The European Union received some good news in the ongoing Greek austerity crisis on Wednesday, as the head of the (relatively) conservative New Democracy Party, Antonis Samaras, sent Brussels a letter promising to get those unpopular austerity measures implemented.
“As I have already stated in my letter to you of November 23, 2011, my Party, Nea Demokratia, is committed to the Stabilization Program’s objectives and key policies and to their successful implementation,” Samaras declared. He goes on to emphasize New Democracy’s commitment to privatization, spending reductions, “a fairer distribution of the tax burden,” and banking reforms.
Sounds great! But there’s a catch. Because his party continues to give “great emphasis to allowing for prompt recovery,” Samaras explains, “policy modifications might be required to guarantee the full Program’s implementation.” In other words, that Stabilization program might have to get a bit less stable, and austere, to give Samaras – likely the next Prime Minister of Greece – a chance of political survival when he implements it.
These qualifications considerably soured the good news in the ears of Germany, Finland, and the Netherlands, who enjoy some of the best credit ratings in Europe, following Moody’s latest round of downgrades. They noted that Greece has two other major political parties, who might be tempted to run hard against New Democracy because of its austerity measures. You can see the “unpopularity” of those austerity measures from orbit – just look for the flames. Also, Greek public opinion is turning strongly against perceived insults to their sovereignty.
Those insults are increasingly easy to perceive. The Financial Times reports the Eurozone is preparing to go ahead with debt restructuring for Greek bondholders, without advancing more bailout funds. That would ease Greek debt pressure, without giving the government any more money to spend.
And the Germans, whose very meager supply of goodwill among the Greek populace is rapidly draining away, are openly suggesting that the Greeks might want to hold off on elections until austerity has been fully implemented, to remove the temptation of leftists and nationalists to seize power by running against austerity and (ahem) Germans:
Wolfgang Schäuble, the German finance minister, said in a radio interview Greece might delay its polls and install a technocratic government that does not include politicians like Mr Venizelos and Mr Samaras, similar to the model currently in place in Italy.
Karolos Papoulias, the Greek president, fired back during a visit to military chiefs at the defence ministry: “We are all obliged to work hard to get through this crisis, but we cannot accept insults from Mr Schäuble. Who is Mr Schäuble to insult Greece?
“Who are these Dutchmen, who are these Finns? We have always defended not only the freedom of our own country, but the freedom of Europe,” Mr Papoulias added.
The center-right coalition in Greece is still ahead in the polls, but they’ve been slipping. The left-wing parties actually have more popular support, but they hate each other too much to form an effective coalition. That’s probably the only thing holding Greece together at the moment. Whatever chance they have to avoid getting kicked out of the Eurozone – or suffering fiscal collapse and taking the Euro with them – rests largely on internal strife between the left-wing parties. No wonder the stable economies of the European Union are nervous.
The curse of insolvent democracies, as they try to pull out of tax-and-spend death spirals, is that austerity measures rarely survive elections. We see that sort of thing in America all the time: whenever a mix of high taxes and spending cuts is proposed to reduce the deficit, the tax increases hit right away, but the spending cuts never happen. It’s sad to see the cradle of democracy hit the point where they’re being told they can no longer afford to hold elections.