tag:theconversation.com,2011:/ca-fr/topics/syriza-14223/articlesSyriza – La Conversation2023-11-23T09:56:46Ztag:theconversation.com,2011:article/2181052023-11-23T09:56:46Z2023-11-23T09:56:46ZEurope’s radical right has made challenging Brussels a winning formula – so why hasn’t the radical left made the same gains?<p>With roughly six months to go, the radical right looks set to make <a href="https://www.politico.eu/article/european-election-2024-polls-right-wing-big-gains/">significant gains</a> in the 2024 European elections. The biggest share of votes is still likely to go to parties of the centre-right, but many of these have lately <a href="https://www.ft.com/content/ef22522b-95fe-4834-bb02-162a279a7214">veered rightward</a>, too.</p>
<p>Meanwhile, <a href="https://left.eu/">the European parliament’s radical left group</a> is failing to make meaningful headway among voters looking for an alternative. It is predicted to increase its number of seats in the 2024 elections, but will remain the smallest group in the parliament.</p>
<p>Radical left parties did experience something of a surge during the eurozone crisis of the 2010s. Parties such as Syriza (from Greece), Podemos (from Spain) and the Left Bloc (from Portugal) rose to prominence in the countries most affected by the crisis. </p>
<p>They capitalised on <a href="https://onlinelibrary.wiley.com/doi/10.1111/j.1468-5965.2012.02299.x">popular dissatisfaction</a> with mainstream parties and the EU establishment, which was enforcing austerity in member states. This also translated into gains in the 2014 European elections, when <a href="https://left.eu/about-the-group/">the Left group</a> increased its number of MEPs by 50%. </p>
<p>But these electoral breakthroughs did not put an end to austerity, even in Greece, the one country where the radical left managed to come first in elections. In July 2015, after merely six months in power, Greece’s Syriza-led government agreed to further austerity and privatisation in exchange for a fresh bailout from international creditors.</p>
<p>The radical left failed to significantly challenge the EU’s “embedded neoliberalism”. Instead, in the years since, and with the new crises engulfing Europe (COVID, cost of living, war), <a href="https://www.pewresearch.org/short-reads/2022/10/06/populists-in-europe-especially-those-on-the-right-have-increased-their-vote-shares-in-recent-elections/">the radical right</a> has been the main beneficiary of the anti-establishment mood.</p>
<p><a href="https://link.springer.com/book/10.1007/978-3-031-39151-4">My recent book</a> argues that if the radical left has not managed to provide a strong alternative to the neoliberal status quo in an era when people continue to seek such alternatives, it is in part because of its limited cohesion and coordination at transnational level. Several factors help explain this puzzle. </p>
<h2>A radical left paradox</h2>
<p>At least on paper, the radical left is the most internationalist party family in the European parliament. Its very existence stems from the understanding that capitalism is an international system that cannot be defeated on a national basis alone. </p>
<p>Paradoxically, though, the radical left has never been great at transnational party cooperation at EU level. It faced <a href="https://discovery.dundee.ac.uk/en/publications/contesting-capitalism-left-parties-and-european-integration">bigger challenges than others</a> in establishing and maintaining a group in the European parliament, which remains a rather <a href="https://hira.hope.ac.uk/id/eprint/1759/">heterogeneous organisation</a>. </p>
<p>Given the transnational character of the eurozone crisis and its austerity-centred management, the radical left had the opportunity to improve its underwhelming transnational cooperation. By focusing on parties from three of the countries <a href="https://www.tandfonline.com/doi/full/10.1080/13608746.2014.947700">most affected by the crisis</a> – Greece, Portugal and Spain – we can see why that opportunity was missed.</p>
<p>The <a href="https://www.cambridge.org/core/services/aop-cambridge-core/content/view/EA2D54BEC7B58F69B78446940671710D/S0898030600000749a.pdf/the-party-of-european-socialists-networking-europes-social-democrats.pdf">preeminence of domestic over European politics</a> hinders transnational party cooperation in general, but particularly on the radical left. As parties struggle to be electorally relevant in the domestic arena, they pay less attention to European politics. </p>
<p>In turn, they have less influence over EU policymaking, which reinforces the prioritisation of domestic politics. As one of my interviewees bluntly put it: “When it comes to the moment of truth, each one is with their own electorate”. </p>
<p>The widely noted <a href="https://journals.sagepub.com/doi/pdf/10.1111/j.1467-9256.2005.00224.x">lack of a European “demos”</a>, or shared political identity, also disproportionately hampers the radical left at the EU level. Radical left parties rely more on <a href="https://www.tandfonline.com/doi/full/10.1080/13608746.2012.758447">mass mobilisation</a> than other parties. During the crisis, they allied themselves with the anti-austerity mass movements in their countries and capitalised electorally on that linkage. </p>
<p>But that kind of mobilisation was very limited at transnational level. As another interviewee remarked: “I don’t think that there is European workers’ solidarity and I think it’s becoming more and more difficult to build one.”</p>
<p>At the same time, radical left parties have been doing relatively little to facilitate such solidarity. They limit their transnational cooperation to party elites and EU institutions – the very establishment they often purport to challenge.</p>
<p>If, on a domestic level, radical left parties have understood that only by drawing on mass movements can they become credible alternatives to mainstream parties, they have failed to employ this protest strategy at a European level.</p>
<h2>Disagreements over direction</h2>
<p>Parties of the <a href="https://www.taylorfrancis.com/chapters/edit/10.4324/9781315464015-10/opposing-europe-opposing-austerity-dan-keith">radical left</a> have long been divided over the EU. Some advocate EU reform while others want a complete break from Brussels. </p>
<p>These fractures only deepened during the financial crisis of the 2010s. Tensions were particularly high in the aftermath of <a href="https://www.tandfonline.com/doi/full/10.1080/13608746.2016.1208906">Syriza’s U-turn in government</a>, which further entrenched the position of hard eurosceptics that leftwing policies are incompatible with the EU’s institutional architecture.</p>
<p>That cleavage also widened as <a href="https://onlinelibrary.wiley.com/doi/10.1111/jcms.13313">a new position emerged</a> among parties such as the Portuguese Left Bloc and La France Insoumise. They call for neither reform nor exit from the EU but “disobedience” towards the neoliberal aspects of EU legislation – such as the general prohibition on <a href="https://jacobin.com/2018/05/corbyn-labour-eu-single-market-economic-policy">state aid</a> – that would prevent the implementation of leftwing policies.</p>
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Read more:
<a href="https://theconversation.com/the-fox-in-the-chicken-coop-how-the-far-right-is-playing-the-european-parliament-193136">The fox in the chicken coop: how the far right is playing the European Parliament</a>
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<p>This divergence was seen in the <a href="https://www.euractiv.com/section/eu-elections-2019/news/varoufakis-there-is-no-real-european-left-i-am-running-against-them/">European elections of 2019</a>, when the radical left stood competing lists of candidates in several member states. This is likely to occur again in 2024.</p>
<p>If anything, the radical left’s lack of cohesion has been exacerbated by recent developments, such as the war in <a href="https://www.lemonde.fr/en/international/article/2023/04/03/russia-s-invasion-of-ukraine-leaves-eu-s-left-fractured_6021575_4.html">Ukraine</a>. Some parties want to provide unconditional support to Ukraine while others “critically” defend Russia’s position. Others support neither side in what they see as a fundamentally <a href="https://isj.org.uk/anti-imperialism-a-reply-to-achcar/">“inter-imperialist conflict”</a>.</p>
<p>While the more structural factors are hard to overcome, the ideological differences at play might not be fundamental enough to justify the current level of fragmentation on the radical left. Ideally, differences could be played out within a common transnational project that would coalesce the parties around a shared vision for Europe. In the absence of that, it’s likely that voters disillusioned with the status quo will be lured away by rightwing populism instead.</p><img src="https://counter.theconversation.com/content/218105/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Vladimir Bortun does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Europe’s radical right and radical left share a distaste for the status quo – but while one turns disquiet into votes, the other fails to make an impact.Vladimir Bortun, Postdoctoral Fellow, University of OxfordLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/762932017-05-19T05:28:04Z2017-05-19T05:28:04ZThe road to the great regression<figure><img src="https://images.theconversation.com/files/169850/original/file-20170517-6030-10i3a2x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">War, Ford, fascism, Reaganomics, the pink tide, the EU, debt crises, rights-based activism, a fierce backlash... none of this is new.</span> <span class="attribution"><span class="source">Wikimedia</span></span></figcaption></figure><p><em><strong>This article examining the backlash against neoliberalism is the fifth instalment in our <a href="https://theconversation.com/global/topics/globalisation-under-pressure-38722">Globalisation Under Pressure</a> series.</strong></em></p>
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<p>In 1980, the novelist Martin Amis attended a meeting in Texas with Ronald Reagan, then in the midst of the campaign that would put him in the White House. Reagan liked to end his electoral activities with some audience Q+A. The more personal the question, <a href="https://archive.org/stream/HeliganSecretsOfTheLostGardens/AmisMartin-TheMoronicInfernoAndOtherVisitsToAmerica_djvu.txt">Amis explained</a>, the more Reagan enjoyed answering.</p>
<p>Question: “Of all the people in America, sir, why you for President?” </p>
<p>Reagan grins. </p>
<p>Answer: “Well, I’m not smart enough to tell a lie.” </p>
<p>Laughter, applause. </p>
<p>Amis relays the exchange: </p>
<blockquote>
<p>‘But why do you want it, sir?’ Reagan flexes his worn, snipped, tucked, mottled face. ‘This country needs a good Republican and I feel I can do the job. Why? I’m happy. I’m feeling good.’ Here he turns. ‘And I have Nancy to tuck me up at night.’ </p>
</blockquote>
<p>Laughter, applause, hats in the air. </p>
<h2>Anger, discontent and resentment</h2>
<p>Imagine this anecdote today. Were Donald Trump had asked the same question in 2016, it seems like he may have responded: “Because I’m unhappy. I’m feeling bad. And my relationship with my wife is catastrophic.”</p>
<p>And surely his Republican audience would also have clapped, identifying now not with Reagan’s optimism but with Trump’s self-portrait of anger, discontent and resentment. </p>
<p>Ronald Reagan, that carefree actor-president, may have been the last US leader to channel Americans’ good feelings about the free market. As Robert Putnam outlines in his famous <a href="http://bowlingalone.com">investigation</a>, Bowling Alone, civil society and social bonds in the US strengthened from the early 20th century until the 1970s, when the era of neoliberal reforms began. </p>
<p>At that point, things quickly began to unravel. Historically speaking, the growth of mercantilism, en economic nationalism that seeks to enrich the state through trade and wealth accumulation, has always deteriorated social bonds, though that’s not necessarily a bad thing. The market also <a href="http://www.rochelleterman.com/ComparativeExam/sites/default/files/Bibliography%20and%20Summaries/Comparative%20Politics_0.pdf">weakens relationships that are clientelistic</a>, toxic or patriarchal. </p>
<p>Problems arise when mercantilism becomes an expansive, generalised social dynamic, which is precisely what globalisation unleashed starting in the 1970s. After global economic crisis exposed the limits of the Fordist assembly line-style mass production model, the world veered sharply back toward the liberal, unregulated <a href="http://www.manchesteruniversitypress.co.uk/series/manchester-capitalism/">Manchester capitalism</a> that had predominated before the second world war. </p>
<p>The rest of the story, which is the subject of our new book <a href="http://www.wiley.com/WileyCDA/WileyTitle/productCd-1509522352,subjectCd-SO20.html">The Great Regression</a>, you know well. </p>
<h2>‘A catastrophic level of social corrosion’</h2>
<p>We often make the mistake of thinking that globalisation is a radical new phenomenon, both postmodern and futuristic.</p>
<p>In fact, in his 1944 book <a href="http://inctpped.ie.ufrj.br/spiderweb/pdf_4/Great_Transformation.pdf">The Great Transformation</a>, historian Karl Polanyi was already explaining the political and social crises of the inter-war period as a reaction to the failures of the free market. </p>
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<img alt="" src="https://images.theconversation.com/files/169363/original/file-20170515-7024-fllol3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/169363/original/file-20170515-7024-fllol3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=933&fit=crop&dpr=1 600w, https://images.theconversation.com/files/169363/original/file-20170515-7024-fllol3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=933&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/169363/original/file-20170515-7024-fllol3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=933&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/169363/original/file-20170515-7024-fllol3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1172&fit=crop&dpr=1 754w, https://images.theconversation.com/files/169363/original/file-20170515-7024-fllol3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1172&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/169363/original/file-20170515-7024-fllol3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1172&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="attribution"><a class="source" href="https://www.amazon.com/Great-Regression-Heinrich-Geiselberger/dp/1509522360">Amazon</a></span>
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<p>From his perspective, the whole utopian idea of a self-regulating market was nihilistic and self-destructive, materially incompatible with the variety of human social life of humans. </p>
<p>For the pragmatist Polanyi, the “free market” never existed and could never exist. To begin with, mercantilism as a financial system has always required aggressive state intervention, both to ease the pains of its flaws and to break people’s natural resistance to being dragged along by the coattails of their economy. </p>
<p>Practically every government in the world has undertaken this process since the 1980s. In <a href="https://www.uow.edu.au/%7Esharonb/jape.html">privatising public services</a>, for example, they have created enormous business opportunities for local elites (<a href="http://www.nytimes.com/1992/09/06/business/the-big-push-toward-privatization-in-argentina.html?pagewanted1">Argentina</a> being a prime example), stimulated rampant real estate speculation (just look at <a href="https://www.theguardian.com/cities/2017/feb/06/made-london-property-speculation-industry-capital">the UK</a>) and used public resources to rescue the banking system from its own mistakes (remember <a href="http://www.reuters.com/article/spain-banks-timeline-idUSL5E8H88YV20120608">Spain</a>?). </p>
<p>When mercantilistm reaches the catastrophic point at which it begins to corrupt all society, Polanyi says, then collective counter-movements emerge. These efforts to reestablish communal living can have radically different political orientations. </p>
<p>The 20th century had the fascists, waging what Italian Marxist Antonio Gramsci dubbed “<a href="https://quadernidelcarcere.wordpress.com/tag/teoria-della-rivoluzione-passiva/">passive revolutions</a>” that aspired to alter the economic and social machinery to preserve elite privileges. It also saw Roosevelt’s New Deal, Europe’s 1940s democratic socialist movements and <a href="http://www.bbc.co.uk/history/historic_figures/attlee_clement.shtml">Clement Attlee’s reformist Labour government</a> in the UK (1945-1951). </p>
<p>All these were anti-mercantlist projects inspired by democratisation, learning and egalitarianism.</p>
<h2>Anti-neoliberal counter reactions</h2>
<p>This history is a reminder that there is an old pattern to these shaky modern times. </p>
<p>In the 21st century, counter reactions to globalisation have also been taking radically different forms. Early in the century, <a href="http://www.tandfonline.com/doi/abs/10.1080/13260219.2013.853353">Latin America’s leftist governments</a> challenged the neoliberal order, rejecting the Washington Consensus and building regional solidarity.</p>
<p>Then, there were the <a href="https://theconversation.com/five-years-on-the-spirit-of-tahrir-square-has-been-all-but-crushed-53461">Arab Spring</a> uprisings of 2010 to 2013, which sought to deepen democracy in a region long dominated by dictators. </p>
<p>The former was crushed and the latter has <a href="https://theconversation.com/can-a-chilean-outsider-revive-latin-americas-ailing-left-71213">largely waned</a>. But the innovative ideas developed in the <a href="http://www.academia.edu/1644759/Understanding_European_movements_new_social_movements_global_justice_struggles_anti-austerity_protest">anti-austerity protests</a> of Iceland Greece, Spain and Portugal following the start of the European debt crisis in 2009 are still very much alive.</p>
<p>What has everyone talking are developments on the opposite end of the ideological spectrum: Brexit, Trump, the extreme right, Islamic fundamentalism – <a href="https://theconversation.com/from-brexit-to-colombias-no-vote-are-constitutional-democracies-in-crisis-66668">neoliberal backlashes</a> offering new solutions for global elites hoping to preserve their privileges in a turbulent international economy.</p>
<p>It is early yet for an in-depth analysis of the current regressive phenomenon. But we can at least start asking the right questions.</p>
<p>First, did economic discontent really fuel the rise of the modern right, as many claim? <a href="https://www.theguardian.com/news/datablog/2016/jun/24/the-areas-and-demographics-where-the-brexit-vote-was-won">Data from the UK</a> and <a href="https://www.theguardian.com/us-news/2016/nov/09/white-voters-victory-donald-trump-exit-polls">the US</a> indicate exactly the opposite. Not only – not even mainly – blue collar workers supported Brexit and Donald Trump; <a href="https://theconversation.com/who-are-trump-voters-social-sciencing-the-s-t-out-of-yard-signs-66099">the rich and the educated did</a> too. </p>
<p>But it is misleading to blame the resentment of the declining middle class for the state of Western politics today.</p>
<p>Money played a crucial role in right-wing victories in the US. Big business and <a href="http://www.nytimes.com/2010/08/29/opinion/29rich.html">well-funded think tanks</a>, including the <a href="http://www.huffingtonpost.com/brendan-demelle/study-confirms-tea-party-_b_2663125.html">tobacco lobby and the billionaire Koch brothers</a>, have funded the US Tea Party for years, and starting in 2015, they richly backed Trump. </p>
<p>To mobilise the traditional conservative base of the Republican Party, <a href="https://theconversation.com/are-trump-and-sanders-rewriting-the-rules-on-money-in-politics-56891">cash was injected</a> into media blitzes that spread simple messages, often lies, appealing to American fear.</p>
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<p>Money is not the whole story, but it is an important part of it and it has historic resonance. During Europe’s fascist and Nazi movements, regressive counter movements feigned solidarity with the 99% while clearly enjoying the support of the 1%. The market’s positive response to Trump’s victory may be a <a href="https://theconversation.com/what-we-can-learn-from-markets-reaction-to-a-president-trump-68116">clear indication that this is happening again</a>.</p>
<p>So far, the new regressive movements are adopting very different forms to their left-wing recent predecessors in Latin America and Europe. They diverge not only ideologically – with cosmopolitanism on the one side and xenophobia on the other – but also in their organisational models.</p>
<p>On the right, politics today is characterised by <a href="https://theconversation.com/trumps-inauguration-ushers-in-2017-the-year-of-the-strongman-70846">strong, personalised leadership</a>: Recep Tayyip Erdoğan, Narendra Modi, Vladimir Putin and Donald Trump being prime examples. </p>
<p>Recent progressive anti-neoliberal movements, on the other hand, have been mostly been <a href="https://theconversation.com/how-to-hate-neoliberalism-but-love-each-other-a-latin-american-grassroots-guide-68899">defined by citizen participation</a>.</p>
<p>There’s no evidence (yet) that regressive movements are necessarily more successful than their progressive counterparts. Rather, in times of economic crisis, left-wing advances such as workers’ rights have been met with a powerful, well-funded resistance.</p>
<p>The near-constant protest of Trump, Erdoğan or Orban confirm progressive counter-reactions <a href="https://theconversation.com/trump-victory-comes-with-a-silver-lining-for-the-worlds-progressives-68523">are very much alive</a> indeed. But they seem unlikely to put regressive movements out of business any time soon.</p>
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<h2>One step forward, two steps back</h2>
<p>The mainstream progressive response to this reactionary challenge has been, primarily, nostalgia for Keynesian economics: increase public spending to stimulate the economy, boost demand and create employment, redistribute wealth to grow the economy, among other things.</p>
<p>That’s a bad alternative. Keynes is dead and he’s not coming back. Everything about his era – from the post-second world war international relations system of Bretton Woods and the Soviet threat to the fast clip of <a href="http://www.telegraph.co.uk/culture/books/bookreviews/6251312/Keynes-the-Return-of-the-Master-by-Robert-Skidelsky-review.html">economic expansion</a> back then – is unthinkable today. </p>
<p>Only in a few places has the popular response to the failure of the self-regulating free-market been to push for greater freedom and deeper democracy, rather than to retrench or reminisce. </p>
<p>In addition to a timid normalisation of such activism around basic rights such as housing, a universal basic income, cooperativism and feminism, we have <a href="https://theconversation.com/austerity-portugal-is-on-a-different-path-to-greece-and-spain-heres-why-48121">Portugal’s left-wing ruling coalition</a>, <a href="https://theconversation.com/meet-podemos-the-party-revolutionising-spanish-politics-33802">Podemos</a> in Spain and the <a href="https://theconversation.com/syriza-sweeps-to-victory-in-greek-election-promising-an-end-to-humiliation-36680">Syriza government in Greece</a>.</p>
<p>Today, it is evident that Greece is not the European Union’s burden to bear but rather part of its salvation. Syriza has proposed an alternative to European financial metastasis by <a href="http://fortune.com/2016/06/03/greece-eurozone/">reclaiming fiscal sovereignty</a>, battening down the markets, focusing on democratisation, and seeking continent-wide social solidarity. </p>
<p>It’s noteworthy that virtually <a href="https://theconversation.com/how-to-hate-neoliberalism-but-love-each-other-a-latin-american-grassroots-guide-68899">all rights-based anti-neoliberalism</a> has come from peripheral or semi-peripheral nations: first Latin America a decade ago, and now southern Europe. All of them have faced fierce opposition from the rich West. </p>
<p>It may be time to start <a href="https://theconversation.com/how-to-hate-neoliberalism-but-love-each-other-a-latin-american-grassroots-guide-68899">thinking about the Global South not as a problem but as a solution</a> to the great regression.</p>
<p><em>The Great Regression, available in 13 languages, can be <a href="http://www.thegreatregression.eu/">found online</a>.</em></p><img src="https://counter.theconversation.com/content/76293/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Donatella Della Porta receives funding from the ECR.</span></em></p><p class="fine-print"><em><span>César Rendueles Menéndez de Llano does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>We may think of current reactionary politics as radical and new, but unchecked mercantilism has always elicited a fierce backlash from both left and right. Here’s what history tells us about today.César Rendueles Menéndez de Llano, Professor of Sociological Theory, School of Social Work, Universidad Complutense de MadridDonatella Della Porta, Dean, Institute of Human and Social sciences, Scuola Normale Superiore, Florence Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/558692016-04-29T22:44:48Z2016-04-29T22:44:48ZIn defence of left-wing populism<figure><img src="https://images.theconversation.com/files/114819/original/image-20160311-11277-ap5ubd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">There is no better alternative than the rise of the populist left for Europe and beyond.</span> <span class="attribution"><a class="source" href="http://www.thepeoplesassembly.org.uk/graphics_photography">The People's Assembly Against Austerity</a></span></figcaption></figure><p><em>This article is part of the <a href="https://theconversation.com/au/topics/democracy-futures">Democracy Futures</a> series, a <a href="http://sydneydemocracynetwork.org/democracy-futures/">joint global initiative</a> between The Conversation and the <a href="http://sydneydemocracynetwork.org/">Sydney Democracy Network</a>. The project aims to stimulate fresh thinking about the many challenges facing democracies in the 21st century.</em></p>
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<p>We are witnessing a crisis of representative democracy in most European countries. As I argued in <a href="http://www.amazon.com/Political-Thinking-Action-Chantal-Mouffe/dp/0415305217">“On the Political”</a>, this is the outcome of the “consensus at the centre” established under the neoliberal hegemony between centre-right and centre-left parties. </p>
<p>This post-political situation has led to the disappearance from political discourse of the idea that there is an alternative to neoliberal globalisation. This forecloses the possibility of agonistic debate and drastically reduces the choice offered to citizens through elections.</p>
<p>There are people who celebrate this consensus. They offer it as a sign that adversarial politics has finally become obsolete so that democracy can mature. I disagree.</p>
<h2>A vote but not a voice</h2>
<p>The “post-political” situation has created a favourable terrain for populist parties that claim to represent all who feel unheard and ignored in the existing representative system. Their appeal is to “the people” against the uncaring “political establishment” that, having abandoned the popular sectors, concerns itself exclusively with the interests of the elites.</p>
