The sorry saga of Syriza

In its first hundred days Greece’s government has failed dismally. A crunch looms

May 9th 2015 | From the print edition

Charlemagne

The Economist

IN RECENT months the walls of the B. & M. Theocharakis Foundation in Athens have been lined with mementoes of European support for Greece’s freedom. “Philhellenism”, an exhibition, tells the story of the material and moral backing that Romantics like the English poet Byron gave Greece during its independence fight against the Ottomans. The contemporary resonances are obvious. Showing some children around, Dimitra Varkarakis, who with her husband, Michael, owns the works on display, pointed to a German painting. One girl stopped short. “Aren’t we in a fight with Germany?” she asked. “No,” replied Mrs Varkarakis. “We are all friends.” After recounting this tale she casts Charlemagne an earnest look. “Europeans,” she says, “must love each other.”

That is a noble aim, for some Europeans have lately struggled even to speak to each other. Two weeks ago, after a particularly disastrous meeting, Yanis Varoufakis, Greece’s finance minister, declared that he welcomed the hatred directed against him in the euro zone. After more than three months of fruitless negotiations with Mr Varoufakis, the reserves of Philhellenism among Greece’s partners have run utterly dry. “They are living in cloud-cuckoo land,” says one Brussels official.

Perhaps it was naive to expect anything else. A few years ago many of the men now in charge spent their time discussing the contradictions of capitalism over coffee and cigarettes. Few had ever run anything, let alone a government. Their European contacts were limited. Syriza, their party, typically won only 3-4% of the vote. But Greece’s economic calamity transformed its prospects. In 2012 it came within a whisker of power. And after January’s election it went one better, forming a governing coalition.

Syriza, under the leadership of the new prime minister, Alexis Tsipras, offered an attractive promise to a country battered by recession and humiliated by years of tutelage at the hands of foreign bureaucrats. Mr Tsipras promised to tear up the bail-outs, restore Greek dignity and keep the euro (as the vast majority of Greeks want). Greece might also, ministers mused, change the rules of euro-zone governance, to the benefit of all Europeans.

Three months on, the first two of these pledges are in tatters, the third looks shaky and the fourth is a bad joke. Less than a month after the election, Greece agreed to extend its second bail-out until the end of June, in the hope of securing the €7.2 billion ($8.1 billion) left in the kitty. The abrasive approach of Mr Tsipras and Mr Varoufakis since then may have played well at home, but abroad it has won Greece nothing but mistrust and scorn.

This has had two results. First, the conditions attached to any further loans Greece needs will be even more onerous. Second, the architects of the bail-outs, who were wrong in insisting on forcing austerity on depressed economies, seem more secure in their arguments than ever. “Syriza has done a terrible disservice to all of us who have been trying to change the debate in Europe,” says Loukas Tsoukalis, president of Eliamep, a Greek think-tank.

A Grexit is still unlikely. But it is little wonder people are now planning for one. Having received no bail-out money since August 2014, the government has raided municipal funds and delayed payments to suppliers to keep its head above water. But it cannot go on inducing palpitations with the approach of every IMF and pension-payment deadline. Officials in Brussels and Athens agree that Greece cannot get beyond May without help. After that, it faces huge repayments to the European Central Bank in July and August, for which a third bail-out may be needed.

That has concentrated minds. Mr Varoufakis, whose hectoring style infuriated the Eurogroup of finance ministers, has been sidelined. Talks in Brussels are getting down to detail. Some hope for a deal soon (if not before the Eurogroup meeting on May 11th). But Syriza insists it will not cross two red lines: on pension cuts and the rules governing lay-offs (on the latter, it has half a point).

All of Mr Tsipras’s options look bad. He could delay a payment to the IMF to buy time. He could continue a game of chicken, perhaps slapping capital controls on Greek banks. Or he could do a kolotoumba (somersault), conceding creditors’ demands for the sake of Greece’s euro membership. That might require a referendum. It could also split Mr Tsipras’s party. There is a plethora of possibilities, but one way or another a reckoning is imminent.

Dreaming that Greece might still be free

What explains Syriza’s intransigence? Greek observers offer a range of answers: incompetence, ideological blinkers, satisfying domestic demands for toughness. It may also have overestimated its hand. Whatever the reason, the uncertainty has cost Greece dear. Last year it returned to growth; this week the European Commission cut its forecast for 2015 to just 0.5%, and that assumes a deal will be done. The government is skint, foreign investment has dried up and a small primary fiscal surplus has been wiped out, raising the prospect of yet more hated austerity.

On top of this, there is no longer much hope that Syriza will tackle the chronic pathologies of the Greek state. The government has failed to defang the country’s oligarchs and is reversing some valuable reforms from recent years. An old Greek disease, clientelism, seems as pervasive as ever. To Potami, a liberal party, discovered that 11 of the 13 regional directors of education appointed by the government were Syriza members. (One of the others belonged to its coalition partner.)

In almost every way, Syriza has brought the opposite of what it promised. It vowed an end to depression in Greece. Instead, growth has slumped. It pledged to end austerity politics in Europe, but has done more to embolden its advocates than any German could have hoped. It promised to jettison the bad habits of old parties, and seems instead to have acquired them. Back at the Athens museum, perusing a catalogue of his Philhellenic collection, Mr Varkarakis is downbeat. “Two hundred years ago, everyone loved Greece,” he says. “Now…” His voice trails off.