/ 8 January 2015

Visionary vs Greece’s Mr Austerity

Visionary Vs Greece's Mr Austerity

One hails from the old world of Greek bourgeois society, and is a Harvard business school graduate with stridently conservative views. The other, state-educated and middle class, was raised in the decidedly newer world of rough-and-tumble leftist politics.

The stark differences between Antonis Samaras, Greece’s prime minister, and Alexis Tsipras, the man who wants his job, will to a great degree define the contours of the battleground as the country heads to snap polls on January 25. It is a clash whose outcome will affect Europe too.

“Ultimately the election will boil down to a highly polarised choice between these two men,” said Ilias Nikolakopoulos, a political science professor at Athens University and a leading pollster, “and, of course, everything their parties represent.”

Support for the patrician Samaras is viewed as a vote for stability. International backing for the 63-year-old, a once-vehement opponent of austerity, has soared since his pro-business New Democracy party assumed power as the dominant force in a fragile coalition in June 2012. Both markets and foreign lenders, who have thrown the debt-crippled country a lifeline of €240-billion, see him as the best guarantor of Athens’s future in the eurozone and, by extension, the European Union.

Following Parliament’s dissolution last week in the wake of an abortive attempt to elect a new head of state by the 300-seat house, a failure that under Greek law automatically triggers early elections, Samaras has played up the euro exit dangers of supporting Tsipras’s radical left Syriza party. An alliance of communists, Maoists, socialists, Trotskyists and greens, Syriza has made writing off Greece’s debt and cancelling the austerity measures agreed in exchange for funds from the EU and the International Monetary Fund its overriding mantra. Both are anathema to creditors.

Healthy lead
Last week, as polls continued to indicate a healthy, if narrowing, lead for the neo-Marxists, Samaras told Greeks that endorsement of the rebels would be tantamount to allowing their nation to crash on the rocks of insolvency and be ejected from the single currency.

Brussels’s newly installed EU president, Jean-Claude Juncker, recently echoed that view, proclaiming with forceful self-confidence that he did not think Tsipras was “the right man for Greece”.

Greece’s Prime Minister Antonis Samaras is fighting a serious challenge from left-wing rival Alexis Tsipras. (Aris Messinis, AFP)

But, although the workaholic Sam­aras is credited with putting Athens on a path of tentative economic recovery after its worst recession on record – Greece posted a primary surplus last year – he is also associated with biting austerity. And although polls have persistently portrayed him as being more suitable for the role of prime minister, he is nevertheless part of the traditional ruling class that is perceived to have ruined Greece.

Tsipras, who turned 40 last year, has ridden high on accusations that it is the rotten political establishment, epitomised by New Democracy and its partner, the socialist Pasok, that has caused the country’s great economic and social crisis.

Once mocked as a marginal non-conformist with a penchant for funky hairstyles, the young firebrand is seen, even by his enemies, as a talented politician with extraordinary ambition. The son of a civil engineer, who lives in a rented apartment in a run-down district of Athens with his high-school sweetheart and two young children, Tsipras belongs to a generation untainted by power.

Short and vicious
In an election that will almost certainly be as vicious as it is short, he can tap into the deep wells of discontent elicited by brutal belt-tightening over the past five years. Much of Syriza’s support comes from the young and unemployed. For the three million Greeks now facing poverty, placating creditors means much less than erasing the painful conditions attached to its bailouts.

Since quadrupling Syriza’s popularity in 2012, the charismatic politician has worked hard to galvanise opinion in Europe, building ties with other far-left populist parties and improving his spoken English. Unlike Samaras, who attended Athens College, Greece’s most famous private school, and is fluent in several foreign languages, Tsipras, who studied civil engineering in Athens, did not have such skills.

“While Samaras represents Greece’s traditional ruling class, Tsipras is the new kid on the block, who is learning fast,” said Nikolakopoulos, who has ties with the left. “He has a lot of dynamism and, on a European scale, is seen as offering something new.”

A newspaper depicts Syriza party leader Alexis