12
Midlife Crisis?
2004–
With the triumph of the Olympics, following the seamless transfer of power a few months earlier from PASOK to its rival New Democracy, and a solution (of sorts) to the thirty-year-old dismemberment of Cyprus, Greece and Greeks in 2004 had everything to look forward to. Membership of the European Union and the common currency, the euro, gave the two Greek states, Greece and Cyprus, the best guarantees that either of them had ever had for their external security and their political and economic stability. The future could only go on getting brighter.
And so, for a time, it appeared.
The new centre-right government in Athens carried little ideological baggage. There was no real programme, no ambitious set of goals to be met, no historic destiny to be fulfilled. After all, Greece had already arrived. The new prime minister chose to be known by the familiar form of his name: Kostas (for Konstantinos) Karamanlis. He brought with him little personal baggage, either, beyond the name of his more famous uncle, at a time when both established parties in a two-party system were led by dynastic descendants of their founders. Karamanlis’s governing style has been variously described as informal, relaxed, even (by opponents) as lazy. A certain lassitude, emanating from the top, has been identified as a hallmark of the whole five-year rule of New Democracy that would last until 2009. Reforms begun by the Simitis administration were quietly dropped. The practice of ‘buying’ votes, for instance by declaring a tax holiday in an election year, which had begun under Andreas Papandreou in the ‘populist decade’ of the 1980s, now crossed the ideological divide. Allegedly it reached new heights when Karamanlis ‘literally spent his way to reelection’ in 2007. Even so, a year into New Democracy’s second term, in 2008, the economic indicators for Greece looked as good as they had done four years before, with average annual growth of four per cent since the start of the new century.1
The signs of trouble to come were not, at first, economic. The worldwide financial crisis had begun in the United States in 2007. It peaked with the collapse of the Lehman Brothers investment bank in September 2008. But neither the Greek state nor Greek banks were exposed directly to the forms of high-wire risk-taking that had brought the world’s banking sector to the brink of collapse. The global crisis had passed Greece by – or so, again, it appeared.
And yet, in December 2008, the Greek media were filled with soul-searching, with accusations and counter-accusations, and talk of a ‘crisis’. There were several reasons for this, all of them to be found nearer home. Like the ‘sub-prime’ mortgage crisis in the United States, this one also went back to the summer of the previous year, but was quite unrelated. A series of devastating forest fires in the Peloponnese in August and September had left sixty-eight people dead and destroyed huge areas of woodland. This is a seasonal hazard in the Greek climate and happens every year. No less seasonal are the loudly aired assumptions that most of these fires are started deliberately. The 2007 fires were worse than usual. There was a widespread perception, particularly just after the election in September, that the government was failing to get a grip. The still-unfinished project of a national land registry (begun by Kapodistrias in 1828) focused public attention on allegations that speculators were behind the fires, illegally destroying forests to create opportunities for development.
Then in the autumn of 2008 came the series of headline scandals to which every Greek government seems to become prone after more than three years in office. One involved a bizarre suicide attempt by a senior official of the Ministry of Culture. More serious were revelations about property deals between government ministers and the Vatopedi Monastery on Mount Athos, the self-governing Holy Mountain of Orthodox Christianity. This one forced the resignation of Karamanlis’s chief fixer, Theodoros Rousopoulos, at what would prove to be a crucial time, in October 2008. After that, ‘the government appeared to drift’.2
Ever since the transition to democracy in 1974, there has always been an undercurrent of violent street protest in Greece, and particularly in Athens. Traditionally accepted as part of the legacy of the ‘Polytechnic generation’, its perpetrators regularly claim to be acting in the spirit of the students who had occupied the Athens Polytechnic in November 1973. By the autumn of 2008, hooded anarchists with petrol bombs were taking to the streets, especially in the Exarcheia district of central Athens, near the National Archaeological Museum. For years nightly battles between balaclava-clad rioters (koukoulophoroi) and police had become almost a form of diversion. Ritualized conflicts, with unwritten rules and a tacit understanding of how far they could go, were a kind of bizarre re-enactment of the lives of the irregular militias that had once battled it out in the lawless mountains under Ottoman rule or during the Revolution. The role model of the bandit chief, the outlaw who recognizes no authority but his own, has never entirely gone away.
Then on the night of 6 December 2008 the unwritten rules were broken. That night, in the course of one of these encounters, a school student aged fifteen was shot dead in Exarcheia Square by police. The victim had no connection with the balaclava-wearers. The event caused revulsion throughout the nation, and brought thousands onto the streets. For almost a month the centre of Athens was convulsed by demonstrations, some of them violent. Unusually, the demonstrations spread throughout the country, with almost every town affected. So discredited were the police in the minds of many of the public that law enforcement became all but impossible. Shops were looted and burned, cars overturned and set on fire. Low-level terrorism returned to Athens, with armed attacks on property and police officers.
One historian, writing at the time, accounted for the events as ‘a fantasy-driven and incoherent explosion of a society trapped by the whirlwind of an institutional, social and moral crisis’ – and this was several months before the first whiff of the far greater ‘crisis’ waiting just around the corner. The same observer went on to identify its causes as ‘the disturbing decay of democratic standards, of rationalism, of mutual respect’. Another, writing some years later, noted the absence of any coherent or identifiable demands on the part of the ‘uprising’. Almost more surprising was the total failure of the political left, either to make political capital out of the events or to claim leadership of this ‘resistance’.3 It was a sign that the old fault line that had divided Greeks from the 1940s to the 1980s really had shifted. The new strains were already apparent on the streets of Athens during December 2008. But few could then have predicted where the next cracks would appear, or the nature of the forces that would tear at Greek society during the decade to come.
