its approach to countries’ economies in the future and invest in Greek industries in a way that will trigger growth. Rafael Correa, Ecuador’s President, who knows a thing or two about sovereign debt, told Euronews in June, “All those measures are not meant to overcome the crisis, they are just to liquidate the debt”.

However, irrespective of the outcome of the vote, I would venture a guess that Tsipras, both lacks the political will and the common sense to see through the reforms demanded by the creditors. The Greek default, often compared with Latvia’s, Iceland’s, Ireland’s or Argentina’s, is nevertheless unique. Athens not only lacks a strong export sector or any significant comparative advantage over other EU members (the much-touted olive oil and cheese industry only account for $790 million worth of exports), but the shabby state of the Greek institutional framework and inefficient court system render the austerity-driven bailout vacuous.

Increasing the country’s competitiveness through austerity measures without bolstering its manufacturing sector, imposing tax hikes without strengthening its tax collection capacities, selling off state assets without stamping out corruption, and holding elections on the fickle platform “paying lip service to the creditors while bemoaning the European diktat” are the wrong ways to put Greece back on track. As much as some pundits have tried to spin the Greek crisis into a case of victim blaming whereby evil European creditors snuffed democracy in the name of finance and at the expense of the Greeks themselves, without deep, comprehensive structural reforms Athens will be dead in the water.