On January 25th, Greece chose to turn the page. That day, sovereign Greek people made a historical decision: they chose hope against austerity, growth against recession, democracy against oligarchy. This is the symbolic meaning of SYRIZA party’s overwhelming victory in the recent Greek snap elections. For the first time in history a small and indebted country of Southern Europe has the chance to challenge the austerity dogma imposed by the European Union, in essence Germany, since the outbreak of the financial crisis in 2008. For the first time, Brussels and Berlin have to face a new emerging reality: a possible failure of their punishing policies.
In 2009, Greece entered the euro-crisis. From that year on, the Greek economy has never recovered. On the opposite, the situation has worsened since 2010 when a “standby agreement” with the International Monetary Fund, the European Central Bank and the European Commission was signed. According to this document, the so called troika offered loans to the country in return of a combination of austerity and reform. But, Greece was already in recession when the deal was reached. Therefore, simultaneous debt reduction and structural reforms adopted by the Greek government have done nothing but plunging the economy into a deeper crisis. Savage cuts in key public services such as health have reduced the country to penury. Poverty has surged from 23% before 2008 to 40% and the youth unemployment rose to almost 60% in 2014. It is true that austerity measures have enabled the Greek government to collect more taxes but, the GDP has fallen so quickly that the tax revenue has gone down. Furthermore, the public debt in relation to the GDP is much higher than it was before 2010.
The austerity doctrine has produced dramatic consequences not only in Greece, but all over Europe. As the President of the European Central Bank, Mario Draghi, has often pointed out, excessively restrictive fiscal policies have caused deflation (inflation is now 0.3%) and deepened recession. As a consequence, the Eurozone GDP has registered a decrease of 10% in the period 2013-2014. Apart from Greece, Portugal and Italy are in difficult situations as well. The first one is sinking into a deep depression and Italy’s inflation rate has fallen to zero in 2014 accordingly to official data from Eurostat.
Looking at this general picture, it is clear that the European austerity regime has fallen short its original expectations and it is now put under pressure by Member States’ voters.
Electoral results in Greece show a clear will of change. With 36.3 % of votes, SYRIZA obtained 149 seats out of 300, just two seats short of an absolute majority. The Greek case is just an example of how popular discontent is rising in Southern Europe and it might be the first step towards a general rebellion against the troika’s diktats. In other words, the ascent of SYRIZA to government can spur on other anti-austerity forces across the continent such as Podemos in Spain, which could assume the power later in 2015.
The emergence of anti-austerity and, in some cases, anti-EU parties could put in danger the existence of the Eurozone and, as a result, the survival of the entire European Union. In order to avoid this situation, it could be useful to see SYRIZA’s victory as the perfect occasion to rethink Europe and to launch a new model based on growth, investments, flexibility and expansive fiscal policies.
However, if we were to rethink Europe, this also means first facing the reality. Greek debt has become unbearable (180% of GDP) and as far as revolutionary, it seems that Tsipras’s demands are not completely unreasonable.
The new Prime Minister of Greece is not asking the troika for an immediate cancellation of debt but, a negotiated solution. More specifically, he wishes a European conference to remove part of the debt for all European countries, as it happened for Germany in 1953. At this moment, only the Minister for Finance of Ireland, Michael Noonan, has expressed his favor for a negotiation on the debt terms, but he has also pronounced his disagreement for its cancellation. Apart from this international conference, SYRIZA is concretely demanding to repay the debt through economic growth rather than through budget cuts; in other words a European deal able to restore Member State’s economies.
It is now up to EU institutions to consider Greece’s requests, which might represent not only Greeks wishes, but the voice of millions of European citizens tired of being subjected to an undemocratic austerity regime.
Master’s degree in International Relations (LUISS “Guido Carli”)