Greece: Weathering the last storm

Greece: Weathering the last storm

Last week, I had to call my bank in Athens. I talked to a helpful lady who dealt with my query immediately. But I could not hang up without asking the situation in Greece. “Is it getting very difficult for you?” I asked. “Yes, there is a bit of tension, these days,” the lady replied, calmly. It was obvious that she was told not to cause panic to customers. On that very day – last Friday – 1.2 billion euros were withdrawn from Greek banks by savers. The Greek banking system was kept alive that day only by a new cash injection from the European Central Bank.

It is exactly six months since Syriza became the elected government to renegotiate an austerity program agreed by the previous governments with the European Union and IMF. A program that five years on, has only plunged the country deeper into recession and has increased its huge debt. The emergence of a left-wing government among the eurozone members was seen more as a thorn in the side by conservative European leaders. The defiant anti-austerity tone adopted by the key Greek ministers became an issue of harsh criticism and even ridicule. The new government walked on a “mined” path, as Prime Minister Alexis Tsipras accepted. Who had placed the mines in the first place? The Europeans, the IMF, their political friends in Greece, fractions within Syriza, mistakes by the government itself? Perhaps all of them together. 

Six months later, after a protracted, tense and fruitless negotiation process with its creditors that dried up the coffers of the Greek state, the Syriza government is reaching the moment of truth. Today’s summit of the eurozone leaders will decide whether to keep Greece in or allow it to drift away from the structure of the euro, albeit still in the family of the EU. If the Greek team convinces their interlocutors in Brussels that they are willing to compromise so as to meet their demands for the austerity to continue, then there may be a deal favorable to Greece that will unlock 7.2 billion euros of bailout funds from the EU and IMF. If not, Greece will have no other option but to default on a 1.6 billion euro loan to the IMF due on June 30. 

Predictably, as with a good gambling game, the final moments before Monday’s summit were the toughest.

Syriza tried desperately to convince the Greek electorate that it will fight until the end, to avoid further taxes and cuts, while sending the message to the Europeans that they are willing to make an “honest compromise.” They will try to stick to their red lines of keeping pensions and salaries intact. On the other hand the Europeans and IMF, seeing Syriza falling back on its original electoral promises, increased their pressure knowing it may work. Donald Tusk, the president of the European Council, did not mince his words when he spelled it out clearly: “The Greek government will have to choose between accepting what I believe is a good offer of continued support or head toward default.”

It looks that in the end, some kind of deal is going to be achieved that would keep Greece in the eurozone. Kicking Greece out would be too messy for everybody involved. But the deal would not be dramatically different from the one that was agreed and followed under previous governments. Would that shake the position of Syriza domestically? I think not. 

By now Greeks are fully aware of what went wrong with their country. Crisis has matured them through exhaustion. They do not have the illusion that Syriza can create the fairer society they promised, but they have already lost the trust toward the traditional parties that dominated them for the last four decades. They just wish that the whole nightmare would finish now; they do not want elections and they want to stay in the euro and would rather have Syriza as a government. 

After all, their country has seen worst crises in the past and survived. They are a “sea nation that knows storms,” as their prime minister said. But they just wish this would be the last for some time.