<p>The problem, however, is that in general the populism of those parties has a <a href="http://www.nytimes.com/2015/12/11/world/europe/voter-insecurities-feed-rise-of-right-leaning-populist-politicians.html?_r=0">right-wing character</a>. Often, the way they bring together a series of heterogeneous social demands is by using a xenophobic rhetoric. This constructs the unity of “the people” through the exclusion of immigrants.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/114814/original/image-20160311-11285-7tdfo6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/114814/original/image-20160311-11285-7tdfo6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=337&fit=crop&dpr=1 600w, https://images.theconversation.com/files/114814/original/image-20160311-11285-7tdfo6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=337&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/114814/original/image-20160311-11285-7tdfo6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=337&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/114814/original/image-20160311-11285-7tdfo6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/114814/original/image-20160311-11285-7tdfo6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/114814/original/image-20160311-11285-7tdfo6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Members of the People’s Assembly Against Austerity in the UK protest against the right’s marginalisation of immigrants.</span>
<span class="attribution"><span class="source">David Holt/flickr</span></span>
</figcaption>
</figure>
<p>So, the crisis of representative democracy is not a crisis of representative democracy per se but a crisis of its current post-democratic incarnation. As Spain’s <a href="https://theconversation.com/spain-dispatches-from-the-frontline-of-the-indignados-movement-7091">Indignados</a> protest:</p>
<blockquote>
<p>We have a vote but we do not have a voice.</p>
</blockquote>
<p>On face value, it seems the best way to restore the partisan nature of politics and thereby remedy the lack of agonistic debate is by reviving the adversarial dimension of the left-right opposition that “third way” politics has evacuated. However, this is simply not going to be possible in most countries. Another strategy is needed.</p>
<p>When we examine the state of the “centre-left” parties in Europe we realise they have become too complicit in the workings of neoliberal hegemony to offer an alternative. This became evident during the <a href="https://en.wikipedia.org/wiki/European_debt_crisis">crisis of 2008</a>. Even in their window of opportunity, these parties were unable to regain initiative and use the power of the state to put forward a more progressive politics. </p>
<p>Since then, the centre-left’s compromise with the system has deepened. These parties have not only accepted but also contributed to the politics of austerity. The resulting disastrous measures have brought misery and unemployment in Europe.</p>
<p>If the “centre-left” advocates what Stuart Hall calls “<a href="http://www.mas.org.uk/uploads/100flowers/The%20neo-liberal%20revolution%20by%20Stuart%20Hall.pdf">a social liberal version of neoliberalism</a>”, it is no surprise that resistance to those measures, when it finally came from the progressive side, could only be expressed through protest movements like the Indignados and <a href="https://theconversation.com/rethinking-the-occupy-movement-7121">Occupy</a>, which called for the rejection of representative institutions. </p>
<p>While these movements brought to the fore the widespread potential of dissatisfaction with the neoliberal order, their refusal to engage with political institutions limited their impact. Without any articulation with parliamentary politics, they soon began to lose their dynamism.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/114816/original/image-20160311-11302-1khl2z2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/114816/original/image-20160311-11302-1khl2z2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=337&fit=crop&dpr=1 600w, https://images.theconversation.com/files/114816/original/image-20160311-11302-1khl2z2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=337&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/114816/original/image-20160311-11302-1khl2z2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=337&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/114816/original/image-20160311-11302-1khl2z2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/114816/original/image-20160311-11302-1khl2z2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/114816/original/image-20160311-11302-1khl2z2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The left’s recent refusal to engage with political institutions has left it struggling for long-term representation.</span>
<span class="attribution"><span class="source">Hernán Piñera/flickr</span></span>
</figcaption>
</figure>
<h2>Progressive politics finds a new way</h2>
<p>Fortunately, two exceptions stand out. They indicate how a new progressive politics <a href="https://theconversation.com/are-you-ready-for-a-new-kind-of-left-wing-politics-33511">can be envisaged</a>. </p>
<p>In Greece, <a href="https://theconversation.com/syrizas-not-so-radical-politics-and-europes-economic-choice-36229">Syriza</a>, born of a coalition of different left movements around <a href="https://en.wikipedia.org/wiki/Synaspismos">Synaspismos</a>, the former eurocommunist party of the interior, succeeded in creating a new type of radical party. Its objective was to challenge neoliberal hegemony through parliamentary politics. The aim was clearly not the demise of liberal democratic institutions but rather their transformation into vehicles for the expression of popular demands.</p>
<p>In Spain, the meteoric rise of <a href="https://theconversation.com/postcard-from-spain-where-now-for-the-quiet-revolution-43779">Podemos in 2014</a> was due to the capacity of a group of young intellectuals to take advantage of the terrain created by the Indignados to organise a party-movement. The group intended to break the stalemate of the consensual politics established through the transition to democracy but whose exhaustion was now evident. Their strategy was to create a popular collective will by constructing a frontier between the establishment elites (la Casta) and “the people”.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/118298/original/image-20160412-15861-spkp45.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/118298/original/image-20160412-15861-spkp45.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/118298/original/image-20160412-15861-spkp45.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=704&fit=crop&dpr=1 600w, https://images.theconversation.com/files/118298/original/image-20160412-15861-spkp45.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=704&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/118298/original/image-20160412-15861-spkp45.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=704&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/118298/original/image-20160412-15861-spkp45.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=884&fit=crop&dpr=1 754w, https://images.theconversation.com/files/118298/original/image-20160412-15861-spkp45.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=884&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/118298/original/image-20160412-15861-spkp45.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=884&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Pablo Iglesias, Podemos secretary-general since 2014, was a lecturer in political science.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/culturaargentina/16104083334/in/photolist-qx4CVd-pcF8Mt-qrN4rU-rcGTCz-okacrN-qrNH4u-pRSMxA-tjRT13-nYGgcE-pcrH9Y-pcrGoQ-p7aX3o-pRZEBM-pRZFaa-oBDN7K-pRRWwC-oBDJuf-oBnPwB-pcrGGf-pS1T9X-q9r6Fz-oBDCyX-oncJQx-oDtaCu-oFqxJ6-oncDNi-onb3Es-onc2eN-oDFBye-oBDY7q-onbYAo-oDoWAT-oDs6Bf-oDoZWR-onbFLD-oDsV6U-onb3hU-oDp1Q4-onbNMc-onbdFt-pRZF3X-pcrHku-pS1TP4-q9fND4-q9r7s4-pRZEKx-q79CMu-onbLmk-onbkoW-oFqzo8">flickr/Ministerio de Cultura de la Nación Argentina</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>In many European countries we now encounter what can be called “a populist situation”. A vibrant democratic politics can no longer be conceived in terms of the traditional left-right axis. </p>
<p>This is due not only to the post-political blurring of this type of frontier, but also to the fact that the transformations of capitalism brought about by <a href="https://en.wikipedia.org/wiki/Post-Fordism">post-Fordism</a> and the dominance of financial capital are at the origin of a multiplicity of new democratic demands. These can no longer be addressed by simply reactivating the left-right confrontation: they require the establishment of a different type of frontier.</p>
<p>What is at stake is the connection of a variety of democratic demands with the potential to create a “collective will” struggling for another hegemony. It is clear that the democratic demands in our society cannot all be expressed through a “verticalist” party form that subordinates mass movements. </p>
<p>Even if it was reformed, it is not always possible or desirable to force democratic demands expressed through horizontal social movements into the hierarchical verticalist mode.</p>
<p>We need a new form of political organisation that can articulate both modes, where the unity of progressive people will be constituted not, as in the case of right-wing populism, by the exclusion of immigrants, but by the determination of an adversary represented by neoliberal forces. This is what I understand by “<a href="https://theconversation.com/populism-and-democracy-friend-or-foe-rising-stars-deepen-dilemma-39695">left-wing populism</a>”.</p>
<h2>Reclaiming populism for the left</h2>
<p>“Populist” is usually used in a negative way. This is a mistake, because populism represents an important dimension of democracy. Democracy understood as “power of the people” requires the existence of a “demos” – a “people”. Instead of rejecting the term populist, we should reclaim it.</p>
<p>The agonistic struggle is more than a struggle between conflicting hegemonic projects. It is a struggle about the construction of the people.</p>
<p>It is important for the left to grasp the nature of this struggle. Seen in terms of a “collective will”, “the people” are always a political construct.</p>
<p>There is no “we” without a “they”. It is how the adversary is defined that will determine the identity of the people. In this relationship lies one of the main differences between right-wing and left-wing populism. </p>
<p>Many of the demands that exist in a society do not have an essentialist reactionary or progressive character. It is how they are to be articulated that determines their identity.</p>
<p>This brings to the fore the role that representation plays in the constitution of a political force. Representation is not a one-way process going from the represented to the representative, because it is the very identity of the represented that is at stake in the process. </p>
<p>This is the central flaw of those who argue that representative democracy is an oxymoron and that a real democracy should be direct or “presentist”. What needs to be challenged is the lack of alternatives offered to the citizens, not the idea of representation itself.</p>
<p>A pluralist democratic society cannot exist without representation. To begin with, identities are never already given. They are always produced through identification; this process of identification is a process of representation. </p>
<p>Collective political subjects are created through representation. They do not exist beforehand. Every assertion of a political identity is thereby interior, not exterior, to the process of representation.</p>
<p>Second, in a democratic society where pluralism is not envisaged in the harmonious anti-political form and where the ever-present possibility of antagonism is taken into account, representative institutions, by giving form to the division of society, play a crucial role in allowing for the institutionalisation of this conflictual dimension.</p>
<p>Such a role can only be fulfilled through the availability of an agonistic confrontation. The central problem with our current post-political model is the absence of such confrontation. This is not going to be remedied through “horizontalist” practices of local autonomy, self-management and direct democracy that turn away from institutions and the state.</p>
<h2>The place of passion in politics</h2>
<p>Another important aspect of left-wing populism is that it acknowledges the central role played by affects and passions in politics. I use “passions” to refer to the common affects at play in the collective forms of identification that constitute political identities. Passions perform a central role in the construction of a collective will at the core of any left-wing populist project.</p>
<figure class="align-left zoomable">
<a href="https://images.theconversation.com/files/118300/original/image-20160412-15895-3qrai2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/118300/original/image-20160412-15895-3qrai2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/118300/original/image-20160412-15895-3qrai2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=773&fit=crop&dpr=1 600w, https://images.theconversation.com/files/118300/original/image-20160412-15895-3qrai2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=773&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/118300/original/image-20160412-15895-3qrai2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=773&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/118300/original/image-20160412-15895-3qrai2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=972&fit=crop&dpr=1 754w, https://images.theconversation.com/files/118300/original/image-20160412-15895-3qrai2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=972&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/118300/original/image-20160412-15895-3qrai2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=972&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Marine Le Pen has harnessed political passions to establish her right-wing National Front as a political force in France.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/68651617@N07/7421302448">flickr/Blandine Le Cain</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>The attempt by so many liberal-democratic political theorists to eliminate passion from politics – they refuse to accept its crucial role – is no doubt one of the reasons for their hostility to populism. This is a serious mistake. Only because this terrain has been abandoned to right-wing populists have they been able to make such progress in recent years.</p>
<p>Fortunately, thanks to the development of left-wing populist movements, this could change. It is urgent to understand that the only way to counter right-wing populism is through left-wing populism. </p>
<p>I am convinced we are witnessing a profound transformation of the political frontiers that used to be dominant in Europe. The crucial confrontation is going to be between left-wing populism and right-wing populism.</p>
<h2>Crisis and opportunity in Europe</h2>
<p>The future of democracy depends on the development of a left-wing populism that could revive interest in politics by mobilising passions and fomenting an agonistic debate about the availability of an alternative to the neoliberal order driving de-democratisation. This mobilisation should take place at the European level. To be victorious, a left-wing populist project needs to foster a left-wing populist movement fighting for a democratic refoundation of Europe.</p>
<p>We urgently need an agonistic confrontation about the future of the European Union. Many people on the left are beginning to doubt the possibility of constructing, within the EU framework, an alternative to the neoliberal model of globalisation. </p>
<p>The EU is increasingly perceived as being an intrinsically neoliberal project that cannot be reformed. It seems vain to try transforming its institutions; the only solution is to exit. Such a pessimistic view is no doubt the result of the fact that all attempts to challenge the prevalent neoliberal rules are constantly presented as anti-European attacks against the EU’s very existence.</p>
<p>Without the possibility of making legitimate criticisms of current neoliberal policies, it is unsurprising that a growing number of people are <a href="https://theconversation.com/rise-of-euroscepticism-masks-general-apathy-about-eu-vote-25984">turning to Euroscepticism</a>. They believe the European project itself is the cause of our predicament. They fear more European integration can only mean a reinforcement of neoliberal hegemony.</p>
<p>Such a position endangers the survival of the European project. The only way to counter it is by creating the conditions for a democratic contestation within the EU.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/114812/original/image-20160311-11274-hds1pa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/114812/original/image-20160311-11274-hds1pa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=386&fit=crop&dpr=1 600w, https://images.theconversation.com/files/114812/original/image-20160311-11274-hds1pa.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=386&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/114812/original/image-20160311-11274-hds1pa.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=386&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/114812/original/image-20160311-11274-hds1pa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=485&fit=crop&dpr=1 754w, https://images.theconversation.com/files/114812/original/image-20160311-11274-hds1pa.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=485&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/114812/original/image-20160311-11274-hds1pa.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=485&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Rather than surrender to Euroscepticism, it’s possible to rebuild popular support for the European project by taking it in a new democratic direction.</span>
<span class="attribution"><span class="source">Dave Kellam/flickr</span></span>
</figcaption>
</figure>
<p>At the root of the disaffection with the EU is the absence of a project that could foster a strong identification among the citizens of Europe and provide an objective to mobilise their political passions in a democratic direction. </p>
<p>The EU is currently composed of consumers, not of citizens. It has been mainly constructed around a common market and has never really created an European common will. So it is no wonder that, in times of economic crisis and austerity, some people will begin to question its utility. They forget its important achievement of bringing peace to the continent.</p>
<p>It is a mistake to present this crisis as a crisis of the European project. It is a crisis of its neoliberal incarnation. This is why current attempts to solve it with more neoliberal policies cannot succeed.</p>
<p>A better approach would be to foster popular allegiance to the EU by developing a sociopolitical project that offers an alternative to the prevailing neoliberal model of recent decades. This model is in crisis but a different one is not yet available. We could say, following Gramsci, that we are witnessing an “organic crisis” where the old model cannot continue but the new one is not yet born.</p>
<p>The only way to counter the rise of anti-European sentiments and stop the growth of right-wing populist parties that excite them is to unite European citizens around a political project that gives them hope for a different, more democratic future. </p>
<p>Establishing a synergy between left parties and social movements at the European level would enable the emergence of a collective will that aims to radically transform the existing order.</p><img src="https://counter.theconversation.com/content/55869/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Chantal Mouffe does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The future of democracy depends on developing a left-wing populism that can revive public interest by mobilising political passions in the fight for an alternative to neoliberal de-democratisation.Chantal Mouffe, Professor of Political Theory, University of WestminsterLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/480572015-09-24T05:30:43Z2015-09-24T05:30:43ZTsipras can win elections, but now Syriza needs a growth plan for Greece<p>Syriza’s victory in the Greek snap election is remarkable. After all, it followed a catastrophic seven months in power that saw Greece almost exit the euro, the Greek economy plunge back into recession, the imposition of capital controls following a practically meaningless and divisive referendum, and the signing of a third bailout programme last August – which effectively contradicted the platform on which Syriza initially came to power. </p>
<p>And yet, Alexis Tsipras’s party <a href="https://theconversation.com/greek-election-tsipras-trounces-his-opponents-but-at-what-cost-47790">has been re-elected</a> with almost the same proportion of the vote it secured in his first electoral victory in January 2015 and the same slim majority in coalition with the Independent Greeks (ANEL). </p>
<p>Where do Syriza and Greece go from here? By signing the third Greek bailout programme in August, the country is committed to a large number of fiscal measures and structural reforms aimed towards increasing competition and flexibility in the country’s goods, services and labour market. Any mainstream economist will agree that these reforms are necessary if the Greek economy is to resume a path <a href="http://www.cesifo-group.de/DocDL/dicereport115-rr1.pdf">towards sustainable growth and job creation</a>.</p>
<h2>Policy contradictions</h2>
<p>Nevertheless, a smaller public sector and increased market competition coupled with deregulation is exactly the opposite of what Syriza ideologically stands for. They are also in direct contrast to the vested interests of those lobby groups who have been Syriza’s staunchest supporters such as public sector trade unions, state-owned enterprises and closed professions, ranging from doctors and lawyers to pharmacy-owners and taxi drivers. There’s also a strong risk that the bailout’s success will be undermined.</p>
<p>Since signing the new agreement, Tsipras has repeatedly knocked its prospects. He has stated that he personally does not believe in its <a href="http://www.telegraph.co.uk/finance/economics/11740527/Alexis-Tsipras-on-Greek-bailout-I-signed-a-text-I-do-not-believe-in.html">ability to take Greece out of the crisis</a>. He has also been joined by a number of high-profile Syriza officials who have expressed their opposition to many of its clauses <a href="http://www.protothema.gr/politics/article/505773/spirtzis-euhomai-na-min-karpoforisei-o-diagonismos-gia-ta-aerodromia/">such as the privatisation of Greece’s state-owned ports and airports</a>.</p>
<p>Then there’s the coalition’s record in their first (albeit short) term in office. Their handling of other key areas such as <a href="http://www.kathimerini.gr/830565/article/epikairothta/ellada/150-sxoleia-paremeinan-kleista">education</a>, <a href="http://www.tovima.gr/society/article/?aid=700683">healthcare</a>, <a href="http://www.kathimerini.gr/828439/article/oikonomia/ellhnikh-oikonomia/katerreyse-o-proupologismos-sto-7mhno-toy-2015">tax collection</a> and the <a href="http://www.newsit.gr/ellada/Metanasteytiko-I-ypiresiaki-kyvernisi-karfonei-tin-kyvernisi-Tsipra/428020">refugee crisis</a> raises serious question marks regarding the coalition’s ability to govern effectively. </p>
<p>These are set to become even more acute in light of the economic deterioration <a href="http://money.cnn.com/2015/07/17/news/economy/greece-bailout-recession/">expected in the forthcoming months</a>, when the fallout from the imposition of capital controls and the new bailout’s measures are likely to be felt in the form of a deepened recession, higher unemployment and increased tax bills.</p>
<h2>Uncertain outlook</h2>
<p>As the dust from Syriza’s latest electoral victory settles, the picture emerging is one of a government having to implement a policy in which it does not believe. Not to mention its slim parliamentary majority and the fact that it is relying on political personnel of unproven executive record, within an increasingly challenging economic and social environment. And, as the outcome of the recent showdown with Greece’s European partners showed, very limited leverage in the European political arena. </p>
<p>This outlook is not conducive toward restoring predictability and confidence in Greek politics or the country’s economic performance – necessary prerequisites for Greece to return to the path of economic recovery it <a href="https://www.cesifo-group.de/ifoHome/publications/working-papers/CESifoWP/CESifoWPdetails?wp_id=19126042">seemed to be on a year ago</a></p>
<p>Tsipras has so far proved to be a brilliant tactician in terms of forcing and winning elections. Whether, however, he is an equally brilliant strategist in office, is open to question. The impression one gets from examining his moves is that he keeps asking the Greek voters to hand him electoral victories he does not know what to do with. This is because from the very beginning, his Achilles’ heel has been, and continues to be, the lack of a credible growth plan – and winning elections does not, on its own, produce one. </p>
<p>It can only be hoped that Tsipras’s latest electoral triumph will bring a break with Syriza’s economic <em>idées fixe</em>, in the same way that he broke with the extreme left wing of his party in August. If he manages to do so, both he, his party, but most importantly Greece, stand to gain enormously. If not, then the next Greek election may not be too far away.</p><img src="https://counter.theconversation.com/content/48057/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael G. Arghyrou is a member of the Scientific Council of the Institute for Democracy Konstantinos Karamanlis.</span></em></p>Syriza’s re-election was remarkable for the same reasons that it will struggle to implement the economic reforms Greece needs.Michael Arghyrou, Reader in Economics, Cardiff UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/477902015-09-21T12:01:27Z2015-09-21T12:01:27ZGreek election: Tsipras trounces his opponents, but at what cost?<p>In the latest episode of the seemingly never-ending Greek crisis, the election of September 20 marked another <a href="http://www.theguardian.com/world/2015/sep/20/greece-election-result-the-key-numbers">decisive victory for Syriza</a> – and especially for its leader, Alexis Tsipras. </p>
<p>As in the <a href="https://theconversation.com/why-the-polls-got-it-so-wrong-in-the-british-election-41530">UK elections</a>, opinion polls failed to predict the considerable gap between Syriza (35.5% of the vote) and centre-right opposition party New Democracy (28% of the vote), with most pre-election surveys indicating a very close battle. </p>
<p>In another surprise, no seats were won by Syriza’s splinter party <a href="https://theconversation.com/why-alexis-tsipras-has-called-a-snap-election-in-greece-46496">Popular Unity</a>, which accused Tsipras of treason for signing Greece up to a deal with the so-called “troika” (the European Commission, International Monetary Fund and European Central Bank). </p>
<h2>Natural coalition</h2>
<p>Further confounding predictions was the popularity of Syriza’s populist right-wing coalition partner, <a href="http://www.theguardian.com/world/2015/jan/26/greece-elections-who-are-independent-greeks">Independent Greeks</a> (ANEL). Contrary to the polls, the party managed to enter parliament with ten seats. Its leader, Panos Kammenos, announced that the Syriza-ANEL coalition government will be renewed, while Tsipras promised a four-year government.</p>
<p>It should be noted that ANEL was supported enthusiastically by Tsipras, who claimed numerous times that ANEL was the only party he was willing to collaborate with, and that any other coalition would be “<a href="http://www.bbc.co.uk/news/world-europe-34249754">unnatural</a>”. Despite their differences, Syriza and ANEL have an ideological affinity over <a href="http://blogs.lse.ac.uk/eurocrisispress/2015/02/05/greek-elections-2015-the-beginning-of-the-end-or-the-end-of-the-beginning/">anti-western populism</a>. This paradoxical coalition, however, is now expected to implement a western-led austerity package in order to satisfy the troika. </p>
