What next for Greece?

[Lateralthinking1]

A coalition between the Centre Right and Centre Left now looks very unlikely. Policy differences arguably although senior journalists this morning were talking in terms of small percentages of votes and problems about legitimacy. How, they asked, could the main pro-austerity parties possibly form a coalition with only 35% of votes on a 65% turnout?

They obviously have more principles than we do. The Conservatives formed a Government in 1987 and 1992 with just 42% of votes and Labour formed a Government in 1997 with 43%, in 2001 with 40% and in 2005 with 35%. No one turned a hair.

But what next for Greece?

http://www.bbc.co.uk/news/world-europe-17984805

Those Greek Results in Full

% Vote. Seats are shown in brackets.

Conservatives - 19% (108)
Respect - 17% (52)
Labour - 13% (41)
Greek UKIP - 10% (33)
Greek BNP Parties - 9% (21)
Communists - 8% (26)
Social Democrats - 6% (19)
Liberal Parties - 5% (0)
Greens - 3% (0)
Others - 12% (0)

[Lateralthinking1]

Some interesting facts:

- Greece has the largest army in Europe. It is far bigger than ours. It also has 81 airports.
- Between 2005 and 2011, it had the highest % increase in industrial output of all 27 European Union members.
- It is the EU's highest producer of cotton and pistachios and second for rice and olives.
- It is third for fish, tomatoes, figs, watermelons and almonds and fourth for tobacco.
- It has been a major beneficiary of the Common Agricultural Policy.

- The "unprecedented" austerity measures have included "some" cutting to military expenditure.
- VAT tax has had to increase to a "whopping" 23% and may be "rolled back" to 20%.
- The retirement age is to be raised to 65 but for everyone with 40 years contributions it will be 60.
- While we have cut public sector jobs by 270,000, they have been asked to reduce their civil service by 150,000.

- Some pensions have been reduced by 20%, not incomparable to some reductions in the UK.
- "Some" privatisation is being required, "some" tax evasion has to be managed, and "some" pay has been cut.
- Lower admission fees now required for lawyers, architects and engineers and the banks to be restructured.
- Income tax has been at 0-40% and on more bands than here in Britain although the system is being amended.
- Prescription charges are lower but current shortages because public insurers owe pharmacists 330m euros.

Unprecedented austerity measures? They cannot be serious!

Greece has had every right to pursue policies to the left of those in Britain. Instinctively, I do not feel it is right for measures to be imposed by Germany and other countries on the Greeks, even in times of hardship. But from a British point of view, the "unprecedented" measures facing the Greeks appear anything but unprecedented. It is what we have been enduring for decades and particularly recently with, arguably sadly, far less drama. The current mess seems to be both the fault of Greek Governments and the EU. However, it is not exactly sensible to say that the principal issues are over-spending and economic mismanagement. Where is the evidence for those other than in comparative terms and against the yardstick of others' capitalist policy norms? Nor does it seem to me that the problem is wholly one of the international banking crisis, at least not in any hugely disproportionate way, for again where is the evidence? No, just as France is about to discover what the federalist brand of Mr Hollande's socialism actually means in practice, this goes right to the heart of the politics of the EU, of economic union, of the Euro.

Sadly the European Union and Socialism are now incompatible

The biggest mistake has been all the emphasis on the state of a country's finances to determine whether it is suitable for admission. This has been the way of national Governments, particularly in countries like Greece where EU membership looked symbolic of further distancing from past military rule. It has also been the way of the major players of the EU Club, desperate to grow in size, in power and in status. BUT - If a country is ostensibly socialist in nature, if socialism is what it values most, then is the EU really the best club for it? Was it ever? I think not. Even in good times, this Greek crisis would probably have happened one way or another. And I am not wholly convinced now that the Greeks are exceptional victims. They could sell off the 81 airports and the rest of the family silver. They could increase the retirement age to 68. Prescription charges could be nearly £10. 300,000 jobs could go. In short, "the answer" is there. It is to become what was once Great Britain. What their discomfort has shown us very clearly is the political dimension of the EU. It doesn't have the flexibility to accommodate socialism and probably never did.

[ahinton]

In answer to the question posed in the thread topic, another imminent general election, I shouldn't wonder; widespread journalistic mumblings of increasing volume are already suggesting the likelihood of such an outcome. What it will achieve if indeed it does take place I have no idea and I rather doubt that anyone else does either.

