Pictures About Greece

Facts About Greece / January 5, 2018

In a special long-read, Paul Mason offers five pictures of Greece.

A divided population?

As the crunch approaches the atmosphere has changed. For six months the centre right in Greece was prepared to wait and let Alexis Tsipras try – and fail – to secure a letup on austerity. Now the old political establishment has understood he intends to take this to the bitter end: a default on Greece’s June payment to the IMF, with possible dire consequences for the banks as early as Monday night.

The ECB’s life support facility – known as Emergency Lending Assistance (ELA) – is conditional on Greece being “in a programme” agreed with lenders. I understand on Friday it was only the intervention of Mario Draghi, the ECB’s boss, that prevented the termination of ELA.

So on Thursday, amid an accelerating bank run that has seen €5bn withdrawn this week, the opposition took to the streets.

The demo was called on Facebook and fronted by technocratic young professionals for whom Greek membership of the Euro symbolises their aspirations for a cleaner, more modernised economy. But the majority of those attending were from the political establishment that ran up €320bn debts and then signed up for an EU/IMF austerity deal that destroyed 25 per cent of their economy.

When they surged up the steps of the tomb of the unknown soldier, which fronts the Greek parliament, there was not a single uniformed policeman in sight. They chanted for Europe and against Syriza. Their placards denounced the “soviet” aspirations of the far left government. Present were key members of the conservative right, including leadership hopeful Adonis Georgiadis.

The Greek left is suddenly startled. Though the right wing demo was only around 7, 000 strong, largely composed of people over 65, and ridiculed by Syriza and its bloggers, for a wider group of voters it has sown anxiety.

The soft left of Greek society – also technocratic, also pro-Euro – voted for Syriza because it promised them to reduce austerity while staying in the Euro; and to attack corruption. It also promised to put the world of tear gas and riot cops and fascist infiltration of the state into the past.

Now, every logical mind in Greece is mulling over the following scenario. If the government can’t reach a deal on Monday, and defaults, and its banks are closed – bringing tens of thousands of enraged conservatives to the streets – what next? Syriza removed the barriers to parliament and demobilised the riot cops. So what if next time, alongside the genteel and the technocrats, there arrives the plebeian base of conservatism, carrying national flags and religious symbols?

The prospect of open conflict between the left and right of Greek society terrifies the young, because their grandparents fought it out with tanks, torture and guerrilla warfare. Though nobody is suggesting it will end that way, it is the unanswered question – can Greek democracy and civil society contain the tensions that will be unleashed this week if Greece defaults?

That may shape the actions of both Alexis Tsipras and the lenders.

Syriza: in the headlights of history?

Syriza in power has been a work in progress. Alexis Tsipras divided up his ministries between three distinct groups of politicians: the pro-Grexit hard left of Syriza, which got the energy ministry; long-standing Syriza lawyers and academics of the post-1968 generation; and no fewer than six independent ministers, with political careers in the left of social democracy (plus three right wing nationalists and a green from his coalition partners).

But what they’ve found in power is an apparatus that barely functions. The civil service, one ministerial aide told me, ranges from hostility to mere leakage of information to the opposition. The Greek state had become so reliant on informal, clientelist relationships that it has very little in the way of institutional shock absorbers between ministers and micro-operational decision making.

When it comes to the banks, the minister responsible is Deputy Prime Minister Yannis Dragasakis, yet the effective bank regulator is the ECB. That means the government cannot exert influence into the banking sector at times of crisis. Meanwhile the governor of the Greek central bank, Yannis Stournaras, is a former conservative finance minister who opposes Syriza’s policy but can’t be removed.

There is, both in the party’s rank and file and among the wider population, frustration at Syriza’s slowness in altering the way the state runs.

As a result of this Syriza’s ministers and aides have developed a management style whereby they are in constant execution mode, and constantly reacting to critical events. Technical and operational tasks consume energy that in a functioning democratic state should be used for political decision making, or taking the temperature of society, or just recuperating.

As for communication this is a party with almost no “outriders” in the mainstream press: their media allies are startup internet news sites, or columnists in the liberal and conservative foreign press.

All these relatively minor dysfunctions will be problematic if a default happens and the banks have to be closed or nationalised.

I watched the British state struggle with a bank collapse in October 2008: 24 hour operations by seasoned civil servants, fuelled by takeaway food; line-open calls to Washington, to the central bank, to individual bank bosses. Drawing on decades of goodwill and personal relationships, built over a decade of receptions and business dinners, Gordon Brown’s civil servants saved or sacrificed the finance system, bank by bank, CEO by CEO.

With the Greek state there is scant capacity to mount such an operation, and no single centre from which it would be launched. Plus there is the implicit resistance of the Greek central bank, which is bound by the rules of the Eurozone to act on behalf of Greece’s lenders, not its people.

I do not doubt that finance minister Yanis Varoufakis has a “Plan B” in the case of a rupture, and a banking crisis. But I doubt the Greek apparatus of government is resilient enough to manage it.