<p>Shockingly, neo-Nazi party <a href="https://theconversation.com/for-the-sake-of-greece-they-must-get-the-golden-dawn-trial-right-41395">Golden Dawn</a> remains Greece’s third party, winning almost 7% of the vote (slightly higher than the January 2015 elections) even after its leader publicly accepted the “<a href="http://www.ekathimerini.com/201623/article/ekathimerini/news/golden-dawn-chief-accepts-partys-political-responsibility-in-fyssas-murder">political responsibility</a>” for the assassination of a left wing musician Pavlos Fyssas. </p>
<p>Golden Dawn’s persistence shows that a part of the Greek electorate openly supports a neo-Nazi party which uses violence as political strategy and tool and remains loyal to its message of hate and nationalistic totalitarianism. </p>
<p>It should be noted that Golden Dawn (along with Syriza) is predominantly supported by <a href="http://greece.greekreporter.com/2014/10/20/why-do-young-greeks-vote-for-golden-dawn/">young voters</a>. Greeks have had many options to punish the establishment by voting for any of the country’s array of protest parties; voting Golden Dawn in this election shows there’s a cohort of voters doggedly loyalty to the party, potentially a considerable problem for Greece’s future political stability. </p>
<h2>Pyrrhic victory</h2>
<p>Nevertheless, there is no doubt that the biggest winner in the September election was Tsipras. </p>
<p>His <a href="https://theconversation.com/why-alexis-tsipras-has-called-a-snap-election-in-greece-46496">call to hold snap elections</a> turned out to be a masterstroke of Machiavellian political ingenuity. </p>
<p>On one hand, Tsipras managed a very efficient move to get rid of his internal opposition without even facing them in public. On the other hand, he saved face for his anti-austerity u-turn and now has legitimacy to implement three more years of harsh austerity which he agreed before the elections. That means Tsipras’s power is now more assured than ever, and his popularity clearly intact.</p>
<p>Still, one could argue that Tsipras’ victory was rather pyrrhic. The elections show the <a href="http://greece.greekreporter.com/?s=abstention+rate">highest abstention rate in Greece’s modern history</a> with almost half of eligible voters not turning out. This shows the disappointment of many voters as well as their silent acceptance that there is <a href="http://www.aljazeera.com/indepth/opinion/2015/07/greek-austerity-dead-long-live-austerity-150712083735451.html">no alternative to austerity</a>, and implies that almost half of Greeks do not feel that any of the existing parties represents them. </p>
<p>Greece is still coming off a prolonged period of reform inertia and political instability. That turbulence can be traced back to Syriza’s victory in the <a href="http://www.theguardian.com/politics/2014/may/26/syriza-european-elections-greece">2014 European elections</a>, after which the Samaras government did little to implement much needed reforms for fear of unpopularity. Then the economy almost stalled after Syriza’s win in <a href="https://theconversation.com/syriza-sweeps-to-victory-in-greek-election-promising-an-end-to-humiliation-36680">January 2015</a>, while the imposition of capital controls dramatically undermined economic stability and confidence both within and outside Greece on economic recovery. </p>
<p>The worst is yet to come. The new government will have to implement a series of unpopular measures such as pension and labour market reforms, privatisations, liberalisation of professions and other structural reforms in healthcare and public administration that will alienate key parts of the Greek electorate. </p>
<p>Still, Tsipras has proven to be a remarkable political maverick. He is greatly skilled in electioneering, and his natural charisma keeps him very popular among Greeks (especially younger ones). It remains to be seen how his transformation from a hard-left radical to a pro-austerity premier will turn out, but so far, he has escaped punishment from the electorate despite reneging on almost all of his pre-2015 promises. </p>
<p>One may argue that Tsipras faces a considerable danger to turn into an unpopular leader as soon as austerity hits Greek voters. As Thomas Hobbes wrote in <a href="http://www.notable-quotes.com/h/hobbes_thomas_ii.html#TJFb0tbh61ljzcgg.99">Leviathan</a>, “where men build on false grounds, the more they build, the greater is the ruin”.</p><img src="https://counter.theconversation.com/content/47790/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sotirios Zartaloudis does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Syriza lives to fight another day, but the omens for Greece’s future are as ominous as ever.Sotirios Zartaloudis, Lecturer in Politics, University of BirminghamLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/476472015-09-17T05:32:21Z2015-09-17T05:32:21ZCorbyn can benefit from emerging alliances in left-wing Europe<figure><img src="https://images.theconversation.com/files/95013/original/image-20150916-12006-1bb9o5u.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Corbyn is well-known as an anti-austerity campaigner.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/lewishamdreamer/19621586548/">Flickr/Jasn</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span></figcaption></figure><p>In politics timing can be everything. The former Labour leader Ed Miliband was terribly unlucky in this respect. He tried to capture a social democratic moment just as austerity politics had <a href="http://www.theguardian.com/business/2015/jul/09/greece-debt-crisis-athens-accepts-harsh-austerity-as-bailout-deal-nears">triumphed</a> across Europe.</p>
<p>Jeremy Corbyn, his newly elected successor, might be luckier. His arrival as Labour leader coincides with a new phase in European politics.</p>
<p>Thanks to the crisis in <a href="https://theconversation.com/uk/topics/greece">Greece</a>, the European anti-austerity movement is slowly moving from the confines of the radical left into mainstream social democratic politics. Corbyn should make the most of this new pan-European trend. It might help his anti-austerity drive at home and inform his stance on the EU.</p>
<h2>Austerity takes hold</h2>
<p>As the global financial crisis of 2008 created havoc in Europe, social democratic parties fell from power like <a href="http://www.worldaffairsjournal.org/article/what%E2%80%99s-left-social-democrats-disarray">dominoes</a>. They were blamed for the economic recessions that followed the bank bailouts and for the austerity policies they were forced to adopt by the institutions of the <a href="http://www.bbc.co.uk/news/business-13798000">European Union</a>.</p>
<p>For several years, these parties were unable to articulate a plausible alternative to austerity. The situation was particularly dire in southern Europe, where Greece, Portugal, Italy and Spain suffered <a href="http://www.bbc.co.uk/news/business-15149626">troika</a> interventions of different magnitudes.</p>
<p>But even in countries that are not members of the Eurozone, such as <a href="http://www.ft.com/cms/s/0/ae65c926-6367-11df-a844-00144feab49a.html">Denmark</a>, the austerity dogma was so potent that social democratic governments implemented draconian public spending cuts too. </p>
<p>The result of this strategy is all too clear. Across Europe most social democratic parties are in opposition. And those that are in government – in France and Italy and as junior partners of coalitions in Germany and the Netherlands – are either unpopular or invisible. Their electoral appeal has been eroded by the ravaging effects of austerity and by the rise in popularity of radical left parties like <a href="https://theconversation.com/why-are-european-leaders-so-afraid-of-greeces-syriza-party-35965">Syriza</a>, <a href="https://theconversation.com/meet-podemos-the-party-revolutionising-spanish-politics-33802">Podemos</a>, <a href="http://www.bbc.co.uk/news/world-europe-30342441">Die Linke</a>. On the right, they are being squeezed and by populist right-wing parties such as the National Front, <a href="https://theconversation.com/uk/topics/golden-dawn">Golden Dawn</a>, the <a href="https://theconversation.com/finland-election-anti-eu-right-marches-onto-centre-stage-40504">Finns Party</a> or the <a href="https://theconversation.com/danish-government-voted-out-but-who-moves-in-depends-on-a-battle-of-wills-on-the-right-43417">Danish People’s Party</a>.</p>
<h2>The moderates awake</h2>
<p>But things are starting to change. The months of bullying that Syriza endured at the hands of EU institutions woke several social democratic leaders from their Eurozone-induced coma.</p>
<p>French president François Hollande defended the Syriza government and <a href="http://www.reuters.com/article/2015/07/12/us-eurozone-greece-renzi-idUSKCN0PM08320150712http://www.reuters.com/article/2015/07/12/us-eurozone-greece-renzi-idUSKCN0PM08320150712">pushed</a> (without success) for its debt to be forgiven. Moderate Italian prime minister Matteo Renzi said <a href="http://www.reuters.com/article/2015/07/12/us-eurozone-greece-renzi-idUSKCN0PM08320150712">enough is enough</a> and appealed for an end to Greece’s humiliation.</p>
<p>The actions of French and Italian governments were timid but they signalled a new mood. Questioning the <a href="http://bruegel.org/2014/08/blogs-review-ordoliberalism-and-germanys-approach-to-the-euro-crisis">foundations</a> of the monetary union and discussing the EU’s democratic deficit suddenly became key components of mainstream political debates.</p>
<p>In southern Europe the classic ideological stand-off between the radical left and mainstream social democrats is being replaced by a spirit of openness and co-operation.</p>
<p>In Spain, the socialist party, PSOE, met with the radical left movement <a href="http://politica.elpais.com/politica/2015/06/03/actualidad/1433326219_192163.html">Podemos</a> to discuss a possible loose partnership at the regional level. In Portugal, the Socialist Party has already <a href="http://expresso.sapo.pt/politica/costa-abre-portas-a-compromisso-alargado-a-esquerda=f892351">started dialogues</a> with other left-wing forces.</p>
<p>Elsewhere, ambitious players talk of a pan-European movement uniting different left-wing forces. In that spirit the maverick French socialist who served in François Hollande’s government, Arnaud Mondebourg, invited the former Greek finance minister <a href="http://yanisvaroufakis.eu/2015/08/25/10081/">Yanis Varoufakis</a> to address his annual summer meeting of leftists to put forward the case for a pan-European movement against austerity.</p>
<h2>Riding the wave</h2>
<p>Corbynmania can be seen as part of this European-wide movement. It is clear that there has been a contagion effect directly from Europe into British left-wing circles. Many of Corbyn’s supporters have closely followed the rise of Syriza and Podemos and adopted some of their campaigning techniques.</p>
<p>But another interesting thing has happened. The election of Corbyn as party leader changed the dynamic. Labour is now the largest European social democratic party that endorses an unequivocal anti-austerity agenda.</p>
<p>As such, it is seen as a leading light by both radical left parties and some (though not all) European social democratic parties. As a sign of this new mood, the leader of PSOE, Pedro Sánchez, was quick to reclaim Corbyn for the social democratic camp, reminding everyone that “<a href="http://politica.elpais.com/politica/2015/09/14/actualidad/1442251685_645475.html">Labour and PSOE are sister parties</a>”.</p>
<p>The pan-European, anti-austerity drive is still in its infancy and is limited to southern Europe. But the movement could quickly spread to other social democrats that are tired of sitting in opposition. Hollande, with an eye on the 2017 presidential elections, may well revert to his anti-austerity promises. And even in the German SPD there are signs of frustration over Sigmar Gabriel’s <a href="http://www.ft.com/cms/s/0/0a805a22-2556-11e5-9c4e-a775d2b173ca.html#axzz3ltkoNn6m">pro-austerity stances</a>.</p>
<p>Corbyn should try to ride this wave and play a leading role in European politics (as Tony Blair did in the 1990s with the <a href="http://news.bbc.co.uk/1/hi/458626.stm">Third Way</a>). This would give him an opportunity to inject credibility to his agenda and to offer greater definition to his approach to the referendum on EU membership.</p>
<p>It would also give him a greater chance at success. As Miliband, Hollande, and Tsipras painfully discovered, in a world of globalised capitalism, you cannot fight austerity on your own.</p><img src="https://counter.theconversation.com/content/47647/count.gif" alt="The Conversation" width="1" height="1" />
The new Labour leader’s arrival coincides with a new phase in European politics – the rise of the left.Eunice Goes, Associate Professor of Politics, Richmond American International UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/473782015-09-11T05:33:36Z2015-09-11T05:33:36ZCorbyn cometh: has 21st-century UK protest politics just fully bloomed?<p>The unthinkable has happened. Jeremy Corbyn <a href="http://www.theguardian.com/politics/blog/live/2015/sep/12/labour-announces-leadership-election-result-with-corbyn-tipped-to-win-politics-live">has won</a> the Labour leadership election by a landslide, easily taking more than the other three candidates put together. With a huge groundswell of support from the several hundred thousand people who have joined the party since the last election, the radical democratic socialist has snatched Labour from under the noses of the establishment. </p>
<p>It comes at a time when the UK <a href="http://www.hansardsociety.org.uk/wp-content/uploads/2014/04/Audit-of-Political-Engagement-11-2014.pdf">has never been</a> more disillusioned with mainstream politics. The major parties are viewed as too similar, made up of representatives who are far-removed from the experiences of ordinary people – step forward Corbyn’s rival leadership contenders. What we are not used to is these perceptions affecting political participation. The way in which we used to register our discontent was by passively rejecting party politics. <a href="http://samples.sainsburysebooks.co.uk/9781317524328_sample_1076582.pdf">Only around</a> 1% of the electorate are members of a political party, compared to nearly 4% in 1983 <a href="http://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN05125">for example</a>. </p>
<p>Corbynmania may be challenging this trend, however. In an extraordinary period in the history of the Labour party, an avowedly left-wing candidate has generated a level of support and enthusiasm that <a href="http://www.versobooks.com/books/1447-ruling-the-void">we don’t tend to associate</a> with modern UK politics, or indeed with established democracies. The full implications of these events are as yet unclear but they may have sparked an appetite for a more participatory model of politics in this country. </p>
<p>At the end of 2014, Labour membership <a href="http://samples.sainsburysebooks.co.uk/9781317524328_sample_1076582.pdf">stood at</a> 193,000, having not exceeded 250,000 since 2000. Then came <a href="http://www.newstatesman.com/politics/2014/01/how-labours-proposed-new-leadership-election-system-would-work">Ed Miliband’s changes</a> to the party rules for leadership contests, aimed at extending democratic engagement. These created a selectorate of three groups – members, supporters and trade union affiliates. </p>
<p>Supporters and full members <a href="http://www.theguardian.com/politics/2015/aug/26/labour-leadership-election-party-to-check-voting-history-of-new-supporters">have come</a> to the party in large numbers, generating substantial fees in the process. Of the 554,000 eligible to vote in the current election – which is after the party’s <a href="http://www.theguardian.com/politics/2015/aug/20/labour-leadership-election-rejected-supporters-express-their-anger">weeding out</a> of illegitimate sign-ups – 293,000 are full members (fees vary, but can be £50), 113,000 are supporters (fees £3), and the remaining 148,000 are trade union affiliates. While Corbyn has been most popular among the union sign-ups, <a href="https://yougov.co.uk/news/2015/08/10/corbyn-pull-ahead/">he has</a> enjoyed widespread support among all three groups. </p>
<p>On the face of it, participation in UK politics has obviously been enhanced by the Labour leadership campaign – albeit perhaps in a shallow form given it was possible to sign up for the price of a latte. The real test of engagement will be whether these £3 supporters remain involved. Harriet Harman <a href="http://www.sunnation.co.uk/5-things-we-learned-from-harriet-harmans-andrew-marr-interview/">has suggested</a> this group will naturally convert to full membership to influence policy, but these are probably false hopes.</p>
<h2>People power</h2>
<p>The Corbyn surge may also have wider implications. The swell of enthusiasm for this radical candidate involves rejecting right-wing austerity economics, inequality and elitism, and it has the feel of a mass movement. Clearly the UK is not immune to forces that have already been evident in <a href="http://revolting-europe.com">European</a> and <a href="http://occupywallst.org">US politics</a>. The Corbyn message has appeared authentic, sincere and consistent, not labels commonly attached to politicians. </p>
<p>Perhaps even more important has been its sense of hope and optimism, reminiscent of the <a href="http://www.yesscotland.net/thankyou.html">Yes campaign</a> in the Scottish independence referendum. A positive vision can be inspiring, particularly at a time when many citizens in the UK and elsewhere are desperate for some good political news. Corbyn recognises that popular trust in politics is critical and requires nurturing. This is why he advocates a Labour party built on genuine input from the grassroots. </p>
<p>Corbyn’s campaign has taken the shape of a traditional style of politics, namely the political meeting. He has addressed more than 100 meetings and rallies, with many spillover talks and many people turned away – further echoes of the Scottish Yes campaign – and this has combined with a modern, professional and energetic online campaign. </p>
<p>What we are observing in Labour politics might even have been inspired by events north of the border. Remember that Yes backers the <a href="http://www.scotsman.com/news/uk/boost-for-snp-as-membership-hits-100-000-mark-1-3725308">SNP</a> and <a href="http://www.scottishgreens.org.uk/news/membership-surge-sets-up-strong-scottish-green-mp-campaign/">Scottish Greens</a> both experienced a dramatic increase in membership following the referendum. There <a href="http://www.telegraph.co.uk/news/politics/liberaldemocrats/11600345/Why-are-so-many-people-joining-the-Liberal-Democrats.html">was even</a> a rise in membership of the heavily defeated Liberal Democrats following the general election. Note the break from the past here: until recently, membership increases were associated with election success, not failure.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/94411/original/image-20150910-27309-amqzco.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/94411/original/image-20150910-27309-amqzco.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/94411/original/image-20150910-27309-amqzco.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=398&fit=crop&dpr=1 600w, https://images.theconversation.com/files/94411/original/image-20150910-27309-amqzco.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=398&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/94411/original/image-20150910-27309-amqzco.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=398&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/94411/original/image-20150910-27309-amqzco.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/94411/original/image-20150910-27309-amqzco.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/94411/original/image-20150910-27309-amqzco.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Scotland’s latest export?</span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/cat.mhtml?lang=en&language=en&ref_site=photo&search_source=search_form&version=llv1&anyorall=all&safesearch=1&use_local_boost=1&autocomplete_id=&searchterm=Yes%20Scotland&show_color_wheel=1&orient=&commercial_ok=&media_type=images&search_cat=&searchtermx=&photographer_name=&people_gender=&people_age=&people_ethnicity=&people_number=&color=&page=1&inline=205896952">EQRoy</a></span>
</figcaption>
</figure>
<h2>A new politics?</h2>
<p>Put this all together and it begins to look like we may be entering a new age of protest politics, born of deep disillusionment with the political mainstream. Voters on the centre-left may be persuaded that a viable alternative exists and politicians who can articulate this alternative might inspire a new generation – in a reversal of the <a href="http://www.britannica.com/topic/New-Right">politics that ended</a> the social-democratic consensus of the 1970s. </p>
<p>Then again, we must bear in mind that the politics of party membership is unrepresentative of the electorate at large. What wins an internal party debate is unlikely to win a general election. Conventional wisdom suggests this will be protest to no end. That won’t stop the Corbynistas hoping that this is the beginning of a reshaping of the ideological debate in UK politics – and perhaps even a new model of democratic politics. But for them to be right we’ll still need to see the sort of sea change that has not happened in this country for a very long time.</p><img src="https://counter.theconversation.com/content/47378/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Lynn Bennie does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>As the Labour Left’s fourth choice of candidate prepares to take the party reins, he may have taken the lead from Scotland’s Yes campaign and ushered in a new age in UK politics.Lynn Bennie, Reader in Politics, University of AberdeenLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/464962015-08-21T16:57:29Z2015-08-21T16:57:29ZWhy Alexis Tsipras has called a snap election in Greece<p>Alexis Tsipras, the prime minister of Greece, has <a href="http://www.theguardian.com/world/2015/aug/20/greek-bailout-alexis-tsipras-call-snap-elections">announced he is stepping down and has called a snap election</a> for September 20, less than a year since he took office as the leader of the left-wing coalition Syriza. </p>
<p>The move marks another episode in the long-running and seemingly never-ending Greek crisis. It is evidence of the pitfalls of Tsipras’ populist discourse. His strategy has rendered Greece almost ungovernable for more than a year.</p>
<p>Since the Greek crisis of 2010, Alexis Tsipras had <a href="http://blogs.lse.ac.uk/eurocrisispress/2015/02/05/greek-elections-2015-the-beginning-of-the-end-or-the-end-of-the-beginning/">accused</a> previous Greek governments and opposition members of subservience to Germany’s austerity programme. His anti-austerity and pro-Euro platform won him the <a href="https://theconversation.com/syriza-risks-an-eu-exit-in-a-referendum-wracked-with-problems-44118">January 2015 elections</a> with 36% of the vote and almost half the seats in parliament.</p>
<p>However, Tsipras failed miserably in delivering this promise. After seven months of political theatre and <a href="https://theconversation.com/syriza-risks-an-eu-exit-in-a-referendum-wracked-with-problems-44118">erratic brinkmanship</a>, Tsipras signed the most austere bailout programme yet, lasting until 2018.</p>
<h2>Splinters on the left</h2>
<p>Calling the election, Tsipras spoke of two key signs of his government’s success – the latest austerity package and the return to normality of the Greek banking system.</p>
<p>This is yet another example of his demagogic politics: the man who railed against austerity is now defending a new bailout programme that will result in more austerity. The man who implemented the closure of the Greek banks and the imposition of capital controls boasts that Greek banks will be functioning as they should sometime in the future.</p>
<p>The decision to call this election was dictated mostly by internal party politics. Syriza brings together socialists, Maoists, communists and disillusioned social-democrats (who constitute the minority in the party).</p>
<p>The largest leftist group in Syriza, the radical pro-socialist and pro-Russia Left Platform led by Marxist Socialist MP <a href="http://www.theguardian.com/world/2015/jul/17/alexis-tsipras-reshuffles-cabinet-bailout-dissidents">Panayiotis Lafazanis</a>, could not accept Tsipras’ U-turn. Its members have rejected the government’s new pro-euro policy.</p>
<p>Left Platform’s MPs have been openly against Euro and EU membership. They want Greece to turn to Putin’s Russia for help. Tsipras has only been able to hold power thanks to support from the vilified opposition parties New Democracy, The River and PASOK.</p>
<p>Lafazanis has now announced plans to launch a new party called “Popular Unity”, which will call for the return to a national currency and immediate default on the Greek debt. It should be noted that the only other party openly supporting a Euro-exit is the Neo-Nazi <a href="https://theconversation.com/for-the-sake-of-greece-they-must-get-the-golden-dawn-trial-right-41395">Golden Dawn</a>.</p>
<h2>What next for Syriza?</h2>
<p>Syriza’s break-up marks the end of a symbiotic relationship between the Left Platform and the so-called “Proedrikoi” (in Greek: the men of the president).</p>
<p>These groups tolerated each other while in opposition. The hard-left Syriza members provided the organisational and activist militancy, while the Proedrikoi brought the populist flair of Tsipras. Even now, he remains the most popular party leader in Greece.</p>
<p>Tsipras seems determined to bring a more centrist position to Syriza, replicating PASOK – a party that traditionally combined leftist and nationalistic populism and continued commitment to the EU.</p>
<p>So far, it seems that his populist strategy is working, but nobody knows how the disillusioned Greeks will react on election day when Tsipras asks them to support him for another three years of austerity. It would be safe to assume, however, that like an ancient Greek demagogue, he will manage to persuade Greeks to trust him again in another uncertain trip towards normality.</p>
<p>The best option for Tsipras would be to abandon his populism and demagoguery. He should be honest with Greek voters about the need for painful and unpopular reforms, such as better tax collection, pension and labour market regulation, reduction of <a href="http://blogs.lse.ac.uk/europpblog/2014/10/27/lower-levels-of-clientelism-in-portuguese-politics-explain-why-portugal-handled-austerity-better-than-greece-during-the-crisis/">clientelism</a>, and an increase of Greek competitiveness to attract foreign investment.</p>
<p>This would be a truly revolutionary move – a word he and other Greek politicians have used and abused. As George Orwell wrote in his novel 1984: “In a time of universal deceit – telling the truth is a revolutionary act.”</p><img src="https://counter.theconversation.com/content/46496/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sotirios Zartaloudis does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>After 206 turbulent days in power, Alexis Tsipras now presides over a coalition in tatters.Sotirios Zartaloudis, Lecturer in Politics, University of BirminghamLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/464492015-08-21T14:41:11Z2015-08-21T14:41:11ZTsipras’ second chance: Greece to hold elections<p>Elections have become a national sport in Greece. The country has had five different prime ministers in the last five years. </p>
<p>My prediction is that this number is not going to change anytime soon. </p>
<p>Greek Prime Minister Alexis Tsipras <a href="http://www.wsj.com/articles/greek-prime-minister-alexis-tsipras-expected-to-announce-whether-greece-will-go-to-elections-1440077601">has resigned</a> and called for new elections in a bid to consolidate his power and push through the country’s bailout deal. </p>
