In ancient Greece, city states often rebelled against their overlords, who then besieged them to punish those responsible and re-impose outside control. Modern Greeks have likewise rebelled against EU authority by choosing a government led by the anti-austerity Syriza party and now face an economic siege aimed at forcing them to abide by past agreements with the EU.
The Greek government has a far weaker hand than Brussels and Berlin, but in his first days in power Prime Minister Alexis Tsipras has acted swiftly in establishing a government, with the names of the cabinet announced today. Yanis Varoufakis, a 53-year-old economist, becomes Finance Minister, having long argued for repayment of Greece’s massive loans to be linked to economic growth.
These are very early days but the new government is so far maintaining its momentum. Nick Malkoutzis, editor of the online magazine MacroPolis, says that “if Mr Tsipras can overcome fears that he will mess things up in his first few weeks in office, then he will have won half the battle”. The problem is that the Greek economy is already besieged – even healthy businesses cannot get bank loans – and things could get a lot worse. However astute a political tactician Mr Tsipras may be, Mr Malkoutzis believes his government could not survive the European Central Bank denying liquidity to the Greek banks “so they have to close”.
Despite economic calamities and a hard-fought election, Athens does not have an air of crisis. The general election on Sunday took place without a shot fired and the old government peacefully gave away to the new. There is a sense that both the eurozone and Greek governments want Greece to stay in the eurozone and not default on its debts so Greek commentators believe a compromise should be possible, if only after a long confrontation.
How capable is the Greek government of sustaining such a siege?
It was established at impressive speed, but only because Mr Tsipras has made a political gamble in allying himself with the Independent Greeks party to give him a majority in parliament. A small right-wing party opposed to austerity and EU dictation, it is notorious for its vicious feuds and racist views. By choosing it as a partner, Mr Tsipras shows the total priority he gives to economic issues.
Panos Kammenos, the Independent Greeks party leader, becomes Defence Minister, an appointment likely to go down well with the army and police. Other advantages flowing from the presence of the Independent Greeks in the government is that it gives it a more national flavour and pushes to one side divisive issues with which Syriza does not want to deal at this time, like gay marriage and relations between church and state.
Mr Tsipras needs to keep his party and government focused on the two issues which won him the election: popular rejection of the EU austerity package and hostility to the corrupt clientist system of government that led Greece into the crisis of the last five years. Contrary to the claims by the Troika (EU commission, ECB and IMF) that it has imposed structural reforms, it has not achieved much.
Bizarrely, the EU’s chosen instruments of change in the two years since the 2012 election have been the conservative New Democracy party and the nominally Socialist Pasok party which had created and benefited from the system they were meant to reform. Predictably, they were unenthusiastic about sawing off the branch on which they had been comfortably sitting for so long. Syriza has greater potential for taking on the oligarchs and vested interests, but could probably only do so if backed by the EU.
The most striking feature in the impending confrontation between the eurozone leaders and Greece is the disparity in strength between the two sides. Yet Mr Tsipras has some strong cards and telling arguments. He has just won the election showing that Greeks reject the EU austerity programme. Experience shows that any Greek government seen as the EU enforcer will lose power. Whatever the Troika thought it was doing, it has failed: the Greek economy remains feeble and signs of modest revival last year were over-sold. This is despite the massive sacrifices made by Greeks, who have seen a quarter of their economy disappear, 26 per cent unemployment and youth unemployment at 57.5 per cent. If the EU genuinely wants structural reforms in Greece then this can only come through a Greek government with a popular mandate.
It is curious to recall that two years ago Syriza seemed one of the most radical threats facing the established order in Europe. It was denounced by media and governments as Bolshevism reborn. But these days, EU leaders have to think of much more dangerous adversaries such as Isis with its newly born state in Iraq and Syria. It has growing franchises in other Mediterranean states – a point underlined by today’s attack by Isis on the main hotel in the Libyan capital. Meanwhile, the escalating conflict in Ukraine means war has returned to Europe.
Compared to the crises revolving around Isis and Ukraine, the Greek crisis is so far peaceful and, says Mr Malkoutzis, is “wholly soluble”. Failure to solve it highlights the political weakness of the EU. The neo-liberal reforms of privatisation and a restricted public sector as a recipe for growth have a dated feel to them.
Compared to 2012, the financial contagion of a Greek exit from the eurozone is less, but the likelihood of political contagion is much greater, as shown by intense Spanish interest in the Greek election results. There is something old-fashioned about the Greek crisis with German and other north European states pontificating to the Greeks about the virtues of balanced budgets and debt payment.
In the days of Isis and tank battles in Ukraine, the danger posed to the stability of Europe by the election of Syriza and the rejection of EU austerity terms should be well down the list of threats.