THE POLITICS OF ‘CRISIS’
By April 2009 an uneasy peace had returned to the streets. The Karamanlis government had managed to borrow enough to cover the needs of its budget for the year. But in the economic climate after the global crash the increase in government borrowing could not escape the attention of the European Commission. Eurozone rules on deficits would have to be applied. This would mean cutting back on public spending. It was not an unprecedented situation. The second PASOK government had found itself similarly placed, twenty years earlier. The measures had been unpopular then, and PASOK had lost power in 1989, perhaps in part as a result. But such problems had been contained before. Why should they not be again?
Karamanlis’s motivation in calling a parliamentary election for October 2009, two years before the end of his government’s second term, has been called into question. Although he fought a vigorous campaign, some thought he was deliberately walking away from a situation that New Democracy could no longer control. It was the same accusation that had been levelled – and then with some justice – against his predecessor Georgios Theotokis almost exactly a century earlier. In 2009, PASOK, led by Georgios Papandreou, far from offering a consensual approach to the country’s difficulties, simply denied that there was a problem at all. The good times could continue as before. On 4 October, PASOK won the election with 44 per cent of the vote and 160 seats in the 300-seat parliament. Georgios Papandreou became prime minister.
It fell to the finance minister in the new government, Georgios Papakonstantinou, to break the news to parliament, two weeks after taking office. Although it was couched in the cautious economics-speak of a different age, its import amounted to much the same as the laconic bombshell attributed to Charilaos Trikoupis back in 1893: ‘Unfortunately, we are bankrupt.’ Jean-Claude Juncker, later to become President of the European Commission, in his capacity as host to the Eurogroup of finance ministers meeting in Luxembourg the next day, responded more laconically still: ‘The game is over.’4 It took a little longer for Papandreou to accept the full scale of the disaster. But by the first months of 2010 the world’s media had got hold of the story. Greece was in crisis. And not only Greece. Greece was part of the Eurozone. With European banks and the institutions of the EU still reeling from the slow-burn effects of the financial crash of 2008, the likelihood of a sovereign default by one of its members suddenly threatened the whole project of monetary union, perhaps even the entire political edifice that was the European Union itself. Extraordinary measures were called for.
Much has been written by professional economists about the technical factors that added up to the ‘perfect storm’ for Greece at the end of 2009 and early 2010. And much remains contentious almost a decade later. Reduced to essentials, the Greek government by April 2010 found itself unable to borrow at affordable rates to service its existing debts. Such things had happened to sovereign states before – not least to Greece itself, in 1843, 1893 and 1932. In the new century it had happened to Argentina in 2001. The classic solution was to default on part of the outstanding debt, devalue the currency and rebuild the national economy from there. It had worked well in Greece in the 1930s. By 2009, it was working well in Argentina. But there was no precedent for a sovereign default by a member of the Eurozone. An economy the size of that of Greece (amounting to no more than two per cent of the economy of the Eurozone) could have been allowed to default without creating more than a ripple in the world’s markets. But if a constituent part of the common currency were to default, the consequences would be literally incalculable – because no one had imagined it ever happening. The European institutions suddenly found themselves having to make up the rules as they went along.
It was not just Greece. Other countries on the geographical periphery of Europe were struggling too, under the same pressures that stemmed from the banking collapse of two years before. Governments used taxpayers’ money to buy up the debts of banks that had become insolvent and in this way to save their taxpayers from losing their savings. But in the process national treasuries themselves came close to insolvency. What became known as the ‘European debt crisis’ spawned its own vocabulary of acronyms and metaphors. The at-risk countries were the ‘PIGS’ (Portugal, Italy, Greece, Spain, later joined by Ireland). The greatest fear was of ‘contagion’ spreading from one to the other, and then to the heart of the Eurozone itself. The rough-and-ready solution concocted on the hoof was called unofficially a ‘bailout’ (a benefactor who can afford to do so puts up bail to save his associate from jail) and in the formal jargon of the institutions a ‘Memorandum of Understanding’, or ‘MoU’ for short. This last would be translated into Greek as the infamous Mnimonio. To make it all work, a new collaboration would be required, so as to spread responsibility among the European Central Bank (ECB), the European Commission (EC) and the US-based International Monetary Fund (IMF). This new, ad hoc conglomeration soon came to be nicknamed, especially in Greece, by another metaphor, the ‘Troika’.
Georgios Papandreou formally requested a bailout on 23 April 2010. A Memorandum of Understanding was signed between Greece and the ‘Troika’ on 2 May. In return for a loan worth 110 billion euros, the PASOK government undertook to implement drastic measures to reduce the country’s deficit and restructure its economy along the lines of the more robust economies of northern Europe. It was the beginning of ‘austerity’. The government had been elected only six months previously on a promise that all was well and no belt-tightening would be necessary. Three days after the signing of the Mnimonio an estimated hundred thousand demonstrators took to the streets of Athens. The protest turned violent. When the crowd set fire to a bank near the city centre, three employees were burned to death. Was the price of saving the euro to be the collapse of public order in Greece, as had last happened in the 1940s?
In the event it was not, or at least it hasn’t been so far. But for several years it looked as though it might be. Instead, in Greece, unlike anywhere else where the same measures were applied, it was the economy that collapsed.
It soon turned out that the projections contained in the Memorandum had been wildly optimistic. Ninety per cent of the funds disbursed to Greece went not towards relieving the finances of the Greek state, but to service old debts and recapitalize foreign banks, particularly in France and Germany.5 Over the next four years, personal incomes in Greece were reduced by a third, unemployment rose to 27 per cent and among the young was more than double that. The size of the economy shrank by a quarter. Bank deposits fled abroad. Investment was reduced almost by half. Businesses failed, public services were reduced.