<p>Odds are Tsipras will emerge a winner in the elections, expected to take place on September 20. This is not a testament to his leadership skills, but rather due to the vacuum of leadership in Greek politics. Opposition parties, such as New Democracy and PASOK, have been completely discredited because of their disastrous management of the country over the last 40 years. </p>
<p>Only the centrist To Potami party could emerge as a competitor to Syriza. As they say – keep your enemies close. So, if Tsipras does not emerge as a clear winner to form a government on his own, I expect him to form a coalition government with To Potami.</p>
<p>Either way, the new elections give Tsipras another chance to get Greece’s financial house in order.</p>
<h2>How we got here</h2>
<p>Seven months ago, <a href="http://www.forbes.com/sites/hbsworkingknowledge/2015/01/29/what-the-greek-elections-mean-for-the-economy/">I suggested</a> that the Greek government’s actions – or inactions – would destroy an enormous amount of value. Unfortunately, I was right. </p>
<p>My conservative estimate is that the average Greek employee would need to work an additional year and a half to make up for the value in the economy destroyed in the last year. </p>
<p>One can arrive at this conclusion by analyzing data from the Athens Stock Exchange, IMF, Bank of Greece, Eurostat, OECD and European Commission: €30 billion was lost in government bank holdings held in the <a href="http://www.hfsf.gr/files/HFSF_Interim_January_March_2015_en.pdf">Hellenic Financial Stability Fund</a>. Another €13 billion was lost in <a href="http://www.bankofgreece.gr/Pages/en/Statistics/accounts.aspx">non-bank equity holdings</a>. From the €26 billion recorded by the <a href="https://www.imf.org/external/pubs/cat/longres.aspx?sk=25781.0">IMF</a> in non-financial assets held for privatization, about €10 billion of value has been destroyed. The sum is €53 billion in losses. </p>
<p>One also needs to account for opportunity costs due to sources such as lost tax revenue and increases in unemployment benefits. This is difficult to estimate, but one simple calculation for the former would be to assume that a 5% GDP contraction would proportionately contract tax revenues by the ratio of tax revenues to GDP, which in 2013 was close to <a href="https://stats.oecd.org/Index.aspx?DataSetCode=REV">33%</a>. Given a GDP of €180 billion this would translate into another €3 billion of losses. </p>
<p>Of course actual tax losses could be much higher if GDP losses persist for multiple years. Even ignoring this loss as well as increases in unemployment benefits and any potential losses from the new bank recapitalization, €56 billion of losses have been incurred. </p>
<p>This amounts to €16,000 per each of Greece’s approximately <a href="http://www.statistics.gr/portal/page/portal/ESYE/BUCKET/General/GREECE_IN_FIGURES_2014_EN.pdf">3.5 million workers</a>.</p>
<p>With an average net wage close to €900, this amounts to a full 18 months of hard work.</p>
<h2>How to undo the damage</h2>
<p>This value destruction can be reversed if Greece changes its focus. </p>
<p>Greece needs a turnaround, and with any turnaround strategy, focus is key. Where milk or bread is sold or whether stores will open on Sundays is not going to put Greece in a trajectory of growth. The IMF and the European partners are dead wrong, in my view, to focus on these issues instead of the elephant in the room. </p>
<p>The elephant in the room is the public sector, which has a budget of close to €80 billion and 650,000 employees. </p>
<p>Increasing accountability and improving governance in the public sector could have massive economic consequences because it could restore confidence and trust in the country. </p>
<h2>A 100-day plan</h2>
<p>Here is one 100-day plan on how to achieve this:</p>
<ol>
<li><p>The Greek government can increase the transparency and management of its assets and liabilities by reporting an up-to-date balance sheet of its accounts (which is currently does not). Thus, it should adopt accrual accounting and <a href="https://www.ifac.org/public-sector">International Public Sector Accounting Standards</a>. Within 30 days, the government should then report its net debt position under international standards. This is much lower than the frequently reported gross debt number that uses nominal value. The former is lower than <a href="http://www.hbs.edu/faculty/Pages/item.aspx?num=49288">50% of GDP while the latter is close to 180%</a>.</p></li>
<li><p>The government should then relentlessly educate credit rating agencies that its net debt does not justify such a low credit rating. Having secured European Stability Mechanism financing and having such a low net debt number justifies a better credit rating. A BB credit rating would be perfectly possible within 100 days. </p></li>
<li><p>The government should do whatever is necessary for Greek government bonds to be included in the European Central Bank’s quantitative easing program. This will improve liquidity and set the foundation for economic growth.</p></li>
<li><p>With a commitment to transparency, a better credit rating and being part of ECB’s quantitative easing, my estimate is that 10-year Greek government bonds could trade close to 3% yield within 100 days. Now they trade close to 10%. This would open the doors for Greece to tap the market and issue a bond. </p></li>
<li><p>Within this sequence of events, it would not be unrealistic to expect a 50% increase in the Athens Stock Exchange index leading to a gain of approximately €15 billion. </p></li>
</ol>
<p>Greece used to have GDP-per-capita levels almost double that of the poorest countries in the European Union. Now it has just 20% higher than them. </p>
<p>New elections will give Tsipras a second opportunity to reverse that trend. Let’s hope he does not waste it again.</p><img src="https://counter.theconversation.com/content/46449/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>George Serafeim does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Elections will give Alexis Tspiras another chance to put Greece’s financial house in order. Here’s what he should do after the government reforms in September.George Serafeim, Jakurski Family Associate Professor of Business Administration, Harvard UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/451142015-07-30T14:04:46Z2015-07-30T14:04:46ZWhy Greece’s third bailout package is bound to fail<p>The Greek government was forced into accepting a third bailout under very difficult circumstances on July 13. The dramatic <a href="http://www.consilium.europa.eu/en/press/press-releases/2015/07/12-tusk-final-remarks-euro-summit/">euro summit of July 12</a> lasted 17 hours before a new bailout package of €86 billion was agreed by eurozone prime ministers. Conditional on a new recessionary policy mix, negotiations are now underway to determine the specifics. </p>
<p>While the details of the new plan are undecided, so far we know that it will last three years. A higher than anticipated recession might further increase Greece’s financing needs rendering the above figure inadequate. </p>
<p>But regardless of the specifics, since the recessionary policy mix will remain the same, there is nothing to suggest that the third bailout will have a different fate to its predecessors. The first bailout program in 2010 failed and was replaced by a second one in 2012 and now a third, similar one. All demanded unreasonable high fiscal consolidation without any significant debt relief. After the new agreement recession is very likely to deepen again. </p>
<h2>Economic woes</h2>
<p>The Greek economy faces yet <a href="http://www.theguardian.com/business/live/2015/jul/23/business-live-greece-mps-reforms-tsipras-bailout-live">another recessionary year</a> with depressed consumption, anaemic investment and an extremely <a href="http://www.telegraph.co.uk/finance/economics/11554873/Why-theres-little-hope-for-Greeces-unemployed.html">high unemployment rate</a>. On top of that, the ongoing humanitarian crisis <a href="http://www.bbc.co.uk/news/world-europe-31992175">is deepening</a>. The third bailout will exacerbate this.</p>
<p>The tremendous <a href="http://www.economist.com/node/21555955">fiscal consolidation</a> implemented by Greece and a badly designed private debt haircut in the beginning of 2012 that undermined the banking sector under the terms of its previous two bailouts, has led so far to economic losses equal to a quarter of GDP and <a href="http://www.alpha.gr/files/infoanalyses/Greece_Economic_Financial_%CE%BFutlook62015.pdf">pushed unemployment to levels over 25%</a>. No other country has suffered similar losses in peacetime. </p>
<p>Another mark of the recessionary policies being a failure is Greece’s inability to meet the economic targets predicted by its creditors. IMF forecasts of nominal GDP overestimated the actual numbers <a href="https://www.oxfordeconomics.com/my-oxford/publications/273817">by 25% in 2013 and 2014</a>. The same will probably happen in 2015. Financing Greece’s debt in the same old way is expected to further boost sovereign debt <a href="http://www.imf.org/external/pubs/cat/longres.aspx?sk=43080.0">to the level of 200% of GDP</a>. This figure is, in its own right, a guarantee that it will take years before Greece regains access to markets (without a drastic intervention by the ECB).</p>
<h2>Bad design</h2>
<p>There are also elements in the new programme that are a clear outcome of a bad design. Greece has already received a <a href="http://www.consilium.europa.eu/en/press/press-releases/2015/07/17-efsm-bridge-loan-greece/">€7 billion bridge loan</a> to meet its summer liquidity needs by the EU’s emergency fund, the European Financial Stabilisation Mechanism. If there are further delays to the new agreement, Greece will need another bridge loan of €14 billion to pay back a maturing bond to the ECB of €3.2 billion, due on August 20, and to recapitalise the country’s banking sector before the autumn stress-tests, which will reveal how robust (or not) the Greek banking system is.</p>
<p>After a prolonged holiday the banking sector requires an urgent recapitalisation. This is mainly due to cash withdrawals from the Greek banks and the high levels of the non-performing loans triggered by the persistent recession and the bank closure. According to <a href="http://www.consilium.europa.eu/en/press/press-releases/2015/07/12-euro-summit-statement-greece/">rough EU estimations</a>, banks will immediately need an injection of €25 billion. In the new agreement the plan is that this will come from privatising state assets. </p>
<p>On the basis of past experience, this target is unthinkable. Privatisation receipts for 2011-2014 (under the terms of the last two bailouts) <a href="http://www.ft.com/cms/s/0/b3f7a5b0-ac61-11e4-af0e-00144feab7de.html?siteedition=uk#axzz3hJDexlaH">were only €5.4 billion</a> . But even if the target is reached it will take years to collect the recapitalisation funds, which are urgently needed now. In the meantime, limits on cash withdrawals remain, with Greeks limited to withdrawing €420 a week and unable to send money abroad.</p>
<h2>Democratic deficit</h2>
<p>It is clear that the new bailout plan is inadequate even before the official agreement. The plan will also meet increasing resistance from Greeks – the majority of whom will not benefit <a href="http://www.aljazeera.com/indepth/opinion/2014/06/our-big-fat-greek-privatisation--20146921125385770.html">from the fire-selling of public property</a>. The fact that the state assets will be mandatorily transferred to a newly created fund will raise further concerns. Aspects of the new agreement are not only poorly designed but they are also lacking democratic legitimisation.</p>
<p>Given the size of the recession and the increasing unpopularity of the reforms, a new political impasse is very likely to arise before the end of the economic crisis. The economic conditions and targets of the new programme will likely be missed, flagging up a new failure long before the lapse of the three years. </p>
<p>Meanwhile, Greece has been trapped to a self defeating plan. With the option of Grexit now put on the negotiating table for the first time by officials from core countries, any state attempting to break from the recessionary-led reforms will be scared into submission. This may be enough for the moment to tackle the anti-austerity forces in Europe; but it is also a slippery ground for the longevity of the eurozone.</p><img src="https://counter.theconversation.com/content/45114/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dimitris P. Sotiropoulos is a member of Syriza.</span></em></p>It’s groundhog day for Greece as the third bailout package is negotiated. And there’s no reason to think this one will be any more successful than the last two.Dimitris Sotiropoulos, Senior Lecturer in Finance, The Open UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/447292015-07-24T05:22:41Z2015-07-24T05:22:41ZThis is the end of the line for Syriza<p>Greek banks have <a href="http://www.theguardian.com/world/2015/jul/20/greek-banks-reopen-surprise-no-deluge-customers-greece">reopened</a> after weeks of closure. The patient and orderly way customers queued outside to use ATMS during the big shut down was an impressive sight, especially for those people who are fond of considering Greek people as somehow incapable of doing things right. </p>
<p>But nothing is harmonious. The queues outside the job centres are as long as ever, while many of the shops that shut down at the same time as the banks, still haven’t reopened. Anti-austerity and anti-governmental protests have started to take place for the first time since Syriza came to power. Dozens were arrested as the Greek parliament voted to accept a new bailout deal from Europe, based on the very terms that were <a href="https://theconversation.com/greece-votes-no-experts-respond-44231">rejected</a> just days earlier in a national referendum. <a href="http://www.skynews.com.au/news/top-stories/2015/07/23/thousands-protest-as-greece-votes.html">Fresh riots</a> took place as the parliament passed a law that allows the <a href="http://www.theguardian.com/business/live/2015/jul/22/business-live-greece-votes-on-further-bailout-reforms">confiscation of people’s homes</a>.</p>
<p>As Syriza burns its bridges with the general public, life for the majority of people has returned to hopeless normality – indeed, many people have spent more time talking about the <a href="http://www.theatlantic.com/photo/2015/07/wildfires-rage-across-greece/399092/">wildfires</a> that have broken out around the country than the troika in the past few days.</p>
<p>Greece’s ruling party might be called the coalition of the radical left but it seems to be rejecting a basic argument put forward by activists at that end of the political spectrum for years: It is impossible to transform this unequal, structurally and physically violent world into a better place if you try to do it via the institutional route. State governance, the parliamentary system, prime ministerial meetings and the rest are all the enemies of meaningful change. </p>
<p>Perhaps to a certain extent Syriza’s leaders were aware of the <a href="http://blogs.channel4.com/paul-mason-blog/syrizas-greece-chile-allende/3139">risks</a> they were taking when they sought to continue negotiating with Europe. They could end up crossing the political spectrum to join the rest of the austerity governments or, less likely, be overthrown for failing to comply with the requests of creditors and international bankers.</p>
<p>Players in the neoliberal system have never been afraid of drawing blood – and Greek history has quite a few examples. The left has often been brutalised in order to protect capitalist forms of governance. This is what happened during the <a href="https://en.wikipedia.org/wiki/Greek_military_junta_of_1967%E2%80%9374">military coup</a> of 1967. And although such extremes are unlikely these days, the bailout debacle has introduced Syriza’s leadership to real politics. </p>
<p>Just after prime minister Alexis Tsipras agreed to the terms presented to him by Greece’s international creditors, the IMF, itself part of the deal, <a href="http://www.bbc.co.uk/news/business-33531845">spoke out against</a> what was on offer. Greece, it argued, would never be able to pay its debts under the terms being put forward. Very soon followed the German minister of finance who <a href="http://www.politico.eu/article/german-finance-minister-schauble-undermines-greek-deal-grexit-merkel/">made it publicly known</a> that he does not think the programme proposed by his own government will work.</p>
<p>And yet this was the route taken by EU leaders. Syriza argues that the Greek government chose these new catastrophic terms and conditions instead of a much more catastrophic option. This is precisely how high-level politics works behind closed doors. There is blackmail and there are threats. One can only wonder why Syriza would have expected anything else.</p>
<p>Many believe Tsipras was forced into agreeing to the terms but Syriza is not innocent in this situation. It continues to glorify the eurozone and still prioritises paying back a supposedly national debt that ends up bailing out the Greek and European banking sector.</p>
<p>Moreover, Syriza’s belief in national unity also reflects the mistakes long made by the Greek left. The Greek population includes both massively impoverished social classes and a corrupted few who get richer every day. The latter group has no interest in an even slightly fairer system than extreme austerity for the poor and state generosity for the rich.</p>
<p>At least amid all the confusion there is clarity in one respect. Voters are seeing that Syriza’s parliamentary victory does not mean the end of austerity and poverty. Even Syriza’s own youth group <a href="http://neolaiasyriza.gr/%CE%B1%CE%BD%CE%B1%CE%BA%CE%BF%CE%AF%CE%BD%CF%89%CF%83%CE%B7-%CE%BD%CE%B5%CE%BF%CE%BB%CE%B1%CE%AF%CE%B1%CF%82-%CF%83%CF%85%CF%81%CE%B9%CE%B6%CE%B1-%CE%B3%CE%B9%CE%B1-%CF%84%CE%B7-%CF%83%CF%85%CE%BC/">publicly denounced</a> the new loan agreement. </p>
<p>The deep division between the government and people is opening again. Since Syriza’s election in January 2015, significant parts of the grassroots movement that opposed austerity – from solidarity and protest groups to immigrant support initiatives and unions – had remained somewhat inactive. They had slipped into a lethargic state, expecting a smoother state of affairs with Syriza at the helm of the austerity-ridden country. But the scales have fallen and those who were sympathetic to this new government are losing again faith in politics from above.</p><img src="https://counter.theconversation.com/content/44729/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dimitris Dalakoglou received funding from an ESRC Future Research Leaders grant for the project 'Crisis-scapes: The City at the time of Crisis' studying public spaces and infarstructures in Athens.</span></em></p>The deal is done with Europe, and the people aren’t happy about it.Dimitris Dalakoglou, Professor of Social Anthropology, Vrije Universiteit AmsterdamLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/446272015-07-14T19:03:43Z2015-07-14T19:03:43ZGreece: a bad deal for everyone<figure><img src="https://images.theconversation.com/files/88340/original/image-20150714-21719-26g289.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Held by the throat.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/photophiend/8140308522/in/photolist-dpkd7W-oGJV5W-oYXZSc-dXAqAA-dYbMTm-93XMvQ-5qUW9K-oGJAnM-4mTYze-ed5TpW-mCfG4X-dJwb56-5wu5zd-2774B3-2seX2h-hQZFSi-qXpHVE-fcecoJ-fcesUU-34TEpd-atxoj9-pR4XML-dXAqzw-bsKxnf-eDyK3n-qYMGrS-qYUFbT-9UAhH6-9UAgdn-rge2sp-9UAeFc-9UDguW-9UDcKy-3LjxH-cWv8B-cWviX-cWv3s-cWv5r-5r3upB-cWw1e-cWvgV-cWwcf-d3sxnL-2yyfsg-2QA2pp-cWwgX-ewAiS-cWwiv-jdgkX-k2urB">Photo Phiend</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span></figcaption></figure><p>The bailout deal <a href="http://www.independent.co.uk/news/world/europe/greece-debt-crisis-analysis-live-everything-you-need-to-know-about-the-greek-austerity-deal-10386529.html">negotiated between Greece and the eurozone</a> was yet another example of bad EU decision making. It only partially addresses the problems which the Greek economy faces. It also confirms the structural weaknesses at the heart of the European monetary union. If it does prove to be the end of the game, then it is one with no winners.</p>
<p>In simple terms, Greece has obtained a third bailout at terms which are not markedly better than those rejected by voters in <a href="https://theconversation.com/victory-for-politics-of-defiance-in-greece-means-the-real-crisis-starts-now-44317">last week’s referendum</a>. There is the small carrot, but no guarantee, of future debt reduction or a pause in debt repayments. In exchange Greece has surrendered its fiscal sovereignty to the EU. Indeed, it has capitulated other aspects of its economic governance. </p>
<p>The <a href="http://www.consilium.europa.eu/en/press/press-releases/2015/07/12-euro-summit-statement-greece/">Eurosummit statement</a> published on July 12, clearly sets out the stark ultimatum demanded by the hardliners at the summit – including Germany, Finland, Austria and the Netherlands – who welcomed “the commitments of the Greek authorities to legislate without delay.”</p>
<p>There follows a list of requirements to streamline and increase VAT, reform pensions, introduce quasi-automatic spending cuts in the case of missed fiscal surpluses, and a reform to streamline the judicial system. Some measures must be agreed by the Greek Parliament by Wednesday, and the rest by the July 22 at the latest.</p>
<h2>A punishment that fits the crime?</h2>
<p>In addition there needs to be a clear path, with clear milestones, towards pensions, energy and labour markets reform. The diktats also extend to liberalising Sunday trade, pharmacies, the sale of milk and bread. One wonders about this level of detail. It’s doubtful that it was driven by a need to improve the efficiency of various aspects of Greece’s retail sector. Some have speculated that it’s an attempt to <a href="http://blogs.channel4.com/paul-mason-blog/">punish Greece for the current crisis</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/88342/original/image-20150714-21719-zk9w4f.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/88342/original/image-20150714-21719-zk9w4f.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/88342/original/image-20150714-21719-zk9w4f.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/88342/original/image-20150714-21719-zk9w4f.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/88342/original/image-20150714-21719-zk9w4f.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/88342/original/image-20150714-21719-zk9w4f.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/88342/original/image-20150714-21719-zk9w4f.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/88342/original/image-20150714-21719-zk9w4f.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">A hard slog for the people, and police, of Athens.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/biglebo/5885236310/in/photolist-9Y4nHy-5HyTGB-5HfsGp-5H4Vi7-9Y4opC-5HPXXo-5KNfa5-9Y1tXr-5KNiMw-eQe9KA-5HPXW7-5HjLjf-5HjMoz-5JD2DD-apvbML-9ky7XC-7hf7H2-5HjMpP-amXvmJ-5Hp6x3-5KJ1ig-5HKFw4-eQ22xK-q3m5bR-qtuBtY-q4fgW7-9Y1tHk-9Y4no5-uCaujN-eQ2AKD-8Ut4RW-9Y4nwN-bkq5F6-nPx1Vb-9Y4nQj-2abnCr-2abnDa-pBA9oR-5JHigL-aNNPBP-aNNPme-drtmKX-6Wi3rx-7hf7Dk-hCzwW3-5JHi7q-5JD2TF-uAQd5R-7gGU3z-9Y1tqB">yannis porfyropoulos</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span>
</figcaption>
</figure>
<p>Greece also has to escalate its privatisation programme, which the Syriza government had opposed, and which will be used to reimburse loans obtained through the <a href="http://www.esm.europa.eu/">European Stability Mechanism (ESM) programme</a>. Some €50 billion will be used to recapitalise the banks and to reduce its debt-to-GDP ratio. At one stage of the negotiations it had even been suggested that this forced savings fund from privatisation might be held in Luxembourg, out of reach of the erring Greek government.</p>
<p>In exchange, Greece gets a third bailout from the ESM Programme of around €82-86 billion. It also allows for bridging finance of €12 billion to tide Greece over on its repayment obligations until early August. There is a suggestion that future lending might be possible including longer grace and repayment terms, but nothing firm.</p>
<h2>Hollow victory</h2>
<p>Objectively this doesn’t seem better than any deal which Alexis Tsipras’ government might have negotiated before the referendum. Yanis Varoufakis, the abrasive former Greek finance minister who resigned after the referendum vote to ease the negotiations <a href="http://www.abc.net.au/radionational/programs/latenightlive/greek-bailout-deal-a-new-versailles-treaty-yanis-varoufakis/6616532">compared the deal to the Treaty of Versailles</a>. It does raise the question of why prime minister Tsipras accepted the deal. The explanation is probably that he knows (and the hardline eurozone countries knew) that even though a majority of Greeks voted No (or rather “Oxi”) to previous bailout terms, they clearly did not want to leave the euro. There is little evidence that a Grexit would provide a better path for Greece out of this crisis. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/88341/original/image-20150714-21696-575ss6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/88341/original/image-20150714-21696-575ss6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/88341/original/image-20150714-21696-575ss6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/88341/original/image-20150714-21696-575ss6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/88341/original/image-20150714-21696-575ss6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/88341/original/image-20150714-21696-575ss6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/88341/original/image-20150714-21696-575ss6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/88341/original/image-20150714-21696-575ss6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Merkel has helped to set a precedent for future talks.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/indeedous/15228324852/in/photolist-pcF9r3-4XMoLe-6CXgVX-8dgPSB-kwugt2-aHtWsB-bB36ox-aNEEex-6qWxU4-8dB8fY-6r1KqQ-kwuFEM-kwuFq8-b27mUg-eaRxL2-fWtwBV-6qWEe4-7ezUNa-aNEE9p-aNEE4z-fWAmTH-b27nqB-b27v8F-b27pmP-7Xcwbm-6t4wA8-fbrRYd-fMavvS-b27m2v-6t8EX1-fWzm7q-nbJaQX-cHAsYC-727iTK-b27qkV-6bZbZX-nXEWET-b27oTr-aDtMhi-8pQZdg-tuP1xV-ePWuCJ-fWA1FQ-6QVSJ-aHtXtT-rWZxzg-hbXNa-b27qKn-6XxX9h-nBgujy">Philipp</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>So is this then a triumph for the eurozone? The EU comes out of this very poorly, on three grounds. First, whilst the reforms might (very, very slowly) improve the supply side of the Greek economy, there is little in the deal to address the lack of domestic demand which the resumption of austerity policies will impose. Indeed, the capital controls which are stopping Greeks getting their cash out of ATMs – and which will continue for a time – still act as a drag on the economy. </p>
<p>Second, the deal does not address the issue of debt sustainability, and this will have worsened during the last few weeks.</p>
<p>Third, and more importantly, this deal sets the scene for how future crises will be handled in the eurozone. We have seen division, acrimony, and the triumph of disunity. Exactly the opposite of the driving force behind the closer economic (and political) union which a shared currency was designed to create. Indeed, it’s worth remembering that countries such as France and Italy saw monetary union as a means of moving away from a fixed exchange rate mechanism which was seen to privilege Germany as the surplus country, forcing adjustment on the deficit countries. </p>
<h2>Homer comforts</h2>
<p>Instead, monetary union was designed in the image of Germany: with a fiscal decision-making system which still means countries with strong fiscal balances hold the upper hand. There is no formal mechanism to even up the economies of the weak and the strong, or any method to share the debt burden through mutualisation, as would be expected in a true federal state. The European Central Bank, meanwhile, is independent, but unlike the Bank of England or the US Federal Reserve, is not subject to scrutiny by a single central political authority in its defence of the currency and banking system. The eurozone is a fiscal confederation rather than a proper federation. </p>
