William Theodorou, JHU:
Two months after the controversial election that brought SYRIZA to power, the Tsipras administration is struggling to uphold its campaign promises while securing an extension of the country’s bailout. On Monday, the Greek Prime Minister, Alexis Tsipras, travelled to Berlin to meet Angela Merkel for what he called “emergency talks,” in order to further address the debt crisis that Greece is facing. At the joint press conference, it became clear that Merkel and Greece’s European creditors would not offer Greece emergency aid unless the administration enacts the structural reforms that Tsipras agreed to when an extension was granted in February. As June draws near, Merkel is becoming fearful that the political ideals of the Greek administration may lead to an impasse that would force Greece to leave the euro and return to the drachma, an outcome neither side wants to see come to fruition.
If Greece were to leave the euro, the country would feel the impact of rapid inflation due to a severely devalued currency, and the quality of life in Greece would continue its decline. Michalis Chrysohoidis, the Greek Minister of Civilian Protection recently said that Greece “will end up in civil war if the country exits the Eurozone.” The riots of the past few years will seem negligible compared to the civil unrest expected if Greece defaults on her debt and, according to a UBS study, the country’s GDP experiences a 50% decline.
But as a “Grexit” becomes more and more likely, the government is plagued by a cash flow dilemma that lead to the withdrawal of 13 billion euros in January alone. Some Eurozone economists have predicted that the Greek government will run out of money by the second week of April, a reality of which Tsipras is cognizant; this past week, the government auctioned 1 billion euros in treasury bills in order to pay government workers and already-reduced pensions.
In essence, Tsipras has until June to convince the European Central Bank and International Monetary Fund that Greece has started and will continue to reform its economy with the goal of becoming a self-sustainable country. In order to achieve this, Greek Parliament will be forced to pass austerity measures that will include further privatizations, pension reductions, and a reformed mode of tax collection. But it is a tall order to expect a radical-leftist to push through legislation that is so clearly capitalist and conservative in its nature. Therefore, Tsipras will have to decide between national bankruptcy and honoring his campaign, because it seems that Tsipras will have to compromise the anti-austerity platform on which he ran if he truly wants the euro to remain in Greece.
This inevitability has become apparent in the past few weeks as the ideology of SYRIZA’s platform, something that captivated the Greek people during the election, is now the source of disunity within the party. Simply put, the party’s ideas oppose the desires of Greece’s lenders. Tsipras is earnestly attempting to run the Greek government along a middle ground that will satisfy both his creditors and people, but it is hard to run on a path that doesn’t exist. Concessions on either side work only infuriate the other; Panagiotis Lafazanis, a leader of SYRIZA’s far-left faction, was angered by Tsipras’ agreement to privatize state assets. Mr. Lafazanis is also angry at the apparent acceptance of the memorandum because of the administration’s failure to annul the present terms of Greece’s bailout.
While Tsipras attempts to show a unified front within his own party, the disapproval of the remaining members of parliament is reaching its apex. Evangelos Venizelos, president of the social democratic party, PASOK, accused the administration of being “grossly unprepared and naïve,” while other right-leaning ministers are biding their time until Tsipras is forced to pass austerity measures or accept default.
In a broader sense, the success of SYRIZA will speak volumes to the rest of Europe. If Tsipras is somehow able to find a way to appease Greece’s creditors while remaining popular domestically, other southern European countries such as Portugal, Spain and Italy will inevitably see SYRIZA-like governments ride the anti-austerity platform to power. If successful, SYRIZA will finally show that the EU does not have to function as a giant international welfare system in which self-sufficient, northern European countries economically control southern European countries. The EU can instead function as it was originally meant to by joining the powers of Europe in an effort to open trade and help each country compete with the U.S and China on the global market. However, if Tsipras fails, all of these struggling countries will find their economic sovereignty chained to the whims of European creditors who will continue to dole out loans with ridiculously high interest rates, and this cycle of bailouts and austerity measures will continue as these inefficient countries are left depleted by the greed of foreign creditors.
It is highly unlikely that Tsipras will be able to appease the IMF, ECB and people of Greece; he can be either anti-austerity or pro-austerity. Unless creditors save Greece for humanistic reasons, Greece will default on her debts come June. The government will be bankrupt and will still be harangued by the ever increasing cash flow dilemma that will not be solved even if Tsipras succeeds in eradicating tax evasion as promised. In the short term, Greece will experience tremendous hardship, but at the moment, this debt crisis is insurmountable; Greece cannot pay back this debt, and will most likely never be able to. The decision that rests in Tsipras’ hands is whether to encourage this austerity cycle, or to accept default and start again at the immediate cost of his people.