The burden fell most harshly on pensioners and the unemployed. Long queues formed at soup kitchens. Even formerly well-to-do people lost their homes and took to the streets. The number of suicides soared. In a distant echo of the far harsher conditions of the 1940s, many who could no longer make a living in Athens and the larger towns returned to their families’ roots in villages that had been steadily depopulated ever since the Second World War. Those with the benefit of higher education, who could contribute to the ‘knowledge economy’ but had no prospect of finding a job in Greece, took advantage of the EU’s right to freedom of movement among member states and settled abroad. It was estimated in 2017 that during the previous seven years half a million graduates had left Greece, equivalent to approximately 10 per cent of the workforce. Tax rates kept rising, with a predictably deflationary effect on the economy.
What had brought Greece to this pass? And why was Greece, alone of the ‘PIGS’, poisoned rather than cured by the medicine that the European institutions had forced equally on all of them?
There have been many attempts over the last few years to make sense of this conundrum. Most concede that blame lies neither solely with Greece nor solely with the European institutions. Systemic problems at home combined in a toxic way with structural weaknesses in the European project, particularly the systems devised to oversee the single currency without a single fiscal authority for the Eurozone. But beyond that there is little agreement. The world’s media, and many serious commentators, have accused the Greeks of being ‘profligate’ and ‘lazy’. Those ill-disposed towards the political project of the European Union for ‘ever closer integration’, or towards the economic and fiscal ambitions of the single currency, have had a field day as the weaknesses of both have been exposed by the unfolding ‘crisis’ in Greece.
Inevitably, critics of Greece’s socialist experiment have shone the spotlight on specific policies of PASOK, particularly during the 1980s. It is common to cite examples of wastefulness in the public sector, not least in higher education and the health service, and of the failure by governments to collect taxes and of citizens to pay them. Hard evidence from statistics shows that Greeks are not ‘lazy’ – but the same evidence does underscore how underproductive their labour is.6 A former PASOK government minister, speaking off the record in 2017, identified the underlying causes of the ‘crisis’ as ‘poor governance, clientelism, weak institutions, lack of competitiveness’. It may be that the headline story of a spectacular boom followed by an even more spectacular crash actually masks quite a different pattern. When GDP growth for Greece is averaged out over the whole period since the start of the international oil crisis in 1973, the underlying rate turns out to have been uniformly flat at no more than one per cent. Perhaps Greece had never, ‘really’, recovered after that?7
It is easy to say, as many now do, that Greece should never have joined the euro. But ‘Grexit’, a term coined at the time of Greece’s second bailout in February 2012, would always have been the ‘nuclear option’. Although many predicted that it would happen, there was never sufficient appetite, on the part of either the creditor institutions or successive Greek governments, for either side to be the first to press the button.
By early in 2011 it was becoming clear that, for Greece to avoid a default, a further bailout would be needed, with further austerity measures attached. Violence once again broke out in central Athens at the end of June. Faced with new terms for a second Memorandum, and the threat of more civil unrest in October, a desperate Papandreou announced that he would turn to the electorate. The Greek people would decide in a referendum whether or not to accept the terms or risk default and an exit from the euro. Papandreou announced the referendum on the last day of October. Eleven days later he was gone. Summoned to a crisis meeting with the French president, Nicolas Sarkozy, and the German Chancellor, Angela Merkel, the hapless Greek prime minister had been told in no uncertain terms that he could not have a referendum. The only thing left for him to do was resign.
That left the way open for a ‘technocratic’ government to take over. The new administration was supported by a three-party coalition, and headed by a former vice-president of the ECB and former governor of the Bank of Greece, Loukas Papadimos. Unelected, and probably in the climate of the time unelectable, the Papadimos government oversaw the signing of Greece’s second bailout on 2 February 2012. That same night Athens once again erupted in violence. But the deed was done. In return for a ‘haircut’ (another of those metaphors, meaning a partial write-down of Greek sovereign debt) and yet more austerity, Greece signed up for a new loan worth 130 billion euros. The ‘haircut’ disproportionately hit the country’s own banks, with the direct and unintended consequence of spreading the ‘contagion’ to Cyprus the following year.
With the new deal signed, it was time once more for the electorate to have a say. The main opposition party, New Democracy, was now led by Antonis Samaras – he who had engineered the party’s downfall in the 1993 elections, over his hardline stance on the name of Greece’s northern neighbour, the ‘Former Yugoslav Republic of Macedonia’. Samaras’s campaign slogan, ‘Let’s tear up the Mnimonio’, repeated the tactic of his rival Papandreou three years before. This time it was only partially successful. The election of 6 May 2012 produced a hung parliament, with no party able to form a government. A second election took place six weeks later. This time, faced with uncompromising threats from European leaders that if Greece were to repudiate the Memorandum it would be thrown out of the euro, enough voters turned to New Democracy to give Samaras a mandate – not to govern outright, but in coalition with what was left of PASOK and one other minor party.
The two elections of 2012 marked another turning point in Greek politics. Ever since 1977, Greece had had a recognizable two-party system. Barring two short-lived coalitions at the end of the 1980s, every government in almost thirty years had been formed by either New Democracy or PASOK. Now, in the May election, the vote for both parties collapsed. Faced with the impasse that followed, enough voters rallied to New Democracy to save the party from oblivion, though Samaras ended up in power with less than 30 per cent of the popular vote. The punishment of PASOK appears to have been terminal, with only 13 per cent of the vote in June 2012, and further to fall three years later. The end of the two-party, relatively centrist consensus was matched by the rise of parties that until now had been on the fringes, to both left and right.