Should developing circumstances eventually conspire to force Greece to exit the Eurozone (which does not appear to be what the majority of Greeks actually want, as best I understand the situation), it is hard to see what economic benefit or reduction in indebtedness that country will derive from having been expelled from Eurozone membership, but the fallout from such an exit might well risk focusing yet more unwelcome and worrying international attention on which other current Eurozone nation might be for the Eurochop next; whilst even that in itself might not necessarily lead to the ultimate demise of the Euro, the risk of such a possibility will remain a very grave one indeed, for however loudly the Simons of this world might crow at such a prospect, the financial cost to all EU nations both inside and outside the current Eurozone will likely be so immense as to be incalculable and even rural Derbyshire will not escape the effects of this.

[aeolium]

Should developing circumstances eventually conspire to force Greece to exit the Eurozone (which does not appear to be what the majority of Greeks actually want, as best I understand the situation), it is hard to see what economic benefit or reduction in indebtedness that country will derive from having been expelled from Eurozone membership, but the fallout from such an exit might well risk focusing yet more unwelcome and worrying international attention on which other current Eurozone nation might be for the Eurochop next;

Greece's only options here are appalling ones, but I really think that staying in the Eurozone is a counsel of doom for them (whatever benefit it has for other European countries and the financial system generally). They are effectively bankrupt, they have no way of generating growth or employment and will be indefinitely reliant on EU/IMF bailouts in return for savage public sector cuts and general impoverishment. There is not the slightest chance that they will ever be able to pay back the sovereign debt - indeed it is increasing with every year. As long as this goes on, the electoral arithmetic will increasingly swing towards those parties which want to renege on the bailout agreement and leave the Eurozone (as Paul Mason predicted last year), and that has already happened to a large extent in this election. So however disastrous the option of leaving the Eurozone, imo it is the least worst option - at least for the Greeks. There have been many sovereign defaults in the past and countries have eventually recovered, in some cases quite quickly.

The essentially German-driven policy of enforced austerity is a disastrous dead-end, which is already leading to the rapid rise of extreme parties of left and right and is already creating the electoral conditions for that policy to be rejected - in France, in Holland (where the government collapsed owing to the refusal of Geert Wilders' party to agree to the new package of austerity), in Greece, in the Czech Republic, Hungary and Romania (more government collapses) and surely elsewhere to come. It is as if an economic policy has been dreamed up in a laboratory with no consideration taken of social and political impact at all.

[ahinton]

Greece's only options here are appalling ones, but I really think that staying in the Eurozone is a counsel of doom for them (whatever benefit it has for other European countries and the financial system generally). They are effectively bankrupt, they have no way of generating growth or employment and will be indefinitely reliant on EU/IMF bailouts in return for savage public sector cuts and general impoverishment. There is not the slightest chance that they will ever be able to pay back the sovereign debt - indeed it is increasing with every year. As long as this goes on, the electoral arithmetic will increasingly swing towards those parties which want to renege on the bailout agreement and leave the Eurozone (as Paul Mason predicted last year), and that has already happened to a large extent in this election. So however disastrous the option of leaving the Eurozone, imo it is the least worst option - at least for the Greeks. There have been many sovereign defaults in the past and countries have eventually recovered, in some cases quite quickly.

The essentially German-driven policy of enforced austerity is a disastrous dead-end, which is already leading to the rapid rise of extreme parties of left and right and is already creating the electoral conditions for that policy to be rejected - in France, in Holland (where the government collapsed owing to the refusal of Geert Wilders' party to agree to the new package of austerity), in Greece, in the Czech Republic, Hungary and Romania (more government collapses) and surely elsewhere to come. It is as if an economic policy has been dreamed up in a laboratory with no consideration taken of social and political impact at all.

I am broadly in agreement with much of what you write here, the possible exception being that I do not see what benefit being expelled from the Eurozone will or could have for Greece, since it seems that nothing that's likely to occur with Greece inside or outside that club will reduce its indebtedness or signal any improvement to its economy; as to the benefit to other Eurozone nations of Greece being booted out, again I take leave to doubt that there's anything rosy to contemplate here, in that it will likely further expose the woes of certain other Eurozone nations with less than ideally stable economies with the concomitant risk that the next ejection may not be so far behing that of Greece - and it wouldn't be difficult to figure out where that kind of thing might well end. I'm not saying what I believe should happen or even will happen about this - merely pointing out that the words "rock" and "hard place" seem somehow to come all too easily to mind...

[Lateralthinking1]

the words "rock" and "hard place" seem somehow to come all too easily to mind...