<p>In the circumstances there are few plaudits for anyone. An immediate Grexit has been averted. But even if all goes as planned in Brussels, and the Greek (and German and Finnish) parliaments approve the deal, the resolution of the Greek debt crisis will take a long time. Longer than the years it took Odysseus to return to Ithaca in Homer’s poems. But, unlike Homer, there are few heroes to be found in this saga.</p><img src="https://counter.theconversation.com/content/44627/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Anton Muscatelli does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A punitive deal which makes life hard for the Greek people and which sets dangerous precedents for the eurozone.Anton Muscatelli, Principal and Vice Chancellor, University of GlasgowLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/446172015-07-14T09:46:28Z2015-07-14T09:46:28ZHow Europe turned its back on Greece in the pursuit of profit<p>After five years of imposed austerity, Greece is on its knees. GDP has declined by 25%, unemployment has hit 26% (and youth unemployment more than 50%). And yet, all the EU has to offer is <a href="http://www.bbc.co.uk/news/business-33505555">more austerity</a> in exchange for a third bailout agreement.</p>
<p>Pension reform will be part of the deal agreed at the marathon meeting of eurozone leaders on July 12, as is further privatisation and <a href="http://uk.businessinsider.com/greek-deal-update-islands-and-assets-need-to-be-sold-to-raise-50-billion-2015-7?r=US">labour market liberalisation</a>. EU agents will be given oversight of Greek government spending, including a new independent fund that will monetise €50bn in state assets to repay debts.</p>
<p>Greece has essentially been pushed into accepting more of the same, even after voting to reject the terms on offer from Europe in a national referendum. There is no sign of European solidarity in this deal. It is a punishment handed down to Greece for daring to say no to austerity.</p>
<p>The EU was established on the principles of cooperation and mutual support – and many are now wondering what has happened to those aspirations. But solidarity fell by the wayside some time ago in Europe. This is just the most recent example of how European integration today is about profit maximisation for capital – not about cooperation between European people.</p>
<h2>Good intentions</h2>
<p>When the EU was established in the 1950s, it was based on mutual economic support in the reconstruction after World War II. Politically, it was intended to ensure that France and Germany, in particular, would never again go to war against each other.</p>
<p>The initial success was impressive. France and Germany quickly moved from being arch enemies to the axis of further integration. The whole EU prospered economically so much, in fact, that other countries were quick to seek membership too.</p>
<p>Greece joined in 1981, and Spain and Portugal followed in 1986. In all three cases, significantly lower GDP levels made clear that they were not economically ready. </p>
<p>Yet the others accepted them as new members because they felt it was important to provide these young democracies, which had just overcome military dictatorships, with political support and stability. <a href="http://blogs.lse.ac.uk/greeceatlse/2014/11/26/does-the-greek-crisis-prove-the-countrys-entry-into-the-eec-in-1981-was-a-mistake/">Solidarity overrode economic concerns</a>.</p>
<p>From the mid-1980s onwards, economic integration deepened with the <a href="http://www.civitas.org.uk/eufacts/FSTREAT/TR2.php">internal market project</a> as well as <a href="http://www.civitas.org.uk/eufacts/FSECON/EC4.php">Economic and Monetary Union</a> including the introduction of the euro – but, at least initially, solidarity with less advanced regions was not forgotten.</p>
<p>The 1993 <a href="http://www.eurotreaties.com/maastrichtec.pdf">Maastricht Treaty</a> included the so-called cohesion fund, which was specifically intended at the time to support Ireland, Greece, Portugal and Spain in their efforts to catch up economically with the more advanced EU members. Equally, further economic integration was supposed to go hand in hand with the development of a <a href="http://gsp.sagepub.com/content/7/3/271.abstract">social dimension</a>, guaranteeing minimum social and workplace rights across the EU.</p>
<h2>The age of profit maximisation</h2>
<p>The 1990s marked a clear break away from solidarity in the EU. Even though some progress was made in areas such as parental leave, the social dimension of the EU was never fully developed. Broader, neoliberal restructuring quickly started to dominate.</p>
<p>Full employment was mentioned in the 2000 <a href="http://www.europarl.europa.eu/summits/lis1_en.htm">Lisbon Strategy</a>, but this was to be achieved mainly through supply-side measures such as training, not through state investment in the economy.</p>
<p>Several decisions by the European Court of Justice during the 2000s further undermined the social dimension. In the so-called <a href="http://www.eurofound.europa.eu/observatories/eurwork/articles/unions-fear-ecj-ruling-in-laval-case-could-lead-to-social-dumping">Laval case</a>, for example, the free movement of services across borders was prioritised over the right of Swedish workers to blockade a construction site where 14 Latvian workers were employed on wages of around 40% less than their Swedish counterparts. Supporting the profitability of the company was considered to be more important than social justice, minimum standards and the right to strike.</p>
<p>Then, in 2004, eight countries from Central and Eastern Europe joined the EU together with Cyprus and Malta. These countries were economically even further behind the EU average than Greece, Spain and Portugal had been in the 1980s. </p>
<p>Instead of providing extra support, the EU imposed a more radical, market-oriented variant of neoliberalism onto the new members than for existing members. As it enlarged to the east, the EU did not offer substantial financial aid, the free movement of labour, or the full amount of subsidies available to farmers within the <a href="http://cnc.sagepub.com/content/30/1/57.abstract">Common Agricultural Policy</a>. Having just overcome Communist, authoritarian regimes, there were no forces in Central and Eastern Europe able to demand compromises – just as had been the case for Western Europe after World War II. </p>
<p>In its external, free-trade policy too, the EU moved away from relations of special support for developing countries. For example, the <a href="http://ec.europa.eu/development/body/cotonou/lome_history_en.htm">Lomé Conventions</a> included preferential arrangements for countries from Africa, the Caribbean and the Pacific. In 2006, however, this was replaced with the new free-trade strategy, Global Europe, which demanded <a href="http://media.waronwant.org/sites/default/files/global%2520europe%2520-%2520a%2520critique.pdf?_ga=1.244190977.562478043.1433798730">full reciprocity</a> in market opening from developing countries and emerging economies alike. Again, solidarity was replaced with a focus on profit maximisation.</p>
<p>Given this history, the lack of solidarity being shown towards Greece now should not come as a surprise. For quite some time, EU policies have been dominated by neoliberal restructuring and a focus on profit maximisation for capital.</p>
<p>When the <a href="https://theconversation.com/uk/topics/eurozone-crisis">eurozone crisis</a> hit, it quickly became a justification for austerity, undermining of trade union rights (see, for example, the <a href="http://www.worker-participation.eu/National-Industrial-Relations/Countries/Portugal/Collective-Bargaining">erosion of collective bargaining</a> in Portugal), privatising state assets and public sector cuts. The purpose was to shift the general balance of power in society towards capital.</p>
<p>The idea of solidarity has been lost in European integration. Neoliberal capitalism has no room for solidarity with workers, no understanding of the importance of social justice and equality in society. Neoliberal capitalism does not consider balanced development across the EU an important objective.</p><img src="https://counter.theconversation.com/content/44617/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Andreas Bieler is affiliated with the University and College Union (UCU) and a member of its National Executive Committee. </span></em></p>Since the 1990s, the EU has been less about social integration and more about neo-liberal values.Andreas Bieler, Professor of Political Economy, University of NottinghamLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/446132015-07-13T12:44:25Z2015-07-13T12:44:25ZTsipras may have just done the best deal possible for Greece<p>When Alexis Tsipras walked into the meeting with the remaining 18 eurozone leaders at the weekend, he may have had in mind, not a line from Greek antiquity, but perhaps one from the Italian middle ages. Dante Alighieri’s version of hell had a simple message at its gate: “Abandon all hope, ye who enter here”. It was a very difficult, and very long, meeting for Tsipras, but my first impression is that he managed the best he could under extremely difficult circumstances.</p>
<p>For a start, the Greek prime minister had to explain to eurozone leaders why he was pushing for an economic agreement which, at the end of the day, had been overwhelmingly <a href="https://theconversation.com/after-the-no-vote-greece-faces-its-last-judgement-44247">rejected in a referendum</a> by his own people. This raised a significant issue of trust and credibility. Despite Tsipras having won Greek parliamentary support (251 out of 300 Greek MP’s gave him the “green light” to strike a deal; perhaps any deal that would keep Greece in the euro) was he trustworthy to implement what was about to be agreed? </p>
<h2>Staring into the abyss</h2>
<p>In fact, Tsipras had very little room for manoeuvre. Greek banks have been closed since late June, capital controls are firmly in place and cash reserves available at Greek banks are at an all-time low of around €500m (only 0.5% of the €120 billion deposits of Greek citizens “sitting” in Greek banks, which, due to capital controls, Greeks cannot withdraw). Tsipras knew that, without a deal, Greek banks would definitely collapse. To make things worse, Greece had already defaulted on an <a href="https://theconversation.com/nine-things-to-know-about-greeces-imf-debt-default-44097">IMF debt repayment of €1.6 billion</a>. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/88222/original/image-20150713-11816-1lj95ep.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/88222/original/image-20150713-11816-1lj95ep.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/88222/original/image-20150713-11816-1lj95ep.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/88222/original/image-20150713-11816-1lj95ep.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/88222/original/image-20150713-11816-1lj95ep.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/88222/original/image-20150713-11816-1lj95ep.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/88222/original/image-20150713-11816-1lj95ep.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/88222/original/image-20150713-11816-1lj95ep.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">A line in the sand. The banks left Greek hands tied.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/afilitos/19103922038/in/photolist-v79Asb-szYSDE-shS25Q-smfxzc-dFwxSq-9NhnCP-9Y2PWN-9otpxM-8aERUW-tzwWxV-ryeR2d-s9ECnq-s7mLvg-spyBiM-spqRyh-skm43Y-snAHjT-rqQ4BT-skkSRA-rqPQAT-snCNCD-rqCwq7-e46z4y-9aKNCR-7V59SY-7fq1Xc-6sUQfQ-6bEufz-5HrvTc-5HrvDt-5HvzjA-fm5Yk-7yKiEj-5BK4yX-5jpRy3-4QRW53-jy35V">afilitos</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<p>To add further to the drama, Greece needs to make a €455m debt repayment to the IMF today and a further €3.5 billion debt <a href="http://graphics.wsj.com/greece-debt-timeline/">repayment to the ECB in seven days</a>. The implication of all this is that Tsipras desperately needed an agreement to enable the ECB to inject additional Emergency Liquidity Assistance (ELA) to Greek banks to support their cash buffer and save them from collapse. He also needed to secure a “bridge loan” from the institutions to pay back both the ECB and the IMF.</p>
<h2>Getting it done</h2>
<p>Details of the agreement are still emerging so I will discuss briefly some of these the way I understand them:</p>
<p>Firstly, Greece needs to pass, within the next 48 hours, through the Greek parliament (possibly as one parliamentary bill) privatisations and a number of structural reforms to which the current government had thus far objected. This is supposed to be some type of “goodwill” gesture to Greece’s partners in order for “Troika” money to start flowing into the country. This is a very big challenge for the SYRIZA-ANEL government and it is very likely to prove hugely damaging for what was always an unusual coalition. It is also a big challenge for a number of SYRIZA MPs (including energy minister Panagiotis Lafazanis) who prefer a return to the drachma rather than an austerity-oriented deal with the Institutions. </p>
<p>Tsipras will have to pass the parliamentary bill with the help of the pro-European parties (ND, Pasok, Potami) at the same time while trying to reshuffle his government by relying (again) on pro-European parties. The bill may pass, but the government’s days may be numbered.</p>
<p>Further – and contrary to the will of Tsipras – it appears that the International Monetary Fund (IMF) will stay firmly into the picture as Greece’s lender. Tsipras (and his colleagues) have consistently opposed IMF involvement on the grounds that it is an outsider to European matters. The irony of the matter, of course, is that <a href="https://theconversation.com/greece-when-is-it-time-to-forgive-debt-44022">debt relief</a>, which Tsipras has been asking for, has been repeatedly promoted by the IMF. After all, the IMF emphatically admitted (only three days prior to the referendum) <a href="http://www.theguardian.com/business/2015/jun/30/greek-debt-troika-analysis-says-significant-concessions-still-needed">that Greek debt is unsustainable</a>. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/88221/original/image-20150713-11831-qdm86c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/88221/original/image-20150713-11831-qdm86c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/88221/original/image-20150713-11831-qdm86c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/88221/original/image-20150713-11831-qdm86c.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/88221/original/image-20150713-11831-qdm86c.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/88221/original/image-20150713-11831-qdm86c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/88221/original/image-20150713-11831-qdm86c.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/88221/original/image-20150713-11831-qdm86c.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">A victory? Alexis Tsipras.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/guengl/19338769219/in/photolist-vsUfkv-vsLT21-vsLRyy-vKo2ue-uNvWyp-vJN45U-vH362h-vKkQsP-vKkQni-uNnGXx-uNnGRv-vsL17r-vKBtkn-uNnGkR-vJwh4m-uNfdKz-vK7gFT-vGNvEy-uN6PEJ-vKtYbe-vGNvC9-vsCvrp-vJwgLC-vGNvrs-uNfdm8-uN6Ped-vK7g88-vGNv6s-vGNuXG-uNfcUB-uN6K7q-vsv4ih-vsv4yW-vsv4uN-vK7cdV-vsCqJt-vK7c96-uN6JRL-vsCqHX-uN6JKJ-uN6JLq-vGNqVo-vGNqTu-vsCqyP-vsv4cd-uN6Jxu-uNf8KK-vsv3PG-vswABX-vspfk7">GUE/NGL</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<p>Greece’s debt currently stands at around 178% of its GDP. Eurozone leaders have repeatedly rejected any idea of a haircut in the face value of Greek debt. The current agreement opens the door, however, for debt relief by pushing (subject to Greece proceeding with privatisations and structural reforms) its <a href="http://www.bankofgreece.gr/Pages/en/Bank/News/Speeches/DispItem.aspx?Item_ID=319&List_ID=b2e9402e-db05-4166-9f09-e1b26a1c6f1b">average debt maturity</a>, <a href="http://www.ft.com/cms/s/0/6e5532c0-a310-11e4-ac1c-00144feab7de.html#axzz3flXQedch">currently at 16.5 years</a> further into the future. </p>
<p>This, on its own, will be a significant debt relief which Tsipras can sell to his people. In maths, the <a href="http://mathworld.wolfram.com/EuclideanAlgorithm.html">Euclidean algorithm</a> has been used for reducing fractions to their simplest form. Tsipras – with the instrumental help of his polite and down-to-earth finance minister <a href="http://www.telegraph.co.uk/finance/economics/11566624/Euclid-Tsakalotos-Yanis-Varoufakis-Greece-new-finance-minister.html">Euclid Tsakalotos</a> – will be able to claim that, subject to passing the parliamentary bill through the Greek parliament and reshuffling his government into a viable and operational group, he has actually pulled off a trick which will reduce the Greek debt-to-GDP ratio to its simplest sustainable form.</p><img src="https://counter.theconversation.com/content/44613/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Costas Milas does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Backed into a corner as the banks reached the brink, the Greek prime minister may have fashioned some sort of success, and the prospect of something approaching debt relief a little down the line.Costas Milas, Professor of Finance, University of LiverpoolLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/445362015-07-11T09:04:31Z2015-07-11T09:04:31ZFive misconceptions about the Greek debt crisis<p>It is widely accepted that the Greek bailout and austerity package has led to wealth flowing from Greece to its European creditors, benefiting foreign banks at the expense of Greeks, that its debt is unprecedented and unsustainable, that its recession is the unprecedented result of reforms that cannot succeed, and that Greece’s exit from the Eurozone would be calamitous.</p>
<p>Amazingly, none of the statements above are strictly true, leading much of the public discussion of Greece to be unusually detached from the facts.</p>
<p>In this article, I outline my reasons for no longer believing these claims – which I had been led to believe were true when I began to try to understand the Greek debt crisis. This is not meant as a comprehensive guide: I do not presume to make policy recommendations, but do hope that it will help readers better understand some of the issues at stake.</p>
<h2>1. The bailouts have extracted resources from Greece</h2>
<p>A common belief in discussions of the Greek economy is that the eurozone <a href="http://www.thenation.com/article/how-greece-put-anti-austerity-anti-capitalist-party-power/">“has become an extractive project</a> that imposes austerity on poor nations in order to collect debts on behalf of rich ones”. A <a href="http://www.voxeu.org/article/modern-greek-tragedy">recent study</a> of capital flows to and from Greece by economists Jeremy Bulow and Kenneth Rogoff debunks this. As the tables below show, capital flows into Greece have not just remained positive, but have increased since the first bailout in 2010. 2014’s flow is slightly negative, partly as the Greek government chose to miss reform targets, preventing release of bailout funds.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/88076/original/image-20150710-17473-1b9qm9m.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/88076/original/image-20150710-17473-1b9qm9m.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=249&fit=crop&dpr=1 600w, https://images.theconversation.com/files/88076/original/image-20150710-17473-1b9qm9m.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=249&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/88076/original/image-20150710-17473-1b9qm9m.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=249&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/88076/original/image-20150710-17473-1b9qm9m.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=313&fit=crop&dpr=1 754w, https://images.theconversation.com/files/88076/original/image-20150710-17473-1b9qm9m.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=313&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/88076/original/image-20150710-17473-1b9qm9m.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=313&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="http://www.voxeu.org/article/modern-greek-tragedy">Jeremy Bulow, Kenneth Rogoff</a></span>
</figcaption>
</figure>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/88074/original/image-20150710-17470-9ndlbq.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/88074/original/image-20150710-17470-9ndlbq.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=195&fit=crop&dpr=1 600w, https://images.theconversation.com/files/88074/original/image-20150710-17470-9ndlbq.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=195&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/88074/original/image-20150710-17470-9ndlbq.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=195&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/88074/original/image-20150710-17470-9ndlbq.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=245&fit=crop&dpr=1 754w, https://images.theconversation.com/files/88074/original/image-20150710-17470-9ndlbq.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=245&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/88074/original/image-20150710-17470-9ndlbq.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=245&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="http://www.voxeu.org/article/modern-greek-tragedy">Jeremy Bulow, Kenneth Rogoff</a></span>
</figcaption>
</figure>
<h2>2. Bailouts benefit foreign banks more than Greeks</h2>
<p>Another misconception is that: “It is not the people of Greece who have benefited from bailout loans … but the European and Greek banks which recklessly lent money to the Greek State.” This was the <a href="http://jubileedebt.org.uk/wp-content/uploads/2015/01/Six-key-points-about-Greek-debt_01.15.pdf">charge of the Jubilee Debt Campaign</a>, which campaigns for further debt relief for Greece. They report that €252 billion has been lent to Greece by the “Troika” (the EU, the European Central Bank and the IMF) since 2010, which they claim has been used as follows:</p>
<ul>
<li>€35 billion in “sweeteners” to get the private sector to accept the 2012 debt restructuring</li>
<li>€48 billion to bail out Greek banks following the restructuring</li>
<li>€149 billion on paying the original debts and interest.</li>
</ul>
<p>These add up to €232 billion, causing Jubilee to conclude that “less than 10% of the money has reached the people of Greece”. </p>
<p>This conclusion incorrectly assumes that none of the recipients of the €232 billion are “people of Greece”. But if the “sweeteners” were for the Greek private sector, they benefited Greeks; bailing out Greek banks directly helps Greeks who have bank deposits, who hold shares in banks (whether directly or via their pensions), and who work for banks. </p>
<p>The best data that I’ve seen suggests that Greek banks may have held just under half the Greek government debt before the 2012 restructuring – twice as much as any other country. Thus, payments to creditors <a href="http://www.esma.europa.eu/system/files/2012-482.pdf">also reached Greeks</a>. Finally, even payments to foreign creditors benefit Greeks by removing obligations from Greeks to pay.</p>
<p>Perhaps the most amazing estimate to come from Bulow and Rogoff’s study is that Greek citizens have “withdrawn over a hundred billion euros from the banking system” since 2010: where has that money gone?</p>
<h2>3. A debt-to-GDP ratio of 180% is unsustainable</h2>
<p>Japanese prime minister, Shinzo Abe, <a href="http://uk.reuters.com/article/2015/07/09/uk-japan-economy-abe-idUKKCN0PJ02220150709">has said</a> he will work with the G7 and other Asian countries to ensure economic and financial market stability as the eurozone grapples with Greece’s debt crisis. This news is unremarkable and unsurprising: the third-largest economy in the world is standing by to help. Unreported is that Japan has the world’s highest debt-to-GDP ratio, <a href="http://www.economist.com/blogs/freeexchange/2014/11/japans-economy-0">at about 240%</a> – much higher than Greece’s.</p>
<p>Furthermore, Japan does not seem to have any easy measures for quickly reducing this: unemployment is already low, leaving little slack in the labour market. And, as one of the world’s least corrupt countries, its unofficial sector is small, leaving little hope that actual GDP is much higher than official GDP. Japan faces serious economic challenges (including two decades almost without growth), but no one sees it as other than stable.</p>
<p>By contrast, there are many ways that Greece could quickly reduce its debt-to-GDP ratio: its unofficial economy is estimated at 25% of its official economy; while some officially unemployed Greeks may be working unofficially, many are not – so labour market reforms could spur rapid growth.</p>
<p>There’s an open debate on <a href="http://www.economist.com/news/finance-and-economics/21576362-seminal-analysis-relationship-between-debt-and-growth-comes-under">how to interpret debt-to-GDP ratios</a> and higher numbers are certainly worrying. Yet, Japan suggests there is no magic number: how a country can manage its debt depends on the circumstances and choices of that country.</p>
<h2>4. Greece’s transition recession is unusually long</h2>
<p>The graph below shows real GDP as a percentage of 1989 GDP in post-Soviet transition economies. Produced by economists Nauro Campos and Abrizio Coricelli, it shows that going through a political and economic transition simultaneously, without a coherent reform strategy, can be disastrous for economic growth. After the collapse of the Soviet Union, post-Soviet countries suffered decreases in official output for years, in spite of international support, including help from the European Bank for Reconstruction and Development. Twelve years after 1989, only six of the 25 countries had official GDP figures above their 1989 levels.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/88083/original/image-20150710-17473-eypod1.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/88083/original/image-20150710-17473-eypod1.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=365&fit=crop&dpr=1 600w, https://images.theconversation.com/files/88083/original/image-20150710-17473-eypod1.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=365&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/88083/original/image-20150710-17473-eypod1.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=365&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/88083/original/image-20150710-17473-eypod1.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=458&fit=crop&dpr=1 754w, https://images.theconversation.com/files/88083/original/image-20150710-17473-eypod1.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=458&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/88083/original/image-20150710-17473-eypod1.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=458&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">GDP in post-Soviet states in the decade after the collapse of the Soviet Union.</span>
<span class="attribution"><a class="source" href="https://www.aeaweb.org/articles.php?doi=10.1257/002205102760273797">Nauro Campos and Abrizio Coricelli</a></span>
</figcaption>
</figure>