The Coalition of the Radical Left, abbreviated in Greek to SYRIZA, the first syllables of each part of its name, had been formed out of several smaller parties, excluding the traditional Marxist KKE, back in 2004. Between then and 2009, SYRIZA had only just reached the threshold for representation in parliament, with between three and four per cent of the vote. Since 2008 its leader had been the youthful civil engineer and former student activist Alexis Tsipras. Uncompromisingly standing out against austerity and the terms imposed by the ‘Troika’, SYRIZA overtook PASOK to come second in the election of May 2012, with 17 per cent of the vote. Six weeks later that had risen to just short of 27 per cent, only two percentage points behind the dominant party in the new coalition government. SYRIZA was of course not a candidate to be included in the coalition – it lay too far from the mainstream for that. But a fringe party of the far left had risen from almost nowhere to become the official opposition in parliament.
On the right, a breakaway group from New Democracy contested the 2012 elections as a newly formed party opposed to the Memorandum. Independent Greeks (ANEL) reached 10 per cent of the vote in May, but fell back the following month. More shocking to most shades of opinion in Greece and abroad was the rise of Greece’s first and so far only fascist or Neo-Nazi party, Golden Dawn. From infinitesimal beginnings (polling less than one per cent in the first parliamentary election it contested, in 1996), Golden Dawn attracted not far short of half a million votes in each of the two elections in 2012. Unlike other anti-bailout parties, it saw only a tiny drop in its support from the one election to the other, from a peak of seven per cent in May, which it would match again three years later. With its emblem of the ‘meander’, or ‘Greek key pattern’, in the colours of the Nazi swastika, which the shape somewhat resembles, Golden Dawn and its members have been associated for many years with violent action, particularly directed against immigrants and anyone well disposed towards them. Their belief in the purity of a Greek bloodline stretching from the militaristic Spartans to today is overtly racist as well as ultra-nationalist. Some of the rhetoric and the symbols favoured by Golden Dawn recall those of the Metaxas dictatorship of the 1930s or the ‘Colonels’ between 1967 and 1974. But it is worth remembering that neither of those regimes had any roots in a popular movement or political organization, but were imposed from above. The appearance of a grass-roots fascist movement in Greece is largely, if not entirely, a consequence of the ‘crisis’ and a response to the new conditions since 2010.
With so many voters turning away from the broadly consensual politics of the metapolitefsi, once again in Greece the tectonic plates were shifting. Out of the new strains that had first become apparent in the violent street protests at the end of 2008 and then been compounded by the debt crisis, a new political alignment had suddenly emerged. Some commentators have defined the new split as being between those for and against acceptance of the Memoranda. Another sees it as ‘ethnocentrism’ versus ‘Europeanism’.8 Either way, the new fault line transcends and replaces the traditional face-off between right and left. Its existence can be traced all the way back to the internal conflict during the Revolution of the 1820s, between rival versions of liberty: on the one side an ideal of absolute self-sufficiency, on the other integration into a Western-dominated world order. Once again, Greeks found themselves forced to choose.
In January 2015 the Samaras government was defending a record of enforcing the terms of the second bailout and could point to signs of a fragile recovery as a result. No end to enforced austerity was in sight. Voters had put their trust first in the centre-left (in 2009), then in the centre-right (in 2012). Both had let them down. Now it was the turn of the new boy on the block, Alexis Tsipras, leader of the official opposition, to bang the same drum that first Papandreou and then Samaras had banged before him. This time, under a SYRIZA government, little Greece would stand up to the bullying creditors in the European Union and the IMF. The medicine prescribed by the ‘Troika’ hadn’t worked. So it was time to change the medicine. SYRIZA could deliver that.
Voting in the election of 25 January 2015 was along the new party lines. Pro-bailout parties polled just under 40 per cent, including the rump of a nearly obliterated PASOK. Ranged against the bailouts were SYRIZA, the breakaway right-wing Independent Greeks, Golden Dawn and the Communist Party of Greece, the KKE. The KKE would work with no one else, and no one else could contemplate working with Golden Dawn. Between them, these two extreme anti-bailout parties accounted for some 12 per cent. That left SYRIZA, with 36 per cent of the popular vote and gifted, as the largest party, with a bonus of an extra fifty seats, just two short of an absolute majority in parliament. It was entirely consistent with the new political logic that the far-left SYRIZA should enter a coalition with the far-right (non-fascist) Independent Greeks (ANEL) to give a working majority with 162 seats in the 300-seat parliament. Both parties that formed the new government had been elected on a ticket of national self-sufficiency and resistance to the ‘Troika’.
The democratic mandate was fragmented. But it was also clear. It was the turn of the new coalition of formerly ‘fringe’ political forces to see whether they could succeed where the experienced politicians of the established parties had failed.
The story of what followed is either high tragedy in the ancient Greek manner or farce, depending on your perspective. Either way, the lead role is played by the academic economist and telegenic self-publicist Yanis Varoufakis, who for the best part of six tumultuous months in 2015 served as Greece’s Minister of Finance. Varoufakis’s highly personal account of these events lifts the lid on the divided loyalties, internal divisions and contradictory behaviour of both sides. The way Varoufakis tells it, he was the plucky champion of the Greek electorate, brought in to do battle with ‘Europe’s deep establishment’, when the dull and corrupt professionals had all failed. He writes of a ‘Greek Spring’, of a ‘rebellion’ that was ‘ruthlessly suppressed’ by the self-defeating obduracy of the European institutions, and betrayed by the leadership of his own party.
