Last night’s vote in the Greek Parliament rejecting the government’s candidate for the presidency for the third time now opens the way for a snap general election on 25 January which could well bring the Syriza party to power (it has a regular 4-7% lead in the polls over the current right-wing government). If so, it will be because the Greek electorate adamantly refuses to accept any more austerity (shades of Britain, 2015?) and despite the risks is determined to break with the EU orthodoxy which has rocketed unemployment to 40% and laid waste the country with nearly half the population driven below the poverty line.
The significance of this moment cannot be exaggerated. It is the first time that a political party anywhere in Europe with a real chance of gaining power has repudiated austerity as the central instrument of economic policy. Fundamentally it is therefore a challenge to the right-wing ideology that has ruled the Western economies ever since 1980, producing the biggest financial crash since the 1930s and the longest and deepest depression since the 1870s, yet still clung to by the EU Commission, the ECB, and the IMF as the source of their power. If however Syriza succeeds, it will have consequences that ricochet across the EU, not least Portugal, Spain, Italy and perhaps Belgium. From that point the unravelling of austerity will gather momentum.
There are real ironies in this. So far from Greece being a basket case, its recent econoimic performance has been encouraging. The economy is (at last) growing, unemployment is down, and even its debt to GDP ratio has improved. But instead of allowing these positive forces to develop further, Merkel (the classic Bourbon figure throughout this long-drawn-out crisis – learnt nothing and forgotten nothing), the Juncker EU Commission and the ECB are insisting that Greece swallows another dose of austerity and is still kept under surveillance by the IMF. To impose a fresh round of deep cuts at this juncture exposes the rigidity and authoritarianism of Eurocrat thinking which was bound to lead to an explosion. They have only themselves to blame.
There is another tragic irony in all this. Germany has painted itself as a virtuous creditor, while Spain and Ireland have been vilified as ‘profligate’, yet Spain and Ireland both entered this crisis with government debt way below the German level. This fantasy of German virtue can also only be maintained with a high degree of German historical amnesia. At the postwar London Debt Agreement in 1953 Germany emerged as the biggest beneficiary of debt forgiveness in recent memory. German external debt was substantially written off or deferred, and Tsipras on behalf of Syriza is now asking the international community for something similar. It is an ugly truth that his main opponent today is Merkel who has inherited from long back the West German economic miracle that was enabled by the Allies to be launched from a clean balance sheet.