Thank you to both of you for your interesting comments. A BBC reporter spoke to every individual waiting in an Athens queue to vote. The question to them was "what will you be voting for?". The answer in every case was "to punish" - essentially to punish the main parties in Greece but if it goes further even better. 70% of Greeks may well say that they want to remain in the EU but to punish is far more important to them. That is the truth of it. It is the thinking of suicide bombers except that it is being done peacefully via the ballot box. Just as here, as in Ireland, as in Spain, as in France, many individuals are suffering from the policies of austerity already. Far greater numbers fear that they will be in a similar position soon. Much emphasis is placed by politicians on restoring confidence in the markets. However, the cost is that confidence among the general public is falling like a stone.

The mainstream idea is that once there is confidence in the markets, the public will be won over. That is naive in the extreme. Such has been the extremity of what has happened financially, growing numbers of ordinary folk are deciding that there won't ever be a turnaround. It is at the point at which the only future for individuals is extremely gloomy, they decide everyone else should be dragged down. Frankly, there is absolutely no reason why they should feel any differently. Politicians will need to get used to dealing with fascist and communist governments across the Continent during the next decade. They will happen. It is just a question of when. Having said as much, I can't understand why Greek politicians don't just get on with selling off the 81 airports and cutting the army by three quarters. They are though at liberty to fall in line with the desires of their own electorate.

[ahinton]

Thank you to both of you for your interesting comments. This will probably be the most doom laden post of the day. A BBC reporter spoke to every individual waiting in an Athens queue to vote. The question to them was "what will you be voting for?". The answer in every case was "to punish" - essentially to punish the main parties in Greece. 70% of Greeks may well say that they want to remain in the EU but to punish is far more important to them.

This I think signals the way forward across Europe. Just as here, as in Ireland, as in Spain, as in France, many individuals are suffering from the policies of austerity already. Far greater numbers fear that they will be in a similar position soon. Much emphasis is placed by politicians on restoring confidence in the markets and one can understand why. However, the cost is that confidence among the general public is falling like a stone.

The mainstream idea is that once there is confidence in the markets from Governments' measures, the public will be won over. That is naive in the extreme. Such has been the extremity of what has happened financially, growing numbers of ordinary folk are deciding that there won't ever be a turnaround. It is at the point at which the only future for individuals is extremely gloomy, they decide everyone else should be dragged down. Frankly, there is absolutely no reason why they should feel any differently.

Just as an economist said to me at the start of this crisis "you ain't seen nothing yet", I say the same to democrats about lurches to the far left and right. Politicians will need to get used to dealing with fascist and communist governments across the Continent during the next decade. They will happen. It is just a question of when.

I agree with what you write here except the very last part; fascist or communist governments, even if elected, will fare at least as badly as any other and be as subject to public desire to punish as any other; I'm not claiming that no such governments might be elected, but I do believe that they'll have at least as rough a ride of being in office as will any other.

Having said as much, I still can't understand why Greek politicians don't just get on with selling off the 81 airports and cutting the army by three quarters. They are though perfectly at liberty to fall in line with the desires of their own electorate.

Whilst I cannot claim to know the answer to that, I suspect that it might well be - at least in part - the fear that, with Greece's economy and ability to govern itself in such turmoil and with its political future as uncertain as it is, few buyers for those airports are likely to be found...

[Lateralthinking1]

Sorry ahinton, I changed my wording slightly but the parts you have copied get the gist of it. I am in little doubt that you are right to say that far left and far right parties will prove equally unpopular. We have seen that already in places in Eastern Europe. The big question is whether elections can be afforded by them following failure. I think they will probably decide "no".

[Beef Oven]

I agree with what you write here except the very last part; fascist or communist governments, even if elected, will far at least as badly as any other and be as subject to public desire to punish as any other; I'm not claiming that no such governments might be elected, but I do believe that they'll have at least as rough a ride of being in office as will any other.


Whilst I cannot claim to know the answer to that, I suspect that it might well be - at least in part - the fear that, with Greece's economy and ability to govern itself in such turmoil and with its political future as uncertain as it is, few buyers for those airports are likely to be found...

Agreed, fascist and communist governments tend to fare (sp.) at least as badly as any other....

[ahinton]

Agreed, fascist and communist governments tend to fare (sp.) at least as badly as any other....

Typo rather than sp. per se, I fear, but thanks for the correction which I've now input.

In the present context, however, my particular concern in my remarks was to respond to the attitude of mind to "punish" governments that has been cited earlier in this thread and to note that I don't think that fascist or communist ones, if elected, are any more likely to escape such public censure than are any others.

That said, when I first saw this thread, my initial response was to wonder who, in the present parlous economic climate in Greece, would be financing a production of Elliott Carter's opera in Athens...