Tsipras at the beginning, and Varoufakis throughout, believed that the mandate they had won from the Greek people would be sufficient to force the European institutions to change their policy towards Greek debt. Desirable though that might be, it was never going to be achieved by pressure from the finance minister of one near-bankrupt country of eleven million souls, exerted against the institutions of a political and economic union representing some five hundred million. The riposte of Wolfgang Schäuble, Varoufakis’s German counterpart, at a Eurogroup meeting on 11 February 2015 has become notorious: ‘Elections cannot be allowed to change economic policy.’ But Schäuble, too, was answerable to an electorate – one that was far larger, and not well disposed to those its daily press called ‘crooks in the euro family’, ‘bankrupt Greeks’ and other unflattering things.9
By the end of June, Greece was once again unable to service its debts. The last instalment of the second Memorandum would not be paid out unless the government signed up to a set of conditions broadly similar to those that had been accepted by its ‘technocratic’ predecessor in 2012. To do so would have been a complete reversal of everything that the SYRIZA-led coalition stood for. Instead, with only a week’s notice, Tsipras announced a referendum, to be held on Sunday 5 July. Voters were to be asked to say ‘yes’ or ‘no’ to the conditions laid down by the Eurogroup. On 29 June, the first working day after the announcement of the referendum, the European Central Bank withdrew its liquidity arrangement with the Greek banks. The Greek government and the Bank of Greece had immediately to introduce capital controls, close the banks for several days, and when eventually they reopened impose a strict limit on withdrawals. Most members of SYRIZA, including Tsipras as prime minister, as well as their coalition partners in ANEL and the extreme-right Golden Dawn, campaigned for a ‘no’ vote.
Against expectations, and under coercion, with the banks closed and the threat that they might not reopen, 61.31 per cent of votes cast were for ‘no’, on a low turnout (by Greek standards) of 62.5 per cent. The Greek government had been careful to emphasize that the choice was not between staying in the euro or leaving the single currency. This was not a vote for or against ‘Europe’, although many who favoured a ‘yes’ vote, both inside and outside Greece, tried to make out that it was. Opinion polls at the time were showing even higher percentages in favour of staying in the euro and the EU than voted against the specific terms in the referendum. Once again the Greek people had spoken out against austerity, and against the dictates of the European institutions. But they had not voted against the institutions themselves.
The day after the poll, Varoufakis resigned as finance minister. By the end of the week, with support from the pro-bailout opposition, a bill was voted through parliament to go back to the European institutions and seek a third Memorandum. Of all the revelations in Varoufakis’s book, the most startling must surely be the reason that he says Tsipras gave, in private, for this ‘capitulation’: ‘He told me that he feared a “Goudi” fate awaited us if we persevered – a reference to the execution of six politicians and military leaders in 1922 … [He] then began to insinuate that something like a coup might take place.’10 If true, was this a remarkable – and uncharacteristic – show of cowardice by an elected prime minister? Or were there still, as Varoufakis at times insinuates, without ever providing the proof, forces at work in the Greek ‘deep establishment’ that would have been ready, as recently as 2015, to overturn the democratic order, even to threaten the kind of extreme violence that had scarred the country’s political life almost a century ago?
On 13 July the heads of government of all those states that make up the Eurozone issued a statement that paved the way for a third Memorandum of Understanding with Greece. Up to 86 billion euros would be made available over the next three years, half to service its debts and the rest to ensure drastic restructuring of the Greek economy. The amount was many times greater than the last tranche of the previous bailout that voters had forgone by voting ‘no’ in the referendum. But the conditions were even more stringent. More than ever, Greece had become a ‘debt colony’. What has been termed ‘Europe’s symbolic colonization of Greece’ had gone one step further.11 The creditors had made their point, and won their case.
The logic of Greek politics up to this point would lead one to expect that SYRIZA and Tsipras would be punished by the electorate. Theirs had been the most spectacular of the three U-turns by successive Greek governments that had accompanied the acceptance of each Mnimonio. This time, the immediate effect was to split the governing party. But Tsipras was able to rely on the votes of opposition MPs. Even so, recognizing that he had lost his mandate, he called a snap election for 20 September. The result again confounded expectations. The splinter group of anti-bailout members of SYRIZA, who were also opposed to continuing membership of the European Union, was wiped out. Their newly formed party failed to reach the minimum threshold for representation in parliament. The state of the parties that resulted was an almost exact re-run of what had happened in January. No party changed its share of the vote by more than two per cent; most, including the largest, SYRIZA and New Democracy, by less than one per cent. The coalition between SYRIZA and ANEL returned to power. And, again confounding expectations in many quarters, at the time of writing, it is still there, almost three years later.
For critics, it was simply incoherent for Tsipras to call a referendum, only to ignore its result and submit to worse terms than had been on offer ten days previously. For the irreconcilable Eurosceptics of the far left, who broke with SYRIZA in August 2015, that U-turn had been a betrayal of the people. Varoufakis has publicly championed this view ever since, although in his case without advocating withdrawal from the European Union. On the opposite side of the argument are those who argue that the first SYRIZA government, and Varoufakis in particular, had ‘cost the Greek economy around €100 billion’.12 Three years later, a third view is beginning to be heard in some quarters: perhaps those hundred billion were what it cost to convince all sections of Greek society, finally and beyond all possibility of doubt, that there really was no alternative to the austerity policies imposed by the ‘Troika’? Yes, it might have been better to have accepted the medicine sooner. But after three bailouts and three changes of governing party, by the autumn of 2015 there were no other options left on the table. Was this the beginning of the end of the ‘crisis’?
