The Greek people had a difficult decision to make. They had to choose between two diverse groups of parties: a group of moderate parties from center-right to center-left which gave first priority for Greece to stay in the euro zone and renegotiate its bailout terms as far as this is realistically possible; and a group of extremist populist parties of ultra-left and ultra-right, giving their first priority for Greece to free itself from the bailout terms even at the cost of losing its euro zone membership status.
The basic argument for the first group was fear for the uncertainty of an isolated Greece—without allies and lenders, bankrupt and ill-reputed, suffering extreme poverty and civil unrest. The basic argument for the second group was the supposed strategic advantage of a Greece willing to play Sampson ready to commit suicide crying “Let me die with the Philistines!”
Fortunately the Greek people did not fall for the gimmicks of the last group despite the unprecedented momentum of the leading party of this group, the left-wing Syriza. Syriza managed to get 17 percent of the vote in the May 6 elections, an impressive result given its 4.6 performance in 2009. Moreover, in the June 17 electionsSyriza reached 27 percent—a 60 percent increase in 40 days. Greece was literally saved by the bell.
Well, not exactly. First of all “saved” is an exaggeration. The alternative to Syriza was a prospective post-election coalitionof the conservative party, New Democracy, the social democratic Pasok and the moderate Democratic Left. Pasok and New Democracy are the two parties mostly responsible for the Greek mess.
Today’s degradation of Greece is mainly the result of Pasok’s policies in two important respects: (a) Pasok’s actual economic policy was catastrophic since it led to a deadly mix of a gigantic but inefficient welfare state and overregulation and (b) the political legacy of Pasok was even more devastating in the long-term, since its political success transformed New Democracy into a bad copy of Pasok. Add to this mix the “Democratic Left,” a splinter party from Syriza managing to show in a few months that it is able to behave as opportunistically as the other two, and you have the new Greek government.
The first signs are not encouraging. The new government was formed mostly by members of the conservative party, some of them with an onerous record of inadequacy and cronyism and others notorious for their opposition to reforms. The two center-left parties, afraid of the political cost, are fencing themselves, trying to minimize their losses.
The only good news is the appointment of Yannis Stournaras as the Minister of Finance. Stournaras is a very good economist and a genuine reformist. However he has few allies in the new government.
Syriza will be back with a vengeance. Its leadership is ready to fight every reform, every spending cut, and every genuine attempt to modernize Greece.
It has some powerful allies: the governing coalition's fear of political cost, the inability of the new government to persuade the Greek people of the long-term beneficial effects of reforms, and the inherent inefficiency of a sheepish government. And don’t forget the euro zone leadership’s stubborn persistence on a notoriously failed policy of anti-growth austerity.
Like the fox in Aesop's famous fable, Syriza has only to wait for the piece of cheese to fall to the ground.
The author is Aristides Hatzis, an Associate Professor of Law & Economics at the University of Athens and runs the blog GreekCrisis.net