A winter of discontent

A winter of discontent

It was hailed as a vote of confidence for the Samaras government. Even his political opponents agreed that the Eurogroup’s decision Nov. 26 to release a total of 40 billion euros in installments as part of the bailout program agreement with Greece earlier in the year was the right move at the right time. After lengthy deliberations and disagreements, the Eurogroup and IMF finally agreed to reduce Greek debt by 40 billion euros, reduce interest rates on Greece’s loans and extend repayment dates. The Greek prime minister was jubilant as he got more than most had hoped for. So, for the moment, Greece avoids bankruptcy, its place in the EU is secured and the see-saw of “Greece in or out of the Euro” will seize to be a favorite theme among the European media.

But as initial jubilations die out and opposition politicians scan through the fine lines agreed to in Brussels, some have come to discover certain conditional terms on several statements of support from Greece’s European partners. It is on these conditional terms that the opposition will base its attacks against the government in the coming period, and it is perhaps because of these that the tripartite coalition Samaras government may face a tough test of endurance. Already his coalition partners are facing problems within their own parties as both E. Venizelos of PASOK and Fotis Kouvelis of the Democratic Left are finding it hard to explain to their supporters how although the money from Europe will come, most of it will go TO the recapitalization of the banks (23 billion euros) and eventually very little will finance the now much-trimmed pensions, salaries and social benefits. There are trickier points, too. For example, the clause of the agreement that provides that strict monitoring mechanisms will be applied to every ministry by Greece’s creditors, activating new austerity measures each time the ministry’s spending is off-target.

And there is the long-term question concerning the sustainability of Greece’s debt, when currently it is running on the scale of 180% of GDP and moving upwards. Will Greece achieve the target agreed to in Brussels, to reduce its debt to around 120% by 2020?

Very doubtful, many say, including the transatlantic creditor of Greece, the IMF, who believes that the Greek problem cannot really be resolved without a serious “haircut,” something that the Europeans despise, especially Angela Merkel in her election year.

Greeks are slowly coming to grips with the new realities of last week’s agreement in Brussels. Yes, the Europeans agreed to help them, to keep them in Europe, but the Greeks will have to accept an even higher cut to their salaries, more taxation and a much-reduced welfare state. All that in the hopes that perhaps in one to two years, this trend will be reversed by a program of privatizations, foreign investments, major deals, etc.

It is exactly that intermediate period of uncertainty and hardship that may become a fertile ground for new political formations, particularly in the left-of-center of the political spectrum. Last weekend, the main opposition leftist party of SYRIZA gathered all its diverse constituent groups for a large “brainstorming” conference, where some 30,000 members came together in a sports stadium. Their target is an amalgamated compact party, as opposed to an assortment of diverse groupings as it is now. The society wants consistency and concrete ideas.

They will have to hurry up because a new trend is gaining strength, drawing from people’s hardshipS but also from simple mathematics on the impossible sustainability of Greece’s debt within the euro. A. Alavanos, a former leader of the Coalition of the Left, is among the supporters of the idea. That trend is pushing toward a Greece outside the euro as the only solution to disentangling from the single currency and a re-start of the economy on the basis of the drachma. This trend may have a small impact yet, but its proponents are heavily counting on a winter of real discontent.