LIVING WITH ‘CRISIS’
A crisis, literally, is a moment of ‘judgement’, a turning point. The word itself is yet another legacy of the ancient Greeks to the vocabulary of today’s globalized world. But in Greece, and wherever in the rest of the world people talk about Greece, during the last ten years the meaning of ‘crisis’ has subtly shifted to refer not to a decisive moment, but to a condition. Part of the nature of that condition, as it has come to be perceived, is that, once in it, nothing changes, or very little. It is a far cry from the normal meaning of the word. For that reason, in this chapter, whenever it applies to the condition of Greece since 2010, ‘crisis’ appears within inverted commas. In Greece, ‘crisis’ has become a way of life.
It is a way of life defined almost universally by the effects of sudden impoverishment. No other developed country in modern times has seen its economy shrink by a quarter within five years, incomes and pensions reduced by at least as much, and unemployment persisting at above 25 per cent, rising almost to 60 per cent among the young. Capital controls and restrictions on bank accounts, imposed in July 2015, are not expected to be lifted until the end of 2018, at the earliest.
While the economic cost is obvious, the effects on society may run deeper and prove more lasting. Greek society had already been changing rapidly, and unevenly, ever since the end of the Cold War. War and failed states in the Middle East, since 2003, have increased the number of displaced people seeking refuge in Europe, many of them travelling via Greece, most dramatically since 2013. Impoverished public institutions and private charities have found themselves responsible for the survival and welfare of unprecedented numbers of migrants arriving on the islands of the eastern Aegean from Turkey – more than a hundred thousand of them, in the first half of 2015, the peak year, alone. The problem was further compounded in 2016, when other states further north closed their borders and began erecting fences to keep migrants out – an option not available to Greece with its hundreds of islands and with its mainland open to the sea on three sides. Many thousands became trapped in a country they had never meant to stay in for more than a few hours. The result was to bring social services in Greece close to breaking point and put further strains on a society already struggling with its own internal ‘crisis’.
Another consequence of the new influx is that, for the first time since 1923, Greece once again has a sizeable Muslim population. Historical memories die hard: proposals to build the first mosque in Athens since the end of Ottoman rule have been fiercely contested for years. Although a site was identified and plans approved in 2016, at the time of writing the mosque has still not opened. Other social stresses have increased dramatically too. Street crime and robbery used to be almost unknown in post-war Greece. The years of ‘crisis’ have changed all that. Muggings take place even in the most well-heeled parts of Athens, where the fewest signs of impoverishment are visible, and on the beautifully designed and still well-maintained Metro. Whole districts of the city’s western suburbs, including some close to the centre, have become ‘no-go’ areas for police and law-abiding citizens, run by people traffickers and drug dealers exploiting the misery of Greeks made homeless by the crisis and migrants without legal status or protection. There are stories of desperate householders turning to the vigilantes of Golden Dawn to protect them and their property, when an overstretched and demoralized police force is unable to do so, even with the connivance of the police themselves.
It is often said that, after the first years, when protesters took to the streets, a climate of despair and resignation set in. Despite the unchannelled currents of violence, fuelled by disillusion and the lack of hope, civil order has not broken down. Greeks have found ways of coping. The traditional family unit is the most important of these. Another is the black economy, based on cash and barter. Many Greeks never did put much trust in banks, and for years their bureaucratic procedures were hardly designed to bring customers through their doors. You don’t have to dig too far down into popular memory to find alternative ways of doing business. Those who can, leave and find work abroad. Greeks have been here before. Generations have lived through far worse conditions in the two-hundred-year history of the Greek state. What helps them to survive at such times is a quality that can best be translated as ‘endurance’ or ‘patient resignation’. But if it is the old, traditional ways that enable people to keep going, despite adversity, this is not a very encouraging sign that Greece and Greeks are on the brink of the kind of decisive upswing that might be expected on the far side of a ‘crisis’.
That said, there are positives amid the gloom. Nowhere is this more apparent than in the arts and culture. Poetry, traditionally the first recourse for self-expression in the Greek language, has flourished, in new forms, new genres, new environments. Some of Greece’s newest poets are immigrants, bilingual in their mother tongue and Greek. All, in different ways, as the editor of a recent anthology in English puts it, bear witness ‘to the hard lives being led in Greece and the Balkans today’, but at the same time ‘offer new ways to imagine what can be radically different realities’.13 Writers of fiction have continued to widen their horizons, with more and more writers engaging with experiences and situations either far from Greece or involving characters who represent the ‘other’ in relation to the Greek. Possibly not unconnected with the rise in crime, detective fiction has belatedly come into its own. Several of the best-selling crime novels by Petros Markaris, featuring the dictionary-loving Inspector Haritos, have been translated into English and other languages. His Crisis Trilogy, published between 2010 and 2012, gives a characteristically gritty and caustic perspective on daily life during those first years of the ‘crisis’.
In other art forms, too, ‘an explosion of creativity has been witnessed in Greece during the crisis, particularly in the areas of theatre, film and performance’.14 Art-cinema films by Giorgos Lanthimos, Alexandros Avranas and others, some of them made in English, have reached international audiences. New compositions and public performances, in the tradition of classical or ‘art’ music, have blossomed. State-of-the-art cultural venues have opened in Athens since the start of the ‘crisis’ and now put on impressive programmes: the Onassis Cultural Centre (Stegi) in 2010, the Stavros Niarchos Foundation Cultural Centre, housing the new Opera House and National Library, in March 2017. Both of these new ventures are tributes to the one great Greek economic success story that goes at least as far back as the eighteenth century, and whose assets have traditionally been held beyond the boundaries of the state: namely shipping. The international art exhibition Documenta 14 welcomed more than three hundred thousand visitors when it opened for six months in Athens during 2017. Street art in Greece has become elevated from the ugly political scrawls that traditionally deface university campuses to an art form, often exuberant, witty, defiant, inventive.
