Greece vs austerity

Greece’s far-left Syriza government is tottering

The Economist

A year after Alexis Tsipras’s sweeping victory, economic woes and scandals threaten to bring him down

Jan 29th 2016 | Europe

ON JANUARY 24th Alexis Tsipras, Greece’s prime minister, gave a rousing speech to his supporters in a stadium in Athens, marking the first year in power of his far-left, anti-austerity Syriza party. He vowed to come down hard on his party’s enemies, and blamed the Greek people’s continuing misery on the opposition. Meanwhile Greece’s public broadcaster, ERT, aired a six-minute retrospective on Syriza’s first year, featuring gauzy shots of Mr Tsipras and a voice-over proclaiming that his government had battled elites, delivered social justice, fixed the economy and made Greece an international symbol of dignity. Even leftists rolled their eyes at the heavy-handed propaganda. But if Mr Tsipras’s speech and video were intended to boost morale, they backfired.

Many Greeks were infuriated that the prime minister’s speech failed to mention the refugee crisis, reinforcing a growing feeling that Mr Tsipras is out of touch. His party has been weakened by corruption scandals. George Stathakis, the economy minister, is being probed by a parliamentary committee for failing to include 38 properties and €1.8m ($1.9m) in his 2011 declaration of assets. Earlier this month, the Greek press alleged that Syriza MPs and officials had appointed family and friends to senior public-sector jobs. The government is moving to privatise ports, airports and other public assets: measures that, while economically sensible, are deeply unpopular. Taxes are rising, and unemployment remains at 25% (and near 50% for those aged 18-24). Capital controls, including a measure limiting bank withdrawals to €420 a week, are still in place.

All this has created a backlash against Mr Tsipras. Around the country farmers, his former allies, have blocked main roads with their tractors. Syriza flags have been set alight. Lawyers, doctors, pensioners and engineers have taken to the streets to protest against a planned pension reform, and truck drivers are threatening to do the same. Meanwhile, Greek officials are struggling to deal with the thousands of refugees who are still crossing the Aegean Sea to land on Greek shores. International NGOs and hundreds of volunteers are doing much of the hard work on Greek islands such as Lesbos.

Most polls give New Democracy, the conservative opposition party, a clear lead. The party’s newly-elected leader, Kyriakos Mitsotakis, is a liberal reformer known for cutting civil-service jobs when he was a government minister. He is broadly popular, although his decision to place some eccentric right-wingers in key roles within the party has disappointed centrists.

In the long run the government’s fate depends on whether it can revive an ailing economy and cope with the refugee crisis. But in the short term it needs to convince its creditors—the European Union and the International Monetary Fund—that it has fulfilled the promises it made last summer to secure its current €86 billion bail-out agreement. Euclid Tsakalotos, the finance minister, spent January visiting European finance ministers to convince them Greece had met its obligations. But bail-out monitors say the pension reforms must be approved before they can release the next tranche of funds in March. At the World Economic Forum in Davos last week, Mr Tsipras was told that vigorous reforms are the price for any more IMF help.

In February Greece’s parliament will be called to vote on the pension cuts. Previous Greek governments have found that imposing harsh but necessary measures is a good way to get yourself kicked out of power. Mr Tsipras may be about to follow.