After more than three years of dismal economic news regarding the Greek crisis, some are beginning to see a light at the end of the tunnel. Prime Minister Antonis Samaras’s coalition government has cohered remarkably well after the political paralysis in the months preceding his 2012 swearing-in, despite fierce competition between the New Democracy majority and radical leftist opposition party, Syriza. This relative stability appears to have inspired the confidence of the Troika, who gave Athens a “thumbs up” in their first progress report since releasing fresh aid in December to avoid bankruptcy. This positive review will result in a 200 billion euro extension of bailout funds in exchange for continued austerity measures.
Greece has also made long overdue progress towards restructuring a desperate banking system, funneling 50 billion euros of bailout funds towards recapitalizing viable banks and shutting down those deemed nonviable. The banking system’s dependence on emergency liquidity assistance from the Central Bank has also been slashed from 120 billion to 22 billion euros, with 8.2 billion allocated for paying off government debts. Such measures should have been imposed years ago to counter the profound losses on government debt holdings and a mountain of bad private sector loans, but the Greek government’s strategic intransigence towards reigning in its oligarchy has put the weight of many of these policies on the shoulders of the people.
Such policies include an omnibus bill passed by the Greek Parliament this week that initiates a series of 15,000 public sector layoffs, starting with 2,000 civil service layoffs by the end of May 2013; another 2,000 by the end of the year; and a further 11,500 by the end of 2014—on top of a decrease in minimum wage from 580 to 490 euros per month. Many on the Left see this initiative as a crude betrayal of constitutional and historical order, as Greek constitutions for more than a century have enshrined the permanence of civil service jobs as a safeguard against the blanket sacking that often occurs with hasty transfers of government—a testament to Greece’s politically turbulent twentieth century.
A bitter combination of these austerity measures and assistance from the European Union could put Athens on course to achieve primary balance this year. It will therefore not have a budget deficit before interest payments, hopefully marking the final stretch to the brutal and wildly unpopular austerity measures. Tourism is also expected to see a resurgence this summer from nine to ten percent, which is highly significant for an economy that depends on the industry.
Despite these improvements, Greece has a ways to go before passing the dark and chaotic days of the economic crisis. The political situation remains fragile: if a supermajority of parliamentarians cannot agree on a candidate for president, which many believe to be the case, a general election must be called. In a situation where the Syriza party wins a lead in the government—a plausible and realistic outcome—it could lead to renewed conflict with the Troika, as well as a decline in business confidence. While Syriza has effectively tapped into the fears and struggles of everyday Greeks by demanding that justice fall where it is warranted, i.e. the aristocracy and oligarchy, Syriza is perhaps less salient when it comes to articulating a coherent structure for rapidly guiding Greece out of the recession.
However, Syriza is capable of addressing and correcting key issues that could lead to an unstable foundation for the Greek recovery, which may mean a slower recovery, but one that is more sustainable and less dependent on foreign or oligopolistic interests. It is widely believed, for example, that the Samaras government has done little to crack down on tax evasion due to the party’s close ties with the interests of the aristocracy. Under Samaras and New Democracy, it is doubtful that such practices will be reigned in, kicking the can of unsustainable capitalism down the road.
Though the true strength of Greece’s recovery will come from the bottom up, Greece is in need of honest and fearless leadership in the coming months and years. From standing up to those who attempt to exploit Greece’s vulnerability by plundering its valuable resources, to forcefully confronting racism on the streets and encouraging a reinvigoration of culture, Greece needs at the helm of its government a confident defender of Greek interests as it continues down the path to recovery.