<p>Greece’s political transitions between democratically elected governments have been less fundamental than the post-Soviet transitions, but its commitment to reform has been <a href="http://www.ft.com/cms/s/0/b3f7a5b0-ac61-11e4-af0e-00144feab7de.html?siteedition=uk#axzz3fJlFrYZh">questionable throughout</a>. Its poor performance in privatisating inefficient state-owned enterprises has drawn particular attention: the following graph shows privatisation not only well behind schedule, but falling further behind all the time. This deprives the Greek state of revenues, and the Greek people of more efficient services.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/88091/original/image-20150710-17439-1kdelo6.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/88091/original/image-20150710-17439-1kdelo6.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=434&fit=crop&dpr=1 600w, https://images.theconversation.com/files/88091/original/image-20150710-17439-1kdelo6.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=434&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/88091/original/image-20150710-17439-1kdelo6.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=434&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/88091/original/image-20150710-17439-1kdelo6.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=545&fit=crop&dpr=1 754w, https://images.theconversation.com/files/88091/original/image-20150710-17439-1kdelo6.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=545&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/88091/original/image-20150710-17439-1kdelo6.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=545&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="http://www.imf.org/external/pubs/ft/scr/2015/cr15165.pdf">IMF</a></span>
</figcaption>
</figure>
<p>Greece finally seemed to have turned back up in 2014: having fallen by about 20% <a href="http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=nama_aux_gph&lang=en">since its peak in 2008</a>, real GDP grew, officially ending the recession; the government balanced its books before debt payments, and had <a href="http://www.imf.org/external/pubs/ft/scr/2015/cr15165.pdf">earned a primary surplus in 2013</a>; <a href="http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=une_rt_a&lang=en">unemployment fell</a>; the government was able to borrow on the regular markets, <a href="http://www.bloomberg.com/news/articles/2014-04-10/greece-readies-bond-sale-as-athens-car-bomb-reminds-of-upheaval">rather than via support packages</a>.</p>
<p>Thus, one of the tragedies of the present situation is that protracted negotiations over the country’s bailout conditions may have just increased the overall cost of the transition process.</p>
<h2>5. Greece is too big to fail</h2>
<p>The idea that Greece is too big to fail and will have significant knock-on effects for global financial markets has been used in some of the brinkmanship at play in the country’s debt negotiations – including <a href="http://uk.reuters.com/article/2015/07/04/eurozone-greece-varoufakis-idUKL8N0ZK04320150704">by former finance minister Yanis Varoufakis</a>.</p>
<p>But, while the Greek debt crisis has increased uncertainty and any further default or uncontrolled exit from the euro will pose costs, the markets do not seem terribly roiled <a href="http://www.wsj.com/articles/muted-response-to-greece-reflects-change-in-markets-1436226834">by the prospect of its default</a>. This is not surprising: Greece makes up about 2% of Europe’s population and GDP; Europe’s economy is stronger than it was in 2010-2012.</p>
<p>An underappreciated aspect of the “too big to fail” idea is what it does to an economy’s prospects. Indeed, one of the leading explanations of Soviet economic decline is the <a href="https://www.aeaweb.org/articles.php?doi=10.1257/002205103771799999">“soft budget constraint”</a>. Soviet firms tended to be much larger than their Western counterparts, giving each considerable power to renegotiate its production plans – without more resources, it could threaten to harm other sectors in the economy, which had few alternative suppliers to turn to.</p>
<p>This seems to be the concern expressed by many of the other European countries: at the eurozone’s inception, the open question was whether the Bundesbank’s credible, low-inflation, low-interest rate standard would prevail. Or whether the eurozone would end up converging on one of the less credible, high-inflation and high-interest rate standards. If the moving appeals of a country comprising 2% of Europe can successfully soften Europe’s budget constraint, then it can be expected that any larger country will be able to as well, if they can demonstrate a severe enough crisis.</p>
<p>Were Greece to become the first country to leave the eurozone, it would give us invaluable real experience in a fairly controlled context; this would improve eurozone policy when faced with similar situations in the future.</p><img src="https://counter.theconversation.com/content/44536/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Colin Rowat does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Greek debt crisis is a complex economic and political issue. Here are five important points for understanding it better.Colin Rowat, Senior Lecturer in Economics, University of BirminghamLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/444822015-07-10T10:12:53Z2015-07-10T10:12:53ZGreece’s final countdown – bailout or bust<p>From bailout to default, then referendum and lack of a bailout, Greece and the eurozone’s troubles continue. While Greece has been on the brink of exiting the eurozone as numerous deadlines have passed, the country’s creditors have signalled Sunday June 12 to be the final deadline for a deal when there will be a full EU summit to discuss Greece’s proposals. </p>
<p>With the final gathering of the 28 EU leaders the seemingly perpetual “will they, won’t they?” question should be resolved one way or the other. And, now that Greek prime minister Alexis Tsipras has <a href="http://www.theguardian.com/business/live/2015/jul/09/greek-crisis-reform-plan-grexit-tsipras-draghi-live">submitted an economic reform plan</a> that accepts many of the creditors demands in exchange for a €53.5 billion bailout, a deal could well be on the cards.</p>
<h2>A renewed mandate</h2>
<p>Following the Oxi win in the July 5 referendum on the terms of the (expired) bailout deal, the Syriza government was provided a renewed mandate for negotiation. However, the point that seemed to initially fail Tsipras and his newly appointed finance minister Euclid Tsakalotos as they met in Brussels on July 7 was the need to secure a negotiated resolution. Instead the pair, with <a href="http://www.bloomberg.com/news/articles/2015-07-07/everyone-is-trying-to-decode-this-photo-of-the-greek-s-finance-minister-s-handwritten-notes">freshly sketched hotel notes in hand</a>, made no concession. With the clock ticking, however, a plan was put together that gave in to a large number of the austerity demands previously rejected and submitted two hours before the July 9 deadline for a proposal, ahead of Sunday’s summit.</p>
<p>The Greek government has no doubt been strengthened by the announcement of the IMF that there is a <a href="http://www.cnbc.com/2015/07/08/imfs-lagarde-greece-will-need-debt-restructuring.html">need for comprehensive debt restructuring</a> – a prospect that has been strongly suppressed by its creditors. Moreover, additional bailout funds are likely to be necessary if Greece is to remain part of the eurozone. Greek allies, such as the French, have sought to champion a deal to keep the EU together, although other leaders have proved less sympathetic. Despite ongoing attempts to make the numbers add up, the problem is about more than finance.</p>
<h2>Beyond debt</h2>
<p>We have <a href="https://theconversation.com/the-greek-economy-needs-much-more-than-just-a-debt-deal-43018">previously highlighted</a> that the crisis cannot be tackled by cutting government spending and that a wider programme of economic reforms are necessary to become competitive again. This is certainly the case. But more than reconfiguring economic institutions, there is a need to address the institutional environment at large. While much debate has focused on the <a href="http://www.independent.co.uk/news/uk/politics/greeces-syriza-are-extremists-engaging-in-fantasy-politics-labours-liz-kendall-says-10377755.html">Syriza government’s politics</a>, the crisis is not about Left-Right politics.</p>
<p>The political question is about how different institutions across the eurozone align. Interestingly the alignment that matters is seemingly with the ideology of the European project as opposed to aligning each other. For the Greek government the politicking is now as much about challenging the inertia of the European project as it is about <a href="http://www.irishtimes.com/news/politics/syriza-lectured-europe-instead-of-fixing-greek-economy-says-burton-1.226318">managing Greek debt</a>. And the potential threat that Syriza pose to the political and economic orientation of the EU is seemingly as important as the prospect of a Grexit. Therefore the negotiations have also become about ensuring that any challenge to the ideology of the eurozone must be seen to fail for the creditors.</p>
<h2>On the brink</h2>
<p>Although Tsipras may urge the EU not to abandon hope, this now hinges on the plans for reform that are expected before the end on the week. While a combination of economic reforms and concessions pave the way for debate, if the meeting on Sunday is to see Greece remain part of the EU, Tsipras and his EU counterparts need to address if not reconcile the conundrum of economics and ideology.</p>
<p>As the moment of truth in testing the European experiment dawns, the immediate outcomes will be either a Grexit or another bailout. The philosopher Slavoj Zizek, paraphrasing Stalin, <a href="http://www.newstatesman.com/politics/2015/07/Slavoj-Zizek-greece-chance-europe-awaken">recently described both choices as bad</a>. However, more than no option for Greece there is a growing danger that this will translate to no good outcome for the eurozone or EU either.</p>
<p>While constructive Greek proposals are a prerequisite to resolution, it is important that the EU reforms itself. It is not simply about Greece realigning itself with the troika, but also the EU and other member states evolving to ensure the future of the of the European project.</p><img src="https://counter.theconversation.com/content/44482/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>While constructive Greek proposals are now a prerequisite to resolution, the eurozone must also reform itself.Tim Vorley, Professor of Entrepreneurship, University of SheffieldNick Williams, Lecturer in Entrepreneurship, University of SheffieldLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/444002015-07-09T08:45:54Z2015-07-09T08:45:54ZGreece is a reminder of the fragility of money and the need to deal with debt<p>As the world waits to see the outcome of negotiations between the Greek government and its creditors, our attention has been drawn to the fragility of money by the ATM queues in Greece. The euro project, which has long been under strain, may soon start to irrevocably crack.</p>
<p>This fragility is born of an irredeemable tension at the heart of the modern monetary system, between the apparent mobility of money – most types of money nowadays usually flows fairly easily across boundaries and borders of all sorts – and its potential immobility. In Greece, it is the ATM queues for the now ever more tightly rationed amounts of cash that symbolise this. When the mundane technology that so many of us rely on to smooth our passage through life suddenly becomes unreliable or inaccessible, we confront the very real consequences of what can happen when money stops moving.</p>
<h2>Crossing borders</h2>
<p>If contemporary economies depend on the unceasing movement of money, then the particular problem for Greek citizens is that the money that they depend on doesn’t match their own mobility. This was symbolised by a set of incidents that took place in the aftermath of the imposition of limits of cash withdrawals by the Greek government. Certain enterprising Greeks, taking full advantage of the EU’s freedom of movement laws, <a href="http://www.balkaneu.com/greeks-head-bulgaria-draw-cash-atms/">crossed into Bulgaria</a>, the nearest EU neighbour, to try to see whether its ATMs would be more generous in giving out cash than their own.</p>
<p>They weren’t. Restrictions on cash advances to Greeks are determined not by the location of the dispensing machine but by the location of their account. But you can see why they were tempted to try. At the heart of the euro is an ideal of unfettered physical movement (although of course only for privileged EU citizens, as the rising deathtoll of migrants trying to reach Europe <a href="https://theconversation.com/europes-war-on-migrants-while-we-argue-thousands-perish-in-the-mediterranean-40330">continues to grimly remind us</a>) aided and accelerated by equally unfettered monetary movement. The Greek visitors to Bulgaria reasonably enough put this to the test, only to be confronted by the reality that – for them – the euro is simply not mobile enough.</p>
<p>The problems many Greeks are experiencing are made worse by some of their fellow citizens. In the past months, <a href="http://www.telegraph.co.uk/finance/economics/11637688/Greek-capital-flight-hits-record-as-ultimatum-talk-grows.html">huge sums</a> have left the country as its richer residents have tried to safeguard their wealth. This has in turn contributed significantly to weakening Greece’s banking sector. In at least partial response, the government is said to be <a href="http://www.reuters.com/article/2015/07/05/us-europe-greece-swiss-idUSKCN0PF0IN20150705">considering a tax amnesty</a> for the billions worth of euros that have been tucked away in Switzerland. In such instances, it is the ability for money to not just move somewhere else but to then sit there that comes to matter. </p>
<h2>An obligation to forgive</h2>
<p>Of course, when it comes to the current Greek debt crisis, the real problem the Greeks and their government are facing is not the challenge of how money moves or doesn’t across space but across time. The challenge for the Syriza negotiators is to convince their creditors that the past promises made by Greek governments cannot and should not cause ongoing harm to the lives of the Greek population. This means that at least some of their debts should be written off.</p>
<p>It is a property of debt that it can draw people and governments into making promises that, in the end, prove utterly incapable of being kept. </p>
<p>I study the <a href="http://www.livedeconomies.net/">consumer credit industry</a> and this fact is wholly uncontroversial within it. While creditors may not like debtors breaking their promises, they recognise that they do, build this into their risk models, and, most importantly, they then tolerate debts being written down when they have to be.</p>
<p>In the case of most contemporary forms of consumer debt, it is also simply not true to say that the only obligation is on the debtor to repay. Societies have gradually developed a range of mechanisms that, even if unsatisfactory, place an obligation on creditors to, in certain circumstances, allow debtors’ promises to be broken. With mechanisms like bankruptcy, linked to the possibility of an eventual clean slate for debtors, we have come to recognise that a debtor’s past cannot in every case be allowed to dominate their future.</p>
<p>Amid the Troika of Greece’s creditors, <a href="http://www.theguardian.com/business/2015/jul/02/imf-greece-needs-extra-50bn-euros">only the IMF</a> has, extremely belatedly, shown even a vague sense of recognising this, in suggesting that a debt write down will be necessary for Greece to recover. The open secret they grudgingly admit is that, because of their deep dependence on flows of debt, modern money requires such mechanisms of forgiveness. Yet it is quite transparent that the majority of Greece’s creditors live in abject fear of this open secret being uttered too loudly within earshot of the more indebted eurozone members. The money they protect depends on it.</p>
<p>The problem for the EU is that, unlike in the case of consumer credit, no real mechanisms have been put in place to allow debt forgiveness to occur. In their stead is the false choice offered to the Greek people of yet deeper austerity or the national immiseration of being forced to leave the euro. Unless creditors quickly work out how to allow debt promises to be broken then, with or without Greece, the euro will remain fatally fragile.</p><img src="https://counter.theconversation.com/content/44400/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Joe Deville has received funding from the Economic and Social Research Council for his research into consumer credit default, grant number PTA-031-2006-00457. </span></em></p>The euro remains fatally fragile so long as the eurozone lacks a mechanism for forgiving debt.Joe Deville, Lecturer in Mobile Work, Lancaster UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/443822015-07-08T05:24:01Z2015-07-08T05:24:01ZWant to know how Greeks see the future? Get in the ATM queue and ask them<p>If one was following Greek and international media, it might have seemed as though the difference between the numbers in the Yes and No camps in the Greek referendum was tiny. However, as most ethnographers of Greece would be able to tell you, especially the ones who have spent <a href="http://www.crisis-scape.net/">two years doing research in Athens during the crisis</a>, the No voters were in the overwhelming majority. And so it ultimately proved in the result. </p>
<p>One of the most grotesque moments in the festival of pro-Yes propaganda hosted by Greek TV channels came when a Mega Channel journalist attempted to interview a pensioner in Athens about his views on the debt crisis. The journalist had been expecting the elderly man to complain about the terrible queues at the banks. Instead, the man began to comment on how the crisis has caused thousands of suicides and that he supported the decision to let the people decide. Having failed to get the answer he was looking for, the journalist simply pushed the man out of the frame and quickly began <a href="https://www.youtube.com/watch?v=UjMBq59fRV0">talking over him</a>, while the camera panned away. </p>
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<p>Probably one of the best places to understand what is going on in Greece at the moment is in the queues forming at the ATMs of closed banks. People have to wait longer than usual to withdraw cash, and with a daily limit of €60, they are queuing more often, so while there, they just chat with each other spontaneously. Others join in the conversation until you have a small assembly. People address the “audience” loudly, agree and disagree, add comments on top of the main debate and splinter off into their own, smaller groups in the queue. Sometimes people stick around to talk even after they have withdrawn their <a href="https://euobserver.com/economic/129359">60 euros</a> from the ATM.</p>
<p>They talk about their fear but also about their anger. They are angry at the private TV channels and newspapers that spread fear ahead of the vote. They are angry at Greece’s creditors and resent the euro as a currency. In the queue, the conversations are often about the real value of the euro. People still loudly translate their 60-euro allowance into the old Greek currency. They talk about how much they could buy with 20,000 drachma and how little they can get with 60 euros.</p>
<p>They also remember the last time a significant percentage of people in Greece lost substantial amounts of their savings. That was in 1999 when the Athens Stock Market collapsed, just before Greece joined the euro. The government, led by technocrat Costas Simitis had liberated the financial markets as part of the eurozone integration process.</p>
<p>People were encouraged to invest their savings in the financial market via governmental (and TV) propaganda. Small stock market agencies sprung up in towns and villages to help them on their way. The TV sets in the traditional Greek coffee shops broadcast stock market sessions and pink newspapers appeared on the tables. A country with 10 million people was suddenly home to more than 1 million stock-market investors.</p>
<p>Then came <a href="http://tvxs.gr/news/%CE%B5%CE%BB%CE%BB%CE%AC%CE%B4%CE%B1/%CF%80%CE%B1%CF%81%CE%B1%CF%80%CE%BF%CE%BC%CF%80%CE%AE-%CF%83%CE%B5-%CE%B4%CE%AF%CE%BA%CE%B7-16-%CE%B1%CF%84%CF%8C%CE%BC%CF%89%CE%BD-%CE%B3%CE%B9%CE%B1-%CF%84%CE%B7%CE%BD-%CF%85%CF%80%CF%8C%CE%B8%CE%B5%CF%83%CE%B7-%CF%84%CE%BF%CF%85-%CF%87%CF%81%CE%B7%CE%BC%CE%B1%CF%84%CE%B9%CF%83%CF%84%CE%B7%CF%81%CE%AF%CE%BF%CF%85">the crash</a>. The market collapsed under the weight of several corporate manipulations and investors saw their savings vanish.</p>
<p>At the time, there was enough going on to distract people from the blow. The change of currency to the euro and the devaluation effect made the loss of trillions of drachmas look relatively less significant. People still recall how things that cost 100 Drachma or less quadrupled in value overnight and suddenly cost a euro.</p>
<p>This time around, there are no distractions. But although people fear losing their deposits while the banks remain closed – <a href="https://en.wikipedia.org/wiki/2012%E2%80%9313_Cypriot_financial_crisis">as happened in Cyprus</a> – the fact is, very few people have much of a deposit to lose.</p>
<p>Beyond what people are talking about as they queue for the ATM, social theory teaches us that large groups with little to lose are a traditional danger for capitalist projects.</p>
<p>The threat they pose was temporarily diffused by the referendum, as they had the chance to express their discontent, but the result makes it clear that they will not be placated for long. The resounding No vote has emerged from a population with no faith in the neoliberal economic system or the mainstream media that presents it to them. They voted no because people are ready to risk losing things in order to win a new political and social deal– especially when what they have to lose doesn’t amount to much.</p><img src="https://counter.theconversation.com/content/44382/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dimitris Dalakoglou received funding from an ESRC Future Reearch Leaders grant for the project 'Crisis-scapes: Transformations of Public Spaces in Athens'</span></em></p>Talk on the street is that nothing short of revolution will do after the referendum.Dimitris Dalakoglou, Professor of Social Anthropology, Vrije Universiteit AmsterdamLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/442152015-07-07T12:20:01Z2015-07-07T12:20:01ZStaying shut is the best option for Greek banks – but time is running out<p>The issue of liquidity in Greek banks is one of the most pressing now that the referendum is over. As widely reported, Greek banks are running out of reserves – even with capital controls <a href="https://theconversation.com/euro-nightmare-unfolds-queues-at-banks-in-greece-as-capital-controls-follow-ecb-funding-cap-43984">in place since June 28</a> putting a €60 cap on the amount Greeks can withdraw from their accounts. There are a number of pressing issues that, if not resolved, could lead to a Grexit. </p>
<p>With a freeze on the amount of emergency assistance being provided by the European Central Bank (ECB), Greek banks remain unable to reopen. A short-term solution would be for the banks to issue IOUs backed by the Bank of Greece. This, however, would effectively be a parallel currency and would be the first stage of reintroducing the drachma. It would also be a big step toward leaving the eurozone. </p>
<p>The ECB is withholding the amount of emergency liquidity assistance (ELA) it is providing Greece in lieu of a bailout deal that will guarantee (in their eyes) Greek solvency. Pending the ECB stepping in to stabilise banks with more ELA, Greek banks will remain shut – and their reserves will quickly diminish. </p>
<p>The clear and present danger is that Greece’s creditors will maintain an attitude of “euro-hubris”. This attitude is displayed in an inflexible commitment to obeying fiscal rules irrespective of their socio-economic outcomes. Consequently, the ultimate price to pay for the Greek No will be a Grexit.</p>
<h2>Keeping banks shut</h2>
<p>The decision on whether or not Greece will receive the added ELA that it needs is in the hands of the ECB and its governing council. It consists of the six executive board members and the presidents of the 19 central banks of the eurozone countries. Despite claims to independence, the management of the ECB is closely tied to the Eurogroup of finance ministers. They are seen to be the most virulent in their opposition for debt relief <a href="http://www.ulton.net/resources/site1/general/economic_strategy_why%20the%20eurogroup%20is%20wrong_01.07.15.pdf">for embattled euro member states</a>. </p>
<p>It should be noted that the decision to limit the amount of ELA to Greece is not a case of simply following the rules. It is not beyond the ECB’s remit or precedent to give more assistance to Greece at present. The ECB’s <a href="https://theconversation.com/ecb-unleashes-the-trillion-euro-bazooka-but-how-will-it-work-36536">Quantitative Easing (QE) programme</a> to increase liquidity and lending among the eurozone’s banks has included buying the sovereign debt held by these banks (including French and German banks’ purchases of Greek debt). QE is being extended to buy the assets of public utilities, with the prospect of the programme being extended to purchase corporate bonds in the eurozone countries. A key question for the ECB is why this is not being undertaken in Greece. </p>
<p>The ECB is also in breach of its ELA covenants in that it is extending these funds to Bulgaria on the same terms as other member states <a href="http://www.novinite.com/articles/169639/ECB+%27to+Extend+Backstop+to+Bulgaria%27+over+Greece+Crisis">as a backstop against financial contagion</a> from its neighbour’s crisis and a possible Grexit. Yet, Bulgaria is not a member of the eurozone. It is apparent that the ECB’s legitimacy is being undermined by its own actions. Moreover, its political interventions seriously question its central bank role as the lender of last resort to the eurozone banking system. </p>
<p>Responsibility for the provision of ELA is normally deferred to the national central bank in question – so it is the Bank of Greece that should decide the costs and risks arising from granting ELA. If the ECB’s governing council feels that ELA provision interferes with the wider eurozone system, however, it may step in and halt provision. The key question is whether Greece is considered to have a temporary liquidity crisis or a near permanent one.</p>
<h2>Other real and fanciful scenarios</h2>
<p>In the face of ECB intransigence and no speedy resolution to the crisis, the most likely scenario is the issuing of IOUs as a domestic parallel currency. There are, however, other possible scenarios: </p>
<ul>
<li><p>Follow the <a href="http://www.telegraph.co.uk/finance/financialcrisis/9952979/Cyprus-bail-out-savers-will-be-raided-to-save-euro-in-future-crises-says-eurozone-chief.html">example of Cyprus</a>, which kept its banks going by appropriating the private savings of depositors from a certain limit upwards. In Greece, these are estimated <a href="http://www.wsj.com/articles/greek-bank-deposits-fall-to-lowest-level-in-more-than-10-years-1432906601">to total about €140 billion</a>.</p></li>
<li><p>Turning the 3% of total sovereign Greek debt <a href="http://www.bbc.co.uk/news/world-europe-33407742">owned by Greek banks</a> into equity (about €10 billion).</p></li>
<li><p>The more unlikely scenario of the IMF riding to the rescue, in the form of emergency liquidity, under pressure from the US government to avoid a humanitarian crisis.</p></li>
</ul>
<p>None of these are probable in the immediate future but may depend on how negotiations go with their creditors. Time is on no one’s side, however.</p>
<p>The more fanciful options for raising capital in the medium term include leasing airbases to the Russians in return for gold deposits; a fire-sale of infrastructure assets to the Chinese; and nationalising, without compensation, assets owned by other EU corporations. All of these would have profound geopolitical consequences for Greece remaining within the EU (and are therefore unlikely). </p>