On the economic and political fronts, some have detected signs of the Memoranda working, or at least of beneficial effects. On paper, at least, the Samaras government had succeeded in generating a primary surplus by the end of 2014, as its successor may once again do in 2018. In the view of at least one Greek economist in 2017, there has been a shift in Greek public attitudes against indebtedness and for ‘a reasonable degree of fiscal discipline’, matched by the pragmatic turn of the SYRIZA-led coalition after the summer of 2015.15
During three and a half years in power, the former fringe party of the ‘far left’ has morphed into something much more like the social-democratic PASOK that it displaced. Far from losing face after the spectacular U-turn of July 2015, Alexis Tsipras has consolidated his power within his party and with the electorate. He has done it by the exercise of personal authority and charisma, just as every successful Greek prime minister had done before him, all the way back to Ioannis Kolettis in the 1840s. If SYRIZA today is the new PASOK, Tsipras is the new Andreas Papandreou. A career that started out in the communist left and achieved the highest office by appealing to national-populist ideals of self-sufficiency is becoming tempered by the realities of power, both at home and within Europe.
Some of the strongest of these positives take the form of an absence – dire predictions that have not come true, or at least so far. There has been no default or chaotic exit from the euro. There has been no collapse of public order. In Greece, no separatist movements have emerged to threaten the integrity of the state, as has happened elsewhere in Europe in recent decades. There has never been an equivalent to the momentum for independence seen in, for example, the former Czechoslovakia, in Belgium, Spain or the United Kingdom, or even political pressure for greater regional autonomy. Popular movements and uprisings throughout modern Greek history have always been driven by the desire for unification. Outside greater Athens, which is home to almost half the country’s population, most parts of Greece possess a strong regional identity. But even in Crete, where such sentiments are perhaps most in evidence, no political grouping has yet put forward a serious programme to break away from the Greek state. This is another potential threat that has not, so far, shown any sign of materializing, despite the new strains imposed by the ‘crisis’.
The case of that other Greek state, the Republic of Cyprus, is rather different. There, political separation was imposed, in and after 1960, and has tended to be reinforced by geographical distance. The Republic of Cyprus, too, found itself plunged into crisis. But there the similarities end. During 2012, after the second Memorandum had been signed with Greece, the Cypriot financial sector took heavy losses from the write-down of loans to Greek banks. In March 2013 it was the turn of the Cyprus government to risk default and to have to turn to the European institutions for a bailout. Capital controls were imposed and limits placed on the amount that could be withdrawn from banks. These were both measures that would be applied to Greece only later, in 2015. In Cyprus the price demanded for rescue was higher still. The country’s second-largest bank was allowed to fail. Depositors in all banks lost up to 10 per cent of their savings. In Cyprus the immediate shock in March and April 2013 was even greater than at the equivalent moments in Greece. It was the Cypriot private sector that bore the brunt. Businesses failed. But retrenchment of the public sector seemed to be contained. Within a few months the limit on bank withdrawals was lifted, and exchange controls two years later.
By the time that in Greece the economy was collapsing again towards its third bailout in the summer of 2015, the Cypriot economy was already out of danger. Once again, as had been proved after the devastation of 1974, the economy of Greek Cyprus was capable of turning itself around in a short time, as has not been the case with Greece. It is another sign of the increasing divergence between the two Greek states, which remain so closely linked in other ways.
But all this is on the surface. The bailouts and the seemingly insoluble problem of Greece’s sovereign debt are only one aspect of a ‘crisis’ that goes deeper. At bottom, once again, it is a crisis of identity.
Under the new pressures of a decade of ‘crisis’, Greeks in all walks of life, and to some extent irrespective of whether they live in Greece or not, have found themselves forced to take stock, to look again at their history, at the values they grew up with, at their own sense of who they are and where they belong in the world. Once again, official Greece has reaffirmed its alignment with the West, now represented by the institutions of the European Union as much as by the broader culture of all Europe. But once again, this has been narrowly achieved, and at great cost.
Surveys and opinion polls have shown some decline in support among Greek voters for staying within the EU and the euro. But even now there is no evidence that a majority would prefer to leave. Private polling reported in late 2017 showed a drop from 69 per cent wishing to remain at the time of the 2015 referendum to 53 per cent in late 2016. The same populist, nativist trends that have been on the rise in other parts of the world for some years now can also be observed in Greece. The widespread anti-Americanism of the ‘Polytechnic generation’ has morphed into forms of popular hostility to Germans, perceived as responsible for enforced austerity. Newspaper cartoons have shown the former German finance minister, Wolfgang Schäuble, in Nazi uniform; popular demonstrations have represented the German Chancellor, Angela Merkel, in the role of Hitler.16 The period of ‘crisis’ has brought renewed calls in some quarters for payment of reparations by Germany for atrocities committed in Greece during the Second World War and, even more controversially, for repayment of enforced loans extracted by the Reich from the National Bank of Greece during the Occupation. Tensions of this sort seem to have peaked during the ‘Greek Spring’ of 2015. But they have not entirely gone away.
