Can Europe Make It?

Greek elections: a bail-in vote in search of political capital

Tsipras and his party may win on the ticket of softening austerity. But their highest playing card is the fear that Syriza's defeat will restore the old regime. 

Adam Giannikos
19 September 2015
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Pablo Iglesias, Ska Keller, Pierre Laurent, Alexis Tsipras and Gregor Gysi (From left to right) wave to the crowd from the stage at the election rally in Athens. Demotix/Michael Debets. All rights reserved.

As we gear up for another election Sunday in Greece, nobody seems willing to discuss the day after. The latest polls confirm that the majority of the Greek voters are benumbed by recent developments. In contrast to the highly political confrontation of January, elections this time seem to miss their most essential element; engagement. And, if anything, that's bad news for democracy in Greece.

The poll findings indicate a fragmented electorate, a majority of swing vote, especially from the left, and no clear lead for any of the two major contenders (Syriza and New Democracy).

Undoubtedly, Alexis Tsipras' popularity has suffered following the adoption of the new three-year bailout program. Eventually, after successive months of bruising negotiations, the Ex-Premier has been accepted as a credible partner among the country's lenders, and he is still leading the polls for the most eligible candidate, yet the way a one-eyed man leads the blind.

Since the very first days of Tsipras' administration, many of its opponents inside and outside the country promoted the 'left parenthesis' scenario, a conviction that the first left government in Greece would collapse soon after people realized that there was no alternative to the German-led austerity. Of course, that notion did not reach the vast majority of Tsipras' supporters plus those who did not vote for him but relied somehow on his major promise to clear up the old regime - of PASOK and New Democracy - that ruled continuously for almost four decades.

All these critical voices took for granted that 'Alexis' would bring a better agreement than those signed by his predecessors, which in turn would blow the balance of power for the benefit of the subdued masses of underemployed, unemployed and impoverished ex-middle class citizens - call it the precariat.

A young, charismatic, 'sinless' leader became the game changer of an entire political system - till the moment he put his own signature on another austerity program, the third rescue deal in five years, or as it is widely called the 'left memorandum'.

Greek politics have risen from obscurity as long as its battered economy has become the headline of almost every report from Europe. For the past five years, the word 'collapse' was synonymous with economic and political woes in Athens. If there is something to collapse nowadays, it is neither Alexis Tsipras nor his wounded party, but the public's belief in recovery. And when there is no such confidence, it is highly unlikely for people to be motivated and assume ownership of the reforms, a persistent theme in the institutions' manuals.

Lack of confidence has been a persistent trend in Greek politics until last January. Long before that time, few believed there was any chance the bailout programs would work. For the majority, the despicable memorandum that accelerated economic contraction was also inapplicable. (Many argued that this was exactly the program's initial goal and success, to deprive Greece of its sovereignty in order to make it easier for the European lenders to secure the price of any rescue through an asset-stripping scheme). The outcome proved them right.

Syriza's response, through its previous election program (announced in Thessaloniki a year ago), was nothing more than a mild version of the 1990s social democratic experience. But even that program was not accepted by Greece's partners who seemed determined not to allow any departure from the fiscal consolidation project of post-crisis Europe. For the weakest Eurozone economies the message was clear: political accountability is limited to the “moral hazard' narrative or how to persuade the precariat that the risk taken by the government to secure, for instance, full employment is a burden to the financial stability brought to you by Schauble & Co.

Tsipras' retreat from his Thessaloniki promises means that Greeks are now left with only one option, which is definitely not the left one he was voted for: abidance by the same draconian rules, a single entity of reforms wherein parties just claim different configurations; a TINA of the twenty-first century.

So, if this is politics, voters of the left just do not care anymore. The inclusive participation of the younger and most educated in January's elections –especially in constituencies where Syriza's victory was uncontested–  most probably will configure a highly increased voting abstention next Sunday. Lack of confidence has returned, but this time it leaves no space for engagement.