<p>In the absence of the European institutions moving from their present stance of euro-hubris and seeking to redesign the whole eurozone architecture, the EU may be destined to go the same way as the Ottoman Empire. That is, transnational ambition imploding into fractious nationalism – something the continent is all too familiar with. If Greek banks run out of cash, leaving the euro will be their only option.</p><img src="https://counter.theconversation.com/content/44215/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Leslie Budd does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Greek banks are running out of options, as cash reserves dwindle in lieu of more ECB emergency funding.Leslie Budd, Reader in Social Enterprise, The Open UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/443242015-07-06T14:26:51Z2015-07-06T14:26:51ZLessons from Greece as controversial finance minister exits stage left<p>Greece’s economy is in ruins. It is hard to imagine how things could have gone worse. Banks closed, no liquidity, very high unemployment, businesses closing down or fleeing the country, and the brain drain is accelerating.</p>
<p>And now the Greek people have voted No in a referendum that some cast as being about whether they would remain in the eurozone – though many were <a href="https://theconversation.com/greece-votes-no-now-syriza-must-clarify-what-that-really-means-44289">unclear</a> about what exactly the vote meant. What it certainly means is that the Greek people are deeply wounded by the prolonged recession of the last six years. </p>
<p>As Greek Prime Minister Alexis Tsipras heads back to the negotiating table in hopes of securing a new deal to save his country, he will go without his controversial finance minister, Yanis Varoufakis, who <a href="http://www.theguardian.com/world/2015/jul/06/greek-finance-minister-yanis-varoufakis-resigns-despite-referendum-no-vote">resigned</a> a day after the vote. According to Varoufakis, Tsipras asked him to resign in order to help with the negotiations.</p>
<p>One reason we’re where we are today, so close to a “Grexit,” is that journalists – Greek and foreign – failed to carefully scrutinize Varoufakis’s strategy to win better terms from Germany – one that didn’t pan out. Let’s hope they look much more closely at his replacement.</p>
<h2>Path of destruction</h2>
<p>Tsipras, Varoufakis and their left wing Syriza party were elected to office back in January because of how much the Greek economy had suffered. Between 2009 and 2014, a tremendous amount of value was <a href="http://qz.com/248821/greeces-collapse-is-officially-worse-than-the-us-great-depression/">destroyed</a>, both because of the failure of Greek governments to implement reforms and because of the austerity measures imposed by creditors. The pace of value destruction only accelerated in the first six months of 2015. </p>
<p>Consider this: just in the first quarter of 2015, the Hellenic Financial Stability Fund (the fund established with loans from eurozone governments and the European Financial Stability Facility to finance Greek bank recapitalization) <a href="http://www.hfsf.gr/files/HFSF_Interim_January_March_2015_en.pdf">lost €5 billion</a>. </p>
<p>This loss and the postponement of cash payments from the Greek government to its suppliers isn’t being accounted for in its budget. Doing so would turn the 4% primary budget surplus that was reported for the first quarter into a 13% deficit. The primary surplus is the sum of spending and income, excluding interest payments.</p>
<h2>From expert to pariah</h2>
<p>When Varoufakis emerged on the public scene, he was quickly <a href="http://business.financialpost.com/news/economy/greeces-superstar-finance-minister-yanis-varoufakis-tests-eus-ways-of-winning-friends-and-influencing-them">baptized</a> by the media as an expert and world-class economist. </p>
<p>That created a figure of authority, a person that many Greeks deeply believed. In the last couple months, however, he has been under attack, accused of destroying the country’s finances. </p>
<p>The same people who now criticize him never questioned the basic premise of Varoufakis’ negotiating strategy: that Europe would blink first because of the risk of contagion. His assumption was that the threat of a Grexit would have devastating consequences to the eurozone. </p>
<p>Back in February, I <a href="https://www.linkedin.com/pulse/greece-threat-eurozone-george-serafeim?trk=mp-reader-card">said</a> the opposite: do not count on this because we are not in 2012 anymore. The eurozone built a concrete fence around the Greek economy so that if it blows up, the consequences for other countries would be minimized – though it still would send Greece back to pre-euro economic development levels. </p>
<p>Whether this will now prove to be true is irrelevant. What matters is that both European politicians and the markets believe it. All Greek threats during negotiations were dismissed.</p>
<h2>Lack of scrutiny</h2>
<p>Unfortunately, before Varoufakis was given the license to implement his strategy, he was never hard-pressed to present evidence of his hypothesis. </p>
<p>What data did he have that suggested that European financial institutions were exposed to the risk of a Grexit? Would big foreign multinational companies be forced to fire a large number of people as a result of the Greek market collapsing? Did the prices of government bonds of other countries move in the same direction as the prices of Greek government bonds in 2014 – in other words, is there evidence of a close connection between the fate of the Greek economy and that of other countries?</p>
<p>The role of a finance minister is incredibly important in a country’s economy. </p>
<p>Given the importance of attracting investments, the finance minister needs to inspire confidence and build trust. The only way to do this is through consistency, specificity and clarity in decision-making and public statements. </p>
<p>A finance minister needs to have a clear plan and to be able to support his or her rationale with evidence. </p>
<p>I do hope that Greek – and other – journalists will scrutinize the country’s future finance ministers to present evidence that justify the policies they choose. They have a very important role to play, if Greece is ever to recover.</p><img src="https://counter.theconversation.com/content/44324/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>George Serafeim is affiliated with Harvard Business School, KKS Advisors, the High Meadows Institute and the Global Initiative for Sustainability Ratings.</span></em></p>Greek Finance Minister Yanis Varoufakis, who led a failed strategy to change the terms of Greece’s bailout, resigned Monday.George Serafeim, Jakurski Family Associate Professor of Business Administration, Harvard UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/442472015-07-06T12:24:27Z2015-07-06T12:24:27ZAfter the No vote, Greece faces its Last Judgement<figure><img src="https://images.theconversation.com/files/87475/original/image-20150706-988-1qpkp63.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Greece's creditors now gather to decide the country's fate.</span> <span class="attribution"><a class="source" href="https://en.wikipedia.org/wiki/The_Last_Judgment_(Michelangelo)#/media/File:Michelangelo,_Giudizio_Universale_02.jpg">Public Domain</a></span></figcaption></figure><p>Alexis Tsipras has just won the referendum vote by a convincing margin. Nevertheless, the victory could be pyrrhic and nothing other than a “Last Judgement” call for the Greeks. They will return to the negotiating table, but their fate is very much out of their hands.</p>
<p>Last Judgement, Michelangelo’s breathtaking fresco painted on the altar wall of the Sistine Chapel tells the story. At the centre, the president of the European Commission Jean-Claude Juncker and the German chancellor, Angela Merkel, like modern version of Michaelangelo’s Christ and the Virgin Mary, appear undecided on whether to save Greece’s economic soul by offering them further loans with less harsh conditions to avoid possible economic contagion. The ECB president, Mario Draghi, like a modern version of St Peter, holds the valuable keys to Greece’s economic heaven – <a href="http://www.ft.com/cms/s/0/3fa39a3e-2006-11e5-aa5a-398b2169cf79.html#axzz3eUScrWrB">€89 billion of Emergency Liquidity Assistance</a> that Greece needs to stop the collapse of its banking system. </p>
<p>The No outcome of the referendum means that discussions will have to conclude at a very speedy pace. This is what the coalition Syriza-ANEL government have promised the Greek people and they should honour their word. This, against the backdrop of a very critical economic situation. </p>
<p>Greek banks remain closed and capital controls are firmly in place. At the same time, Mario Draghi’s ability to provide further Emergency Liquidity Assistance is undermined by another round of embarrassing <a href="http://www.wsj.com/articles/s-p-cuts-greek-bank-ratings-to-selective-default-1435683176">credit downgrades of Greek banks to selective default</a>.</p>
<p>Despite the No vote, the Greek government will be under extreme pressure at home to agree immediately to some version of the austerity proposals put forward by the creditors just before negotiations broke down. The decision by the charismatic Yanis Varoufakis <a href="http://www.bbc.co.uk/news/world-europe-33406001">to step down</a> as Greece’s finance minister is expected to be seen by Greece’s creditors as a step in the right direction towards breaking the current deadlock. </p>
<p>But Varoufakis was not negotiating on his own over the last six months. Rather, he acted under the auspices of Alexis Tsipras. This has raised questions among Greece’s creditors on the willingness of Tsipras himself to handle the Greek deadlock. Anticipating the doubts of Greece’s creditors, Tsipras, a clever politician, has met with Greece’s other political leaders to exchange views and “co-decide” on the next steps. This move is likely to score positively with Greece’s creditors.</p>
<h2>Under pressure</h2>
<p>Renegotiations will have to take place in a very turbulent economic environment. With Greek banks currently closed and the economy most certainly back in (deep) recession, the already discussed <a href="http://blogs.ft.com/brusselsblog/files/2015/06/Prior-Actions-_institutions_modified_4-_1_.pdf">fiscal targets</a> (primary surplus of 1% of GDP in 2015, 2% of GDP in 2016, 3% of GDP in 2017 and 3.5% of GDP in 2018) are very unlikely to be met. </p>
<p>Hence, discussions between Greece and its partners will have to re-examine both targets and measures for the Greek economy. Unfortunately, time is not Greece’s ally. Greece has already defaulted on a €1.6 billion debt repayment to the IMF. With a €3.5 billion debt repayment to the ECB <a href="http://www.ft.com/cms/s/2/8b960548-143b-11e5-9bc5-00144feabdc0.html#axzz3eUScrWrB">due in two weeks</a>, Greeks will be under extreme pressure to agree to any revised proposals put forward by the creditors. </p>
<p>That said, Greece’s lenders will also be under pressure to propose fiscal targets that take into account the rapidly worsening economic conditions. Indeed, ambitious fiscal targets will never be met, in which case, more austerity will have to be recommended. In this dreadful scenario, Greece’s government will have to either accept new painful measures or, surprise surprise, announce a new referendum on the grounds that new measures, not covered by the previous referendum, need to be implemented.</p>
<h2>Debt relief or hell</h2>
<p>The reality of all of the above is that any agreement will have to involve (substantial) <a href="https://theconversation.com/greece-when-is-it-time-to-forgive-debt-44022">debt relief</a> which will rely on the generosity of Greece’s lenders. The big irony, of course, is that debt relief is only promoted by the IMF, which is seen by most Greeks as an “outsider” in eurozone matters. But the IMF emphatically admitted (just three days prior to the referendum) that Greek debt <a href="http://www.theguardian.com/business/2015/jun/30/greek-debt-troika-analysis-says-significant-concessions-still-needed">is unsustainable</a>. This very admission opens the door for debt relief which is desperately needed to stop kicking the (Greek) can down the road. </p>
<p>If debt relief is not implemented, or if Greece’s lenders are really fed up with Tsipras (in which case, no more negotiations will take place), the next step in the Greek drama will follow the script as dramatically portrayed in the lower level of Michelangelo’s Last Judgement. Without Yanis Varoufakis, Greek citizens, exhausted and damned by five years of (experimental) austerity measures, will return to memorable drachmas as a means of a valid currency payment.</p><img src="https://counter.theconversation.com/content/44247/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Costas Milas does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Syriza and the Greek people may have won a victory against austerity, but their fate is largely out of their hands.Costas Milas, Professor of Finance, University of LiverpoolLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/443172015-07-06T10:14:49Z2015-07-06T10:14:49ZVictory for politics of defiance in Greece means the real crisis starts now<p>Now that the Greek referendum has produced a <a href="http://news.sky.com/story/1513901/greece-referendum-no-vote-what-does-it-mean">decisive No vote</a>, never mind what happened before. The real crisis starts now. </p>
<p>It has to be recognised that the Greek people faced a difficult choice. The referendum itself was a political gambit by the Syriza government to seek to split the eurozone governments and obtain a better deal. The politics of defiance has won. It was a major gamble, so will it pay off? </p>
<p>There will be some EU leaders, particularly in France and Italy, who will urge a return to the negotiating table. But the odds which the Greek government now faces are stiff. One political commentator wryly told me in recent days that Syriza has achieved what few others managed: to unite the eurozone governments against it, even those most critical of austerity policies. In my view there is now an 80% probability of Grexit. </p>
<h2>The Greek reality</h2>
<p>The IMF’s debt sustainability report, which <a href="https://www.imf.org/external/pubs/ft/scr/2015/cr15165.pdf">was published</a> on June 26 just days before the vote, shows how dire Greece’s fiscal predicament is. Just a year before, the fund projected the country’s debt/GDP ratio falling from 175% in 2013 to around 128% in 2020. But the poor growth performance and poorer primary fiscal balances have worsened the outlook such that the ratio is now expected to be over 150% by 2020. </p>
<p>Worse is still to come: the report does not yet reflect the negative impact of the current banking closure and capital controls, which will have severely affected economic activity, and numerous commentators have said that the IMF’s growth forecasts for the country are too optimistic.</p>
<p>Although one can partly blame Syriza’s intransigence for the latest economic setbacks, the result of the referendum should be a wake-up call to the eurozone economies that fiscal austerity alone cannot be a solution. Greece’s <a href="http://www.tradingeconomics.com/greece/gdp">GDP decline</a> of more than 27% between 2008 and the first quarter of 2015 is one of the worse peacetime economic declines in history. </p>
<h2>Entrenched warfare</h2>
<p>Following the No vote, the rhetoric on both sides will be turned up another notch, having already sharpened in recent weeks. Northern-European critics <a href="http://www.cesifo-group.de/cesifo/newsletter/0515/Original_Sinn_May_2015.html">point out</a> that none of the reforms to pensions or to the economy, such as privatisations, which were agreed in 2011 have been carried out. </p>
<p>There were <a href="https://www.imf.org/external/pubs/ft/scr/2015/cr15165.pdf">supposed to be</a> €23bn (£16bn) of proceeds from privatisation over the 2014–22 period, and further ones which the Greek government promised but which have since been taken off the table. The IMF now notes that there have been privatisations of €3bn in the past five years and forecasts proceeds of only €500m a year over the next few. </p>
<p>In contrast, critics of the <a href="http://www.bbc.co.uk/news/business-15149626">troika</a>’s approach <a href="http://www.project-syndicate.org/commentary/greece-referendum-troika-eurozone-by-joseph-e--stiglitz-2015-06">argue that</a> Greece’s economy has lagged behind because of a basic lack of domestic demand, and that aiming to run a 3%-4% primary surplus in the national finances is incompatible with any sort of economic recovery. </p>
<p>This polarised debate disguises that the better path probably lies in the middle: Greece does need to improve the supply side of its economy by investing in new technologies and making its existing sectors more competitive. But in the meantime, demand needs to be sustained and you need more than three to four years to radically restructure an economy. In simple terms Greece needs another bailout (probably about €50bn), this time with a major debt restructuring (about €80bn, maybe more) to ensure that a new medium-term economic plan can be adopted which has a chance of working.</p>
<p>That’s what the bargaining should be about, and following the referendum the Tspiras government has a strong mandate. But this will require flexibility so far unseen among the eurozone governments – many have already said publicly that a No would lead to a Greek exit from the euro. Negotiating a new bailout will also take time. </p>
<h2>The liquidity threat</h2>
<p>But in the short run the main binding constraint is the banking shutdown. It is rumoured that one Greek bank is almost running out of cash, <a href="http://www.telegraph.co.uk/finance/economics/11715198/greece-crisis-live-no-yes-referendum-polls.html">and that</a> the whole banking sector has no more than €500m-€1bn left to dispense: about three days’ worth of cash. Without political cover from the eurozone governments, the European Central Bank (ECB) cannot reverse its move on June 28 to cap the Emergency Liquidity Assistance programme, which led to the closure of Greece’s banks the following day. </p>
<p>Having already received €89bn in assistance to keep functioning, the banks can’t resume business unless the cap is removed. Without additional ECB support, there would quickly be serious dislocation in the economy as businesses and government cannot pay salaries, and key imports like food and medicines cannot be guaranteed. Many businesses would cease to operate. So if the eurozone does not restart negotiations then Grexit could follow, de facto if not de jure, as the banks run out of cash. </p>
<p>If the eurozone shuts out Greece from ECB assistance, the Greek government would then be forced to issue promissory notes or IOUs: in essence the precursor of a new Greek currency, to which the Greek Central Bank and the Greek banks would need to be parties. Indeed, outgoing finance minister Yanis Varoufakis <a href="http://www.telegraph.co.uk/finance/economics/11719688/Defiant-Greeks-reject-EU-demands-as-Syriza-readies-IOU-currency.html">has already indicated</a> that this is a possibility. In theory this exit from the euro could be reversed if an agreement were reached with the eurozone.</p>
<p>But a dual currency limbo cannot last long. Very quickly it would make sense to convert all bank accounts, prices and contracts to the new currency. Because it would take time to issue new drachma notes, euro notes would continue to circulate alongside IOUs. But people would seek to hide them in the knowledge that the new drachma would quickly devalue, probably by about 50%. It is also likely that the euro would eventually stop being legal tender and tight capital controls would operate, with a forcible conversion of euro notes to new drachma notes. </p>
<p>For the creditors, Grexit means Greece could walk away from its debt, which is mostly held by governments rather than European banks. This will have a negative fiscal impact on large eurozone countries like Germany, France, Italy and Spain. But European banks have built up capital reserves in the last five years and should be able to withstand the shock of the sovereign bonds of large eurozone countries that they hold on their balance sheets plunging in value as a result. </p>
<p>For the eurozone, the key will be to prevent a contagion through increasing debt costs to other weaker members such as Spain, Portugal, Ireland and Italy. The ECB will need to use whatever it takes to defend these countries, including its <a href="http://lexicon.ft.com/Term?term=outright-monetary-transactions-OMT">Outright Monetary Transactions programme</a>, under which it can buy their sovereign bonds.</p>
<p>For Greece, debt relief would follow an exit from the eurozone. But there are risks, not least that it would have violated its adherence to EU treaties by exiting the euro. So an exit from the EU, though seemingly implausible, cannot be excluded. </p>
<p>And in spite of having a currency with a much lower value following a Grexit, there might be little benefit to net exports for Greece. This is because the Greek economy <a href="http://www.ft.com/cms/s/1bf65f00-1f29-11e5-ab0f-6bb9974f25d0,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F1bf65f00-1f29-11e5-ab0f-6bb9974f25d0.html%2523axzz3f2HiHl5L%3Fsiteedition%3Duk&siteedition=uk&_i_referer=">is quite closed</a>, with net exports less responsive than might be expected to a devaluation. Greece would also need to maintain a fiscal surplus with no short-run external finance sources. So for Syriza this risks being a pyrrhic victory. For the eurozone and the EU, meanwhile, this is their biggest ever challenge.</p><img src="https://counter.theconversation.com/content/44317/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Anton Muscatelli does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Greek rejection of the bailout means it’s time to brace ourselves: Grexit is now an 80% probability.Anton Muscatelli, Principal and Vice Chancellor, University of GlasgowLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/442932015-07-06T08:41:52Z2015-07-06T08:41:52ZGreferendum offers symbolic victory for Syriza’s anti-austerity ‘Third Way’<p>Against the predictions of many opinion <a href="http://greece.greekreporter.com/2015/06/28/greece-referendum-polls-greeks-favor-agreement-yes/">polls</a>, the so-called Greferendum scored a surprisingly resounding victory for the Oxi — or No — campaign. </p>
<p>Some 60% of Greek voters <a href="http://www.nytimes.com/2015/07/06/world/europe/greek-referendum-debt-crisis-vote.html">chose</a> “no” on one of the most incomprehensible referendum questions in history. The vote has been heralded and mourned across Europe, with both sides agreeing that it is a “<a href="http://www.wsj.com/articles/greeks-vote-in-historic-referendum-1436095669">historic</a>” occasion in European (they mean European Union) history.</p>
<p>It is not.</p>
<p>How could it be? The Greferendum was <a href="http://www.theguardian.com/news/datablog/2015/jul/03/greek-referendum-voters-greece-creditors-proposals">designed</a> to be vague and inconsequential. It was on an extremely narrow <a href="http://www.huffingtonpost.com/cas-mudde/victims-of-illusions-the-_b_7679138.html">question</a>, that is whether Greeks supported a highly specific proposal from the country’s creditors. </p>
<p>Moreover, by the time the referendum was held, the proposal was already off the table. It is therefore completely ridiculous to <a href="http://www.huffingtonpost.com/2015/06/29/greece-referendum-national-front-_n_7691166.html">celebrate</a> it as a vote against the eurozone, let alone the EU, as many far right politicians have done, and highly optimistic to see this as a mandate to end austerity. </p>
<p>Not only was this not the <a href="http://www.huffingtonpost.com/2015/07/04/greece-referendum-question_n_7727924.html">question of the referendum</a>, it is not up to Greece to decide that for the whole eurozone and EU.</p>
<p>The referendum was always much more about the <a href="http://www.reuters.com/article/2015/06/30/vicenzino-greece-idUSL1N0ZG30F20150630">survival</a> of the Greek government — and, more specifically, its main party, the Coalition of the Radical Left (Syriza) — than about Greece or Europe. </p>
<p>It was, first and foremost, an elaborate and expensive <a href="http://www.bbc.co.uk/news/world-europe-15588380">vote of confidence</a> in the more moderate line within Syriza. In fact, Prime Minister Alexis Tsipras was remarkably candid about this in his victory speech, saying the result was not a mandate for a rupture with Europe but one for a strengthened negotiating position for Greece. I wonder how that message resonated among the many “anti-EU” and “international solidarity” supporters of Syriza across Europe.</p>
<h2>Back where we started</h2>
<p>Consequently, we are exactly where we started half a year ago, when Syriza won the Greek elections. </p>
<p>In essence, the referendum was about Syriza’s “Third Way,” that is an anti-austerity eurozone, which has been the basis of the party’s electoral success. </p>
<p>Tsipras <a href="http://www.theguardian.com/world/2015/jun/26/greece-calls-referendum-on-bailout-terms-offered-by-creditors">called</a> the referendum with the (unconvincing) argument that he didn’t have a mandate to accept the creditors’ proposals, because the two coalition parties gained only 41% of the vote in the 2015 elections – yet they have a clear majority in the mono-cameral Greek parliament. </p>
<p>If this really is his line of thinking, and we ignore the fact that only about 40% of the Greek electorate actually voted “no” in the referendum (60% of 65% turnout), the situation hasn’t changed much. After all, the Greferendum gave him only a mandate about this specific deal, which was off the table anyway. Any new deal, let alone a significantly changed one, would require another referendum. Somehow I think that will not happen.</p>
<h2>A symbolic victory</h2>
<p>From a broader European perspective the Greferendum was a symbolic victory. But unfortunately, such victories are exactly that, symbolic, and tend to not last long. We have seen symbolic victories against the “imperialist” and “undemocratic” EU before – think about the French and Dutch <a href="http://pa.oxfordjournals.org/content/59/1/98.full">referendums</a> against the European Convention in 2005, in which similar majorities said “no” to a much more fundamental question. </p>
<p>But after a couple of months of “crisis,” the EU responded as it has always done: with more EU. </p>
<p>The <a href="http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:12007L/TXT">Lisbon Treaty</a> was a European Convention Light, which was no longer put to a referendum in France and the Netherlands. The silly Irish <a href="http://news.bbc.co.uk/1/hi/world/europe/6901353.stm">tried</a> to reject it, in a 2008 referendum, only to be forced to vote again in 2009 – as they made “the right choice” the second time around, they didn’t get a third chance. </p>
<p>The Greferendum won’t be different. Within weeks there will be a “compromise” between the two camps, as both have too much at stake (such as hanging on to power). There will be neither an end to austerity nor a Grexit. </p>
<p>Instead, there will be something that strongly resembles the rejected proposal, a Lisbon Treaty of austerity, but that can be re-branded as a victory for Greek “dignity” by Syriza. The new policy will be austerity light, not much different than the policies in most other bailout countries (such as Ireland and Portugal). </p>