The most obvious symptom of a populist backlash is the presence of Golden Dawn, seemingly a fixture on the political landscape, with a polling strength of around seven per cent, which is to say within the same range as the Greek Communist Party has enjoyed for the best part of a century. At least Golden Dawn seeks no other alignment than with those it claims as biological ancestors, and especially the militarist, anti-democratic Spartans. At the other end of the political spectrum, there are those on the left for whom the old lure of the Soviet Union, and before that of imperial, Orthodox Russia, still tugs. This was the case with the thirty or so SYRIZA MPs who broke away from the party in protest against the third Memorandum. For them, as well as for Tsipras himself during the ‘Greek Spring’ of 2015, a serious alternative to ‘ever closer integration’ in Europe lay in reviving the old dream of closer ties to Russia.
That this was not just a fantasy is shown by the official visits paid to Moscow and St Petersburg by more than one member of the first SYRIZA government, including Tsipras himself in April 2015. At the end of 2013, when tensions were at their height over Ukraine and Russia’s annexation of Crimea, advisers to President Putin had even imagined a role for Greece, Cyprus and Turkey within the emerging Eurasian Union, which is the current Russian president’s way of restoring something of the old Russian empire. In a speech in December 2014, Putin had claimed ‘a special relationship with Greece because of our religious affinity’.17 In return, one of Tsipras’s first actions after his election victory a month later was to oppose EU sanctions against Russia over its actions in Ukraine.
In parallel with Varoufakis’s high-wire negotiations in Brussels, Washington and the capitals of Europe, other members of the same government were trying to negotiate an alternative loan from Russia. If that had been offered, it might just have provided the leverage needed to bring concessions from the ‘Troika’, or at least the possibility of a slightly softer landing if Greece were to be ejected from the euro. But President Putin’s interest in Greece seems to be no greater than that of any of his predecessors since Catherine the Great. It is said that it was on the night of the referendum that Tsipras learned finally that Putin had turned down his government’s request for a loan – a possible further reason for the U-turn that followed.18
There remains a strong strand in Greek public opinion, going most of the way to the top, that still identifies either with the Orthodox Christian or the Soviet communist tradition with which it intriguingly overlaps historically. The passing notion, in the Kremlin, of a ‘Eurasian’ Greece, or Cyprus for that matter, might have seemed far-fetched in 2013. But there could yet come a time when it might not. And in the case of Cyprus, although no state loans have been involved, the recovery since 2013 has been aided by private investment from Russia on a scale that Western observers find troubling. Today, restaurants in Nicosia print their menus with a page in Russian, as well as in Greek and English. Arrivals at Larnaca International Airport are greeted with glitzy advertisements for real estate written entirely in Russian. High-profile Russian ‘oligarchs’ have been awarded citizenship of the Republic of Cyprus, and therefore of the European Union. When in March 2018 the majority of NATO and EU countries expelled Russian diplomats in response to the use of a banned Russian nerve agent in the United Kingdom, no one should have been surprised that Greece and Cyprus were not among their number.
So far, most of these responses to the ‘crisis’ have involved various degrees of either introspection or retrospection – whether falling back on resources or strategies that have worked in the past, or turning wistfully towards avenues not taken. But there is one aspect of the ‘crisis’ that crops up again and again. This one, too, needs metaphors to express itself. Greece since 2010 has become a ‘testing ground’, a ‘laboratory’, or is itself the subject of experiment: a ‘guinea pig’ or laboratory animal. Most chilling of all these metaphors is that of the ‘canary in the coalmine’. The purpose of the caged bird down the mine was to give warning of poisonous gases that human senses could not detect. If the canary died, the miners had time to escape before being overcome. It is in that sense that Greece has been tested by the European institutions and the IMF. The very survival of the institutions, and of the global financial system that they in turn shore up, was at risk from the financial crisis of 2008. Following the logic of the metaphor, Greece was the small, weak songbird whose life could be sacrificed for the greater good.
These metaphors and their constant reiteration are not very flattering to Greeks – who nonetheless repeat them as often as anyone else. Their only effect is to reinforce a sense of victimhood that can be traced back through Greek popular culture for hundreds of years. A better metaphor is that of the pioneer.
The pioneer originally was a foot soldier sent ahead of the main force to prepare the way for the rest. In that sense, the pioneer is not totally unlike the canary. But there is a difference. The pioneer, even if he is acting under orders, still has human agency. He may end up losing life or limb to protect his comrades. But he can also use his ingenuity to find the safe path and guide them. It was in that sense, surely, that the novelist Giorgos Theotokas, writing in 1929, in the aftermath of a much greater national disaster, called for ‘bold pioneers’ to carry forward a programme of cultural renewal by reaching out to the rest of Europe.
And this is where the ‘crisis’ and the years that will follow it must surely present opportunities, alongside the more obvious threats. Greece was the first country to be bailed out by a ‘Memorandum’, devised by a ‘Troika’ that had been brought into existence expressly for that purpose. Greece is the only country to have gone through the process three times. The strength of Greek institutions and the endurance of the Greek people have been tested severely, but they have come through the test. Europe, the euro and the Eurozone are the stronger for that. And they have the Greeks to thank, for taking the risks of the pioneer to make it possible.
Two hundred years ago, during the 1820s, Greeks were the pioneers who first mapped out the route that would lead from the old Europe of great empires to the Europe of nation states that we know today. No one should take it for granted that Greece and Greeks in future will always align with the values, traditions and politics that we tend to lump together and call ‘Western’. Geography, and to some extent also history, may pull the other way. But as they prepare to celebrate the two-hundredth birthday of the Greek nation state in 2021, Greeks can take pride in an achievement that by its very nature, and from the very beginning, has been won not through isolation, but in partnership, every difficult step of the way, with other Europeans. It could not be otherwise. Because ‘Greece’, however understood, or misunderstood, has always been part of the modern identity of Europe too.