Photo: Angelos Christofilopoulos / FOS PHOTOS

Once again, a Dead End

Germany, Greece and the IMF put themselves back in the corner.


It should come as no surprise to anyone who’s followed the Greek bailout saga these past six years that once again, a government that has agreed to implement austerity measures under duress, would find sooner or later that the EU and IMF’s constantly growing demands tend to reach a point where they become inapplicable.

Now, with the lenders’ side demanding an extra set of “preliminary” austerity measures to come into effect in case the fiscal targets of the new program fail, the negotiations have reached an impasse that has sparked talks of new elections or even another referendum, this time with a more definitive question than last summer’s, when the choice was between accepting or rejecting a deal proposed by the European’s Commission’s president Jean-Claude Juncker.

Then, the ambiguity of the question resulted in a paradoxical situation: a massive 61,3% that voted in favour of rejecting Juncker’s proposal would see the Greek government agreeing to even more harsh austerity, having to face the results of an immense capital flight that the controls imposed on Greek banks the week preceding the referendum were too late to deter.

One could argue that the political background of the new impasse is of no real importance if the numbers don’t add up. The problem is that the numbers keep on not adding up, ever since the beginning of the crisis in 2010.

From the lenders’ side, this is constantly attributed to an incomplete implementation of the bailout deal, a concern last voiced very recently by the Germany’s finance minister, Wolfgang Schäuble, when he addressed Greece’s Prime Minister, Alexis Tsipras, with a twist on Bill Clinton’s famous saying: “it’s the implementation, stupid”.

This narrative is only half true. The backbone of the measures predicted in the previous bailout deals have come into effect, with a heavy toll on the Greek people. Despite massive cuts in public spending, heavy taxation, privatizations and labour reforms, the economy is almost constantly knee-deep in recession, while any fiscal achievements of the previous measures, have been heavily contested either as products of “creative” accounting, or as coming with the price of tearing the social fabric of Greece apart.

Meanwhile, the EU and the IMF’s stance is riddled with contradictions between their reports and their proposals, especially on tax and privatization policies. The latest episode even saw a rupture between them, as the concept of preliminary policies is incompatible with Greece’s constitution, something that the EU has recognized but the IMF doesn’t seem to care for.

All in all, Greece’s lenders have been firm in their demands, but fluid in their proposals, and have yet to be met with a government that could safeguard the political stability that is needed to implement them.

This is not to absolve the Greek governments (four of them in only six years) of their responsibilities. The additional demands of the EU and IMF might be unreasonable, but they are well within the framework to which Alexis Tsipras’ anti-austerity coalition agreed last summer, neglecting the fact that he had no real leverage in the coming negotiations.

Now, if elections were to happen, it would be the fourth time in 18 months that the Prime Minister has resorted to the ballot and the result does not seem likely to solve anything: according to recent polls, Tsipras’ popularity has collapsed and the opposition’s leader, Kyriakos Mitsotakis, is not high enough to ensure that his electorate would provide the necessary majority consent to austerity.

Even if a referendum that clearly asked whether the Greek people wanted to remain in the eurozone took place, it would still not be adequate as a question: a “yes” vote would imply that the fiscally impossible strategy of the lenders would go on devoid of any social or political restrictions, while a “no” vote would not come with a clear plan of a “Grexit” that would keep the voters informed on the consequences of their vote, as the stigma of such a choice has been so big that it has prevented any rational or well-documented talks on it. Thus, it makes perfect sense that all estimates in this scenario point to a large abstention from the polls, that could even make the referendum void.

The current situation is not just another impasse, similar to the ones the previous governments bumped into. This might be the perfect impasse: a one-way street with dire consequences, political, social or otherwise, that would extend the Greek crisis for many years with no possible exit from its recessionary results.

We previously reported on what the leaked drafts of the bailout agreement contained, even before the preliminary measures demand came in, and the vastness of the measures was more than enough to overwhelm the government’s power. Rumours of dissolving the current government and forming an ecumenical one with most of the parliamentary parties are now on the table, but this option would leave the neo-nazi Golden Dawn party as the sole opposition, in a very dangerous situation, further compromised by the refugee crisis that could be exploited to broaden the far-right party’s appeal.

The EU and IMF don’t seem willing to back down on their demands, while anti-EU far-right powers are on the rise everywhere and the issue of “Brexit” is looming. The landscape in Europe is at its most unstable moment of the last decades and commitment to the European ideal is at an all-time low. The effect of the current impasse on Greece’s politics and the society will surely be tremendous.

AthensLive will be on the story as it evolves, reporting on any major developments or stories that come up.


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