<p>In that way, Syriza’s “Third Way” will end up much the same as the “Third Way” of New Labour in the UK: neoliberal policies hidden under progressive rhetoric.</p><img src="https://counter.theconversation.com/content/44293/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Cas Mudde has received funding from the Alexander von Humboldt Foundation, British Academy, Dutch Scientific Organization (NWO), Flemish Scientific Organization (FWO), Israeli Institute, and Volkswagen Foundation. He is affiliated with the Center for Right-Wing Studies at the University of California, Berkeley, and consults/ed for the Canadian Security Intelligence Service (CSIS), Institute for Jewish Policy Research (JPR), and European Policy Center (EPC).</span></em></p>Heralded and mourned as historic, the so-called Greferendum was more about the survival of the Greek government and Syriza than anything else.Cas Mudde, Associate Professor in the School of Public and International Affairs, University of GeorgiaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/442312015-07-05T20:13:14Z2015-07-05T20:13:14ZGreece votes No: experts respond<p><em>The Greek people have voted, <a href="http://www.bbc.co.uk/news/world-europe-33403665">saying a resounding No</a> to the terms of the bailout deal offered by their international creditors. What will this mean for Greece, the euro and the future of the EU? Our experts explain what happens next.</em></p>
<p><strong>Costas Milas, Professor of Finance, University of Liverpool</strong></p>
<p>Greek voters have confirmed their support for their prime minister, Alexis Tsipras, who now has the extremely challenging task of renegotiating a “better” deal for his country.</p>
<p>Nevertheless, time is very short. Greece’s economic situation is critical. On July 2, Greek banks <a href="http://www.telegraph.co.uk/finance/economics/11714655/Greek-banks-down-to-500m-in-cash-reserves-as-economy-crashes.html">reportedly had only €500m in cash reserves</a>. This buffer is not even 0.5% of the €120 billion deposits that Greek citizens have to their names. It is only capital controls preventing Greek banks from collapsing under the strain of withdrawal.</p>
<p>Basic mathematical calculations reveal how desperate the situation is. There are roughly <a href="http://www.kathimerini.gr/821443/article/epikairothta/politikh/ston-topo-diamonhs-yhfizoyn-oi-eterodhmotes---prwth-fora-gia-108371-neoys">9.9m registered Greek voters</a>. Assume that – irrespective of whether they voted Yes or No – some 2.8m voters (that is, a very modest 28.2% of the total number of registered voters) decide to withdraw their daily limit of €60 from cash machines on Monday morning. Following this pattern, banks will run out of cash in three days and therefore collapse (note: 3 x 2.8m x 60 ≈ 500m). </p>
<p>There is therefore very little time for the Greek government to strike the deal with their creditors that will instantaneously give the ECB the “green light” to inject additional Emergency Liquidity Assistance (ELA) to Greek banks to support their cash buffer and save them from collapse. In other words, Greece does not have the luxury of playing “hard ball” with its creditors. An agreement has to be imminent. </p>
<p>Financial markets, expected to start very nervously on Monday morning, will probably stay relatively calm as the reality of the economic situation spelled out above is more likely than not to lead to some sort of agreement (provided, of course, that Greece’s creditors will listen to Tsipras). Whether this agreement is good for the Greeks, this is an entirely different story.</p>
<p><strong>Sofia Vasilopoulou, Lecturer, Department of Politics at University of York</strong></p>
<p>As his country went to the polls, Tsipras said: “Today we celebrate democracy,” and proclaimed that the will of the people should not be ignored.</p>
<p>But the referendum has had the opposite effect. It has further weakened Greek democracy and undermined Greece’s negotiation position with its creditors. What’s more, its has solidified divisions in Greek society. In a country with a history of civil war and dictatorship, this polarisation may lead to a further rise of the extremes.</p>
<p>The day after the referendum is a very important moment. The people have spoken and the government will need to finally clarify its vision for the future. It will need to explain if it is resolved to addressing Greece’s crisis within the eurozone by cooperating with its partners or if it wants to create a utopian socialist state in Europe. This result marks a new period of uncertainty, not only for Greece but for Europe – and potentially for the world economy as a whole.</p>
<p><strong>Richard Holden, Professor of Economics, UNSW Australia</strong></p>
<p>By calling this referendum and shutting off negotiations for nearly a week, the Syriza party has brought the Greek banking system very close to insolvency. Greece can’t print euros so Greek banks will soon need to issue IOUs, or the demand for money will not be met, leading to utter chaos. Who will accept these? How will they be valued? These are big, scary questions to which nobody knows the answer.</p>
<p>By voting No, Greece has tied the hands of European Central Bank president Mario Draghi. As a matter of politics there’s not much he can do in the short-term and with Greek banks insolvent he may not be able to do anything simply as a matter of law.</p>
<p>At least one if not all the major Greek banks are likely to fail early this week. When this happens, the Greek economy will essentially come to a halt. Nobody knows what will happen, but it surely won’t be good.</p>
<p>The other depressing consequence of the No vote is that Greek finance minister Yanis Varoufakis’s promise to resign if his fellow citizens voted Yes will not come about. It has been abundantly clear that Syriza representatives have been miles out of their depth from the time they took office.</p>
<p>Everyone with real knowledge and experience of financial markets and liquidity crises told them to stop playing chicken with the IMF and ECB. They should start listening immediately. </p>
<p><strong>George Kyris, Lecturer in International and European Politics, University of Birmingham</strong></p>
<p>A historic referendum for Greece and Europe tells a very interesting story. While results indicate that a sizeable 61% rejected existing policies towards the Greek crisis, polls have consistently shown that the majority of Greeks want to remain in the eurozone. This exposes the success of Syriza based on its populism, which has allowed Greeks to think that they can stay a credible member of the EU, while at the same time taking unilateral decisions and refusing to recognise the obligations of their eurozone membership. </p>
<p>This not only creates unrealistic expectations but it is also a very sad result for the relationship between the EU and its citizens, which, once again, falls victim to national governments’ short-term strategies. In this climate of unrealistic expectations, the Greek government embarks on a mission impossible to secure a better deal for the country, where economic, political and social peace has been seriously undermined in the past few months and week especially. </p>
<p>The first reactions of Greece’s EU partners to the No vote are <a href="http://www.independent.co.uk/news/business/news/greece-referendum-live-germany-troika-yanis-varoufakis-alexis-tsipras-vote-10367225.html">far from positive</a>. </p>
<p>In his address after the referendum, Alexis Tsipras indicated the formation of an ad hoc national council with the participation of major political parties to prepare the negotiation strategy. The next few days will show if a more united Greek front is possible and capable of improving things for the crisis-hit country.</p>
<p><strong>Ross Buckley, Professor, Faculty of Law at UNSW Australia</strong></p>
<p>The Greek people have decisively voted No to more austerity imposed from Frankfurt. This is unsurprising. Voters rarely vote for higher taxes and lower pensions. However other polls reveal clearly that the Greek people overwhelmingly also want to retain the Euro. So this is one giant gamble. The Greeks are betting that the potential damage to other countries, especially Spain and Italy, and thus to the very fabric of the Euro, is simply too great for the Eurozone to eject Greece.</p>
<p>When voting on Sunday most Greeks probably felt they were reclaiming control of their own economy. However, paradoxically, the No vote has done the opposite. Greece’s short to medium term economic future is now in the hands of others, particularly Germany and France.</p>
<p>Greek banks today are all but out of Euros. Normally in this situation a nation’s central bank simply prints more currency. Greece can’t do that, as no one country controls production of the Euro. So the options over the next month or so seem to be that either Germany, France and the European Central Bank blink, and extend more credit to Greece, or Greece’s financial system will cease functioning and ultimately it will be forced to print drachma.</p>
<p><strong>Marianna Fotaki, Network Fellow, Edmond J Safra Center for Ethics, Harvard University, and Professor of Business Ethics at the University of Warwick</strong></p>
<p>Beyond the economic issues at stake in this vote, the democratic movement happening in Greece offers new hope not only to the Greek people, but for other countries too. The result is a powerful message to the political establishment that has mismanaged Greece for the last four decades, bringing the country to the brink of catastrophe.</p>
<p>The tremors will be felt beyond Greece’s borders. The promise of a better tomorrow that <a href="https://www.foreignaffairs.com/articles/greece/2015-01-29/austerity-vs-democracy-greece">never seems to arrive</a> on the condition of more impoverishment today is a familiar concept to many. If Greece is successful, it will offer an alternative to the misanthropy driving eurozone austerity policies. It will enable citizens to have a bigger say in the future of the European project.</p>
<p>This is potentially the most important contribution being made by the democratic processes taking place in Greece. The No vote should give pause to politicians and media all over the world.</p>
<p><strong>Remy Davison, Jean Monnet Chair in Politics and Economics at Monash University</strong></p>
<p>With eyes wide shut, Prime Minister Alexis Tsipras has sent his country to the wall.</p>
<p>The “OXI” voters in Athens last night were in full party mode. But in the cold, harsh light of day, the depressingly-painful hangover begins.</p>
<p>61% of voters will wish they didn’t drink so much of the OXI Kool-Aid. Especially when the realisation hits voters that they can only get €60 out of the ATM. Or €50, as €20 notes are now scarce.</p>
<p>The next hurdle for Athens is ominous. The government has a $3.5 billion repayment due to the ECB in mid-July. Defaulting on the 30 June IMF payment was not as serious as the media made out; the IMF default process is slow and ponderous. Conversely, the ECB controls Greece’s capital lifelines. Its emergency lending assistance (ELA) facility has kept Greek banks liquid up to this point. However, the ECB’s Governing Council and the Eurogroup ministers are unlikely to be sympathetic if Tsipras and Varoufakis attempt to renege on the ECB debt repayments.</p>
<p>A deal will ultimately be struck or Greek banks will not reopen without assistance from the ECB. Europe’s central bank will not refinance Greek banks endlessly, as the absence of capital controls before they were imposed on 29 June saw billions of euro offshored within days.</p>
<p>Tax evasion remains a systemic problem for Greece. A Swiss media source has <a href="http://www.theguardian.com/business/live/2015/jul/05/greeces-eurozone-future-in-the-balance-as-referendum-gets-under-way--eu-euro-bailout-live#block-55994493e4b00bdd27707d91">reported</a> that Athens is quietly offering amnesty from prosecution to Greek tax evaders, who have squirrelled away their euro in Swiss bank accounts, if they pay 21% tax.</p>
<p>A Grexit is still extremely unlikely. If there is one thing that government and opposition parties agree upon, it is that there will be no attempt to depart the eurozone. It is not in Greece’s interest, and there is no legal mechanism with which to do so.</p>
<p>An extra-legal attempt (i.e., outside the EU treaties) by a qualified or absolute majority of EU member governments to vote for Greece’s ejection from the eurozone would result in a Greek application to the European Court of Justice for an injunction. A hearing by the ECJ on an attempt to remove Greece from the eurozone could potentially take two years or more, given the complete absence of precedent and the considerable time and resources required to compile briefs for a case of such complexity. Financial commentators who believe in a high probability of a Grexit are either deluded, or have little comprehension of how the institutional mechanisms and procedures of the EU actually work.</p>
<p>The tragedy is that Tsipras and Varoufakis did not need initiate this crisis, as Greece and the IMF were only $400 million apart in their negotiations before the Greek government walked out. Tspiras and Varoufakis have spun the recent IMF report, which calls for debt restructuring, as somehow supporting their side of the story.</p>
<p>In reality, the IMF has been heavily critical of the Tsipras-Varoufakis government and its unwillingness to undertake the requisite, difficult structural reforms that Greece needs, including further privatisation, industry deregulation and competition policy reform, rigorous taxation restructuring in the Greek merchant shipping industry, and tackling offshore tax evasion. Why a far-left government in Greece wants to help rich Greeks to avoid tax defies logic.</p>
<p>In June, a reasonable compromise may have been reached between Athens and the Eurogroup. But it’s unlikely Euro Area ministers will have much sympathy to spare in the next round of negotiations.</p>
<p>Greeks may have voted with an overwhelming “OXI”, but it’s unlikely they realised they might also be voting for capital controls, insolvent banks and a financial system on the verge of meltdown.</p>
<p><strong>Nikos Papastergiadis, School of Culture and Communication, University of Melbourne</strong></p>
<p>A profound recognition has been given now, not just by economists, but by the people of Greece, that the economic policies pushed by the troika are counter-productive.</p>
<p>The government can now walk into negotiations in a strengthened position. They can honour their promises. They have no intention to leave the eurozone, let alone the EU, but can focus on a debt restructure, tackling tax evasion and modernising the state.</p>
<p>I expect some sort of financial resolution in the next 24-48 hours, because a move back to the drachma would be catastrophic.</p>
<p>When politicians in Europe say things like “It’s not a problem for us there is no risk of economic contagion,” that is a profoundly immoral comment given there’s a real risk Europeans will die this winter as a result of their policies. Their sense of solidarity with the union is profoundly blinkered. The risk is not just economic contagion, it’s political contagion. They don’t want Syriza to be the example for other European governments. They wanted Greece to be humbled and crippled by these austerity measures. This divide and conquer attitude means there will be long-term political consequences.</p>
<p>I am so proud of the courage demonstrated by Greeks who have stood up in the face of their own oligarchs, who launched a smear campaign against the government, and said “enough is enough”.</p>
<p><strong>James Arvanitakis, Professor in Cultural and Social Analysis at University of Western Sydney</strong></p>
<p>The Greek people have shown overwhelming support for the Greek government and their stance against the so-called troika.</p>
<p>While most commentators may claim they suspected the outcome, I think those who are honest would say the decision was too close to call. The 61% vote in favour of the government does not indicate this, but the reality is the vast majority of Greeks did not know themselves what their vote would be. </p>
<p>In the end, the existential crisis of potentially leaving the Euro and even the European Union was usurped by the fact that they have had enough: enough of austerity that has driven the economy into the ground, enough of 25% unemployment and a lost generation of productivity with 50% youth unemployment, and enough of the troika and the bankers holding them to ransom. As one academic said to me when I was recently there: </p>
<blockquote>
<p>“Who created the crisis and who pays for it? Like the GFC, it was those that lent the money, those that fudged the figures and those who have moved their money into offshore accounts. We lose our houses, they sip Retsina and watch sunsets on the islands.”</p>
</blockquote>
<p>So what is next for the Greek people?</p>
<p>The obvious answer is uncertainty. But the uncertainty and potential for financial meltdown seems to have usurped the absolute hopelessness that is associated with “more of the same”.</p>
<p>Over the last five years we have seen the Greek government meet most of the austerity requests put forward by the troika. Economic theory tells us that in the “long run”, the austerity would work. For the Greek population however, the long run is too far away, unrealistic and a party trick they are no longer willing to fall for.</p>
<p>Greeks have said enough. They have decided it is better to reboot the economy and suffer the potential consequences than continue to see deeply flawed measures bring nothing but financial misery.</p>
<p>Over the next few days we will see continued celebrations. These will quickly disappear depending on the outcome of the negotiations. As I have written elsewhere, Greek society is fraying, how the negotiations go including a potential “Grexit” would determine just how far this unravelling goes.</p>
<p>The heartbreaking image of an elderly man, 77-year-old retiree Giorgos Chatzifotiadis, collapsed on the ground openly crying in despair outside a Greek bank, captured the attention of the world. It is a manifestation of what happens when economic policy and ideology is separated from the impacts on real people. </p>
<p>The “No” vote will restore the pride that has evaporated. But whether this pride turns into something productive or something that is a chauvinistic nationalism, no-one knows.</p><img src="https://counter.theconversation.com/content/44231/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>James Arvanitakis receives funding from the Australian Research Council and the Office of Learning and Teaching. He is a board member of the Australian Public Education Foundation, a member of the Australian Research Council: Excellence in Research for Australia 2015 Evaluation Committee, Office of Learning and Teaching (OLT): Committee Member: Awards Committee, a member of the panel of experts for the Tertiary Education Quality and Standards Agency (TEQSA and a research fellow at The Centre for Policy Development. </span></em></p><p class="fine-print"><em><span>Remy Davison's Chair is funded by the EU Commission.</span></em></p><p class="fine-print"><em><span>Richard Holden is an ARC Future Fellow.</span></em></p><p class="fine-print"><em><span>Costas Milas, George Kyris, Marianna Fotaki, Nikos Papastergiadis, Ross Buckley, and Sofia Vasilopoulou do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Academic experts respond to the No vote in Greece’s referendum on whether or not to accept a bailout offer from their international creditors.Costas Milas, Professor of Finance, University of LiverpoolGeorge Kyris, Lecturer in International and European Politics, University of BirminghamJames Arvanitakis, Professor in Cultural and Social Analysis, Western Sydney UniversityMarianna Fotaki, Network Fellow, Edmond J Safra Center for Ethics, Harvard University and Professor of Business Ethics, Warwick Business School, University of WarwickNikos Papastergiadis, Professor, School of Culture and Communication, The University of MelbourneRemy Davison, Jean Monnet Chair in Politics and Economics, Monash UniversityRichard Holden, Professor of Economics, UNSW SydneyRoss Buckley, Professor, Faculty of Law, UNSW SydneySofia Vasilopoulou, Lecturer, Department of Politics, University of YorkLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/441182015-07-03T14:14:17Z2015-07-03T14:14:17ZSyriza risks an EU exit in a referendum wracked with problems<p>Greeks go to the polls on July 5 to answer a <a href="https://theconversation.com/the-real-question-being-asked-of-greek-voters-in-the-referendum-44203">highly complicated question</a> regarding what bailout measures they should accept from their country’s international creditors. A bailout is needed to release the funds to keep Greece’s economy afloat and avoid bankruptcy and potential eurozone exit (Grexit).</p>
<p>Tsipras has asked Greeks to vote No without any particular reference to the likely repercussions of the choice, but focusing instead on the need to “restore hope” and “conquer fear”. This decision reveals the dead end that the Syriza government has reached. It devalues the democratic value of the referendum and risks an EU exit – something the majority of Greeks do not want.</p>
<p>The main problem of the <a href="https://theconversation.com/uk/topics/greece">decision to call a referendum</a> can be traced in the way it has been organised. In an unprecedented move for any established democracy, Tsipras announced the referendum only a week in advance, allowing almost no time for proper deliberation. No leaders’ debate has been planned and no official studies have been produced in order to assess the possible choices. </p>
<p>Plus, the question suggested for the referendum has been framed with reference to two long technical documents. The government argues that a No will give them more power against the creditors, but even if 99% of Greeks do so, this cannot have any influence over the other eurozone governments who are responsible to their own electorates. By contrast, EU officials have argued that a No vote <a href="http://www.theguardian.com/business/2015/jun/29/greek-crisis-referendum-eurozone-vote-germany-france-italy">means no to Europe</a>, implying that this may mean an EU exit. </p>
<p>Moreover, the build-up to the referendum has seen most citizens spending hours in queues to withdraw money from ATMs, while banks remain closed. In other words, the referendum process seems more of a <a href="http://www.bloombergview.com/articles/2015-06-28/greek-referendum-is-more-con-than-democracy-ibg6vcmz">mockery</a> than an exercise of democracy.</p>
<h2>Anti-EU rhetoric</h2>
<p>Once the referendum has taken place, it is difficult to guess how the Greek government intends to reach a much-needed deal with the country’s creditors. Both Syriza and their far-right coalition partners, the Independent Greeks party (ANEL), have adopted a <a href="http://blogs.lse.ac.uk/eurocrisispress/2015/02/05/greek-elections-2015-the-beginning-of-the-end-or-the-end-of-the-beginning/">nationalistic anti-EU discourse</a> professing the EU’s desire to <a href="http://greece.greekreporter.com/2015/06/16/greek-pm-tsipras-creditors-want-to-humiliate-greece/">humiliate the Greeks</a>. </p>
<p>Tsipras himself accused the EU of being authoritarian and desiring to <a href="http://www.greekcrisis.net/2015/06/defiant-alexis-tsipras-accuses.html">pillage Greece</a> and the IMF to have <a href="http://www.theguardian.com/business/live/2015/jun/16/greek-crisis-negotiations-deadlocked-as-time-runs-short-live-updates#block-558020ebe4b099c3e01ea902">criminal responsibility</a> for the Greek situation. If you follow the logic of this rhetoric, it clearly questions why Greece should stay within such an undemocratic and hostile EU/eurozone, irrespective of the conditions attached to membership.</p>
<p>Additionally, the Greek government has portrayed itself as a champion of democracy against authoritarian EU rule. This argument, however, is problematic. Nobody forced Greece to join the euro in the first place. And, having joined it, they have an equal place at Eurogroup meetings where decisions are made by the eurozone finance ministers who are also elected and represent national governments. </p>
<p>Tellingly, Ireland and Portugal, which have now exited similar bailout programmes, did not express such concerns. In an unprecedented move for Greece’s history, even Cyprus has kept its <a href="http://www.reuters.com/article/2015/03/11/eurozone-greece-cyprus-idUSL5N0WC44Q20150311">distance</a> from the Greek drama. What’s more, if the Greek government is so passionate about democracy, it is puzzling why it has developed a <a href="http://blogs.lse.ac.uk/eurocrisispress/2015/02/05/greek-elections-2015-the-beginning-of-the-end-or-the-end-of-the-beginning/">close relationship</a> with Putin’s Russia, which is not famous for its democratic credentials.</p>
<p>The coalition government seems trapped in confrontation with the EU as a result of internal politics. A popular accusation within the Greek parliament has been to accuse political opponents of being <a href="http://blogs.lse.ac.uk/europpblog/2015/07/02/the-greek-crisis-illustrates-both-the-poverty-of-syrizas-ideology-and-the-flaws-in-the-eus-balance-sheet-approach-to-decision-making/">collaborators or agents of the creditors</a>. The implication is that making a deal with them is synonymous to treason for members of Syriza or ANEL. </p>
<p>By narrowing the debate in this way, there is little room for criticism of their policy of fighting the EU – doing so marks you as a traitor or enemy of the Greek people. The continuation of this logic is that no government can or should implement the treacherous act of making a deal with the creditors.</p>
<h2>Upheaval and uncertainty</h2>
<p>Another contradiction that the Syriza-ANEL government will face whatever the outcome of the bailout negotiations is its argument that by rejecting EU-led austerity it protects Greeks against hardship and recession. Nobody, however, can predict with <a href="http://www.theguardian.com/business/2015/jun/29/joseph-stiglitz-how-i-would-vote-in-the-greek-referendum?CMP=fb_gu">certainty</a> whether exiting the eurozone is a good alternative in the long term while the immediate financial catastrophe is <a href="http://www.forbes.com/sites/francescoppola/2015/02/17/why-greek-exit-from-the-euro-would-be-a-very-bad-idea/">certain</a>). </p>
<p>Tellingly, over the past five months the Greek government has not implemented austerity but economic growth has <a href="http://www.cnbc.com/id/102648240">deteriorated</a>. And regaining domestic sovereignty over economic policy would not solve the country’s <a href="https://theconversation.com/greece-when-is-it-time-to-forgive-debt-44022">severe economic problems</a>.</p>
<p>Even though Tsipras and key members of his government and party have alluded to Grexit as a <a href="http://greece.greekreporter.com/2012/06/14/syriza-leader-tsipras-agrees-that-the-currency-is-not-a-fetish/">viable alternative</a>, it will mean economic, political and social devastation for most parts of Greek society. The only social group to benefit in the short to medium term from such a development would be Greece’s elites and oligarchs who were able to move their euros <a href="http://www.dailymail.co.uk/news/article-2050895/Greek-fat-cats-secretly-shifted-200bn-euros-Swiss-bank-accounts.html">abroad</a> and will have their wealth multiplied after Grexit as the Greek drachma is <a href="http://www.huffingtonpost.com/dimitriosgiokas/12-consequences-if-greece-returns-to-the-drachma_b_7682982.html">expected</a> to have much less value than the euro. </p>
<p>Grexit is also supported by the more radical left wing of the Syriza party, which would like to establish socialism in Greece – something unfeasible within the EU. It should be remembered that any pursuit of Grexit goes against the <a href="http://www.bloomberg.com/news/articles/2015-07-03/greeks-split-down-middle-before-bailout-referendum-poll-shows">overwhelming majority</a> of Greeks who want their country to remain in the eurozone.</p>
<p>As in other times in Greek history, Greeks face a big dilemma on July 5. I hope that the efforts of a generation for a democratic, stable and prosperous Greece within the EU will not be abruptly terminated.</p><img src="https://counter.theconversation.com/content/44118/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sotirios Zartaloudis does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Greeks face a big dilemma in the July 5 referendum. It’s been badly organised, democratically questionable and there’s a great deal at stake.Sotirios Zartaloudis, Lecturer in Politics, University of BirminghamLicensed as Creative Commons – attribution, no derivatives.