The on-going Greek drama - it has been downgraded from a full-blown crisis – came about when the opposition refused to support the government’s nominee for president for the third time, triggering a general election in January which was won by Syriza, at the head of a “radical coalition of the left”. They didn’t exactly sweep to power, but did garner enough seats to form a coalition government which aimed to remove the “troika” from Greek affairs; slash the debt mountain by half (by getting the IMF and the Eurozone to pick up the tab); restore Greek dignity, ending the “humanitarian crisis” and get Germany to stump up a preposterously large sum in war reparations.
Prior to the fall of the outgoing government, the IMF and the Eurozone were on the cusp of disbursing the final tranche of €7.7 billion under the second bailout. Greece was arguing that it would not need a modest, third bailout as it would be able to meet its obligations through savings and a return to the money markets (Germany thought a further €10 billion was probably needed) and the country had posted a small economic surplus (later disputed). Things were on track.
For the vast majority of outsiders, the Syriza manifesto pledges were a simple wish list and about as likely as a visit from a jolly old man in a red suit that spends much of his year at the North Pole. Syriza were granted an extension to their bailout of three months to come up with what their creditors would see as viable plans for the nation’s economic future. This time was frittered away and all that was seemingly achieved was the irritation and frustration of Greece’s partners and creditors.
Beyond the hour for agreement (showing how keen Eurozone members were to see the bloc remain as a whole) negotiations were being held until the Greeks abruptly called a referendum, asking their citizens to reject further austerity – which they did. The “no” vote would trigger a deal within 48 hours and allow the banks to open within 24 hours, Syriza told the people. Rather than the “no” vote causing a crisis amongst the other 18 Eurozone states which would have them pleading for an accord on Greek terms, it suddenly became clear to Syriza that their partners were making plans for a Grexit (they never did explain how such a vote would magic enough money into Greek banks that they could open within 24 hours, of course. In the event, they stayed closed for a further 2 weeks). Eurozone leaders didn’t even discuss the matter until the Wednesday after the Sunday vote.
Within days, Greece was asking for a third bailout (about €86 billion) and pledging the austerity and reforms that had been asked for in the first place – measures designed to put the Greek economy on a stable footing. VAT was to rise to levels typical within the Eurozone; special low VAT regions (for tourism) were to be scrapped; Greek shipping firms would be asked to pay tax rather make than voluntary contributions! But EU patience had finally worn thin and no talks would be entered into until measures were put before the Greek parliament and voted into law. The second such vote was recently held, and passed, but Syriza and its PM have been openly dismissive of the bailout stating that they do not believe in it, but accept it as a better prospect than economic oblivion. The attitude is hardly conducive of bridge-building, but with the second vote passed, discussions on a third bailout can begin.
In the interim, €7 billion in funding has been made available to Greece to allow it to meet current obligations and clear arrears with the IMF. Backing is available to Greek banks through the ECB which allows them to open, but withdrawals are still pegged at a modest ceiling of €420 per week per citizen, but at least it can be taken in a single go.
We are not quite where we were in December, rather the situation is worse. The Greek people have scored a painful own goal just as it looked as if the match would end in their favour. Trust has been sorely eroded between the nation and its main partners and it is unclear how long the current Greek administration can survive until internal pressure pulls it apart. Surely, Greeks now see that after five years of suffering they need to get their economic house in order, ensure efficient and fair collection of taxes and live within their national means. Most people would say that this has been obvious since 2010, if not much sooner.