This is happening because the so called 'agreekment' of July 12 has shown the limits of the entire political system in a nearly bankrupt country with no control of its banking system. The major lesson to be taught is that no matter how you have managed to present a primary surplus and your economy exceeds the average Eurozone growth (a 'success story' of internal devaluation which restores competiveness as far as the privileged interlocutors of the old regime are concerned, the black hole of an insolvent banking system still chokes off real economy activity).

Since 2009, Greek people voted seven times in national, local and European parliament elections plus in a referendum, which makes it eight if we take into account the forthcoming elections for yet another legislature charged with a Memorandum of Understanding. To their understanding, there is no protest vote against the bankers.

Despite the vast renewal of politicians and admistrators, the bankers are untouched. The same old people have been running the banks before and after their collapse; during the crisis financing is channeled into the same businesses, notably those identified with the reckless past (and still find opportunities regardless of who is in charge at the Maximos Mansion, the offices of the Head of the Government).

Deadlocks always come with a tricky dilemma. Such a dilemma regarding the first two Greek programs was that had it not accepted the troika's conditions, the government would not be able to guarantee salaries and pensions. Replace salaries and pensions with bank deposits and you have the same argument regarding the third program.

In an unprecedented demonstration of defiance, the Greek voters rejected the Juncker proposal just to get it harsher back on the table. Admittedly though, Greeks seemed to withstand the impact of capital controls imposed a week before the referendum; no major unrest, no sway by an equally unprecedented campaign for “Yes”, orchestrated hand in hand by the institutions, the media monopolies and their political patrons.

However, one could validly argue that there have been two kind of Greek votes this year; while the referendum culminated the January mandate to end austerity – a quasi-revolt against the Eurosystem, capital flight between December 2014 and April 2015 had reached 29.4 billion euros. Non-financial enterprises withdrew 7.2 billions (a 35% decrease of deposits since November 2014) and households 22.3 billion (16% respectively).

The outflow of deposits “has largely taken the form of cash withdrawals and hoarding, while flight of capital has also been recorded”, Bank of Greece said in a June report, mentioning that withdrawals by households have been related to time deposits (“a sample of uncertainty”) and “outflows are distributed to all depositors' thresholds” as “percentage changes are larger for depositors with relatively small amounts of deposits”, meaning that minor depositors also took a hit from uncertainty.

The story of the “first government of the Left” ended when everyone realized that the precariat's vote of confidence weighed less than the vote in the form of deposits by those who still have their money aside, even if many among them were to join the “No” vote, too.

This does not necessarily confirm the left parenthesis scenario. While people's support to the European institutions hits historic lows, anti-euro opposition has not yet convinced them that their deposits will be safe in an event of monetary transition. Even those who feel betrayed by Syriza and have nothing to lose declare their reluctance to enter the voting booth.

On the other hand, pro-euro opposition has not restored its legitimacy among active voters and its embarrassed campaign only corrals disillusioned right-wingers but not politically homeless centrists who cringe at Syriza's transformation into a pro-euro agent. Tsipras and his party most probably will get another ticket on the promise that they will implement all these countervailing measures to soften austerity. However, their highest playing card is made out of fear that Syriza's defeat will restore the old regime.

Choosing between two evils is not exactly a political argument, let alone a left one. And implementation of countervailing measures is not exactly a discussion on what's next, how the economy will replenish its human resources and the country will achieve economic independence. Creditors also seem smart (or treacherous) enough to exclude a bail-in (for the time being) opting for a large-scale bank recapitalization. Keeping a Trojan horse full of bankers inside the walls of a besieged economy makes sure that there will always be a reason for not raising the banners of war again. Voters are forced to bail-in a system that has been never “too-big-to-fail”.

The ex-troika now called “institutions” (always been eurocracy, under the aegis of international capital) promises the Greek people will not suffer this time. And here we are; institutions are not accountable; their mandate, even failed, is no revocable; no resentful voter can really dispense with their services; terminating the relationship unleashes their fury; Citizens see no future in a political system where voting will always be a tricky dilemma. A bail-in vote will neither recapitalize Greek politics nor will break the connection between sovereign and bank risks, between the political and the financial elites. Not the next day; not any other day.

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