German Chancellor Angela Merkel visited Athens on April 11 for the second time in a year to celebrate the country’s return to the markets and show solidarity with the government of conservative Prime Minister Antonis Samaras, who is facing major disturbances both inside his government and in society on the way to the European elections in May.
Greece recently managed to raise 3bn euros ($4.14bn) selling five-year bonds with a yield of 4.75 percent for the first time after four years. This is quite an achievement for a country that has lost 25 percent of its GDP and is going through the seventh year of a recession with no signs of recovery any time soon. Analysts and politicians alike welcomed the news with enthusiasm in some cases but also scepticism, as they interpreted the risky action taken by the Greek government as an exhibition of trust by the markets not to Greece, but to the Troika and Germany in particular.
This is a paradoxical situation and critics argue that there is not much room for optimism, whether you look at the Greek recovery programme as a half full or a half empty glass. Greece has a long way to go before it gets anywhere close to its pre-crisis situation and the eurozone is still in trouble. The German Suddeutsche Zeitung underlined the fact that the country is not ready to support a return to the markets and stressed that this is not about a return to normalcy. Forbes even joked that “Greek bonds should come with a hazard disclaimer” since the figures are still disappointing and the Wall Street Journal expressed similar sentiments.
Greece had stopped issuing bonds once its debt reached 120 percent of its GDP, so it seems strange that it would do that today with debt at 175 percent of GDP. But in a market where investors look like “blind bulls” who are attracted by the return rate of 4.75 percent, which is considered high nowadays, and ignore the fundamentals, it has proven to be realistic. Moody’s rating agency recently rejected the upgrade of Greece’s rating from “Caa3” because of the political instability in the country. Just a few hours before the trade took place a car bomb with 70kg of dynamite exploded right outside the Central bank in downtown Athens.
Then there are the social figures of the crisis: Greece still ranks first in unemployment and poverty in Europe with a staggering 60 percent of its educated youth being forced out of work. All institutions face enormous problems. Human rights protection has seriously been damaged with the latest incident involving the torture to death of an Albanian convict by prison guards after he stabbed another guard to death. And still the government agreed to a further deregulation of the labour market, further cuts in wages and pensions and more layoffs from the public sector, despite its earlier promises of “no more” measures.
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Greece might have indeed re-entered the bond market, but was the price it had to pay worth it?
Fixing Greece’s psychology
A return to the markets under these conditions only makes sense as a political action aiming to cause a positive effect on the psychology of Greece’s European partners or, more importantly, the Greek voters. Why else did the country need to add another 3bn euros ($4.15bn) in public debt, when the Troika guarantees all of Greece’s obligations on a lower interest rate? Isn’t Greece weakening its own negotiating position for a haircut of its 325bn euros ($450bn) debt to sustainable levels, when it demonstrates that it can actually borrow money like everybody else? And have people realised that the amount that the country will be forced to pay in interest for this loan equals the primary surplus, a part of which the Greek government is trying to distribute to the more vulnerable in society after it overtaxed them?
In a speech he gave in Brussels, opposition leader and candidate for the presidency of the European Commission on behalf of the European Left, Alexis Tsipras, described the return to the markets as criminal. According to his party, the new Greek “success story” depends on unsustainable growth projections while it has proven to be socially disastrous, especially for the poor.
So long as Greece is in a recession that has been described as deeper and more severe than even the Great Depression of 1929, and tied up to a memorandum with the Troika that imposes a further devaluation of the Greek economy, then the foreseeable future looks nothing but bleak. On April 9, workers went on the 36th general strike since the crisis started. Two days later the Greeks “welcomed” Merkel with another demonstration.
Nothing will change until the municipal and European elections on May 25. Opinion polls suggest that main opposition leftist party SYRIZA is leading but it doesn’t seem that it will be able to achieve a majority that would delegitimise the current government and cause national elections. At least not yet.
What is to some economists a positive turning point in the greatest experiment of fiscal consolidation and market liberalisation that modern Europe has experienced, is a politically fragile, financially futile and socially catastrophic project for ordinary Greeks.
The prospects of political stability with the current governing coalition, or any other party that brought Greece to this point, appear slim. The Greek government came twice to a standstill in the previous weeks. The first was when the vote went to parliament for a multi-bill that radically changes a series of professional relations and opens the way for the recapitalisation of Greek banks with taxpayers money.
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The second was when it was revealed that one of PM Samaras’ closest assistants had ties to the neo-Nazi Golden Dawn party. During a parliamentary discussion on revoking his immunity, Golden Dawn MP Ilias Kassidiaris showed a video where he was in an intimate conversation with the general secretary of the cabinet, Takis Baltakos.
I have argued that the rise of the extreme right in many parts of the continent is related to the unbearable austerity that Europe’s “new conservatives” imposed. This phenomenon is not a reaction, but rather a necessary complement to the re-engineering of societies based on poverty and exclusion.
I’m coining the term “new conservatives” here, in order to define the austerity alliance between the European conservative parties and the Social-Democrats, who endorse these policies. This is particularly evident in Greece, where the neo-Nazis do not only thrive on the fear of the people for the future, but most importantly they introduce and legitimise disciplinary techniques, which are complementary – if not necessary – to impose the bitter neoliberal reform.
The emergence of the neo-Nazi Golden Dawn party in the 2012 elections led to the frankensteinian theory of the two extremes, which allowed the government to take reactionary positions, in many cases. The circumvention of constitutional and parliamentary principles through an excessive use of legislative acts and emergency votes, the crackdown of workers protests, the extensive witch-hunt against immigrants and so on, all happened in the name of “democracy”.
In reality, it would be impossible to impose the measures that caused so much pain and misery without allowing the spread of hate in society through racism, xenophobia, sexism, police violence and fascism. There have been members of the political elite who have endorsed Golden Dawn’s agenda on grounds of nationalism. There have been prominent journalists who have openly proposed a cooperation with Golden Dawn in the past.
This is the political system Merkel came to support in Athens, a system set up to implement the Troika’s austerity measures. Outside the protective fence the Greek police had built for her and the Greek government, a deeply wounded and gradually more and more divided society is struggling to survive. Strangely, the answer did not come from tired Greeks rioting in the streets, but from the massive protests that rocked Rome, Paris and other cities during the “11th April, day against austerity” protests.
Matthaios Tsimitakis is a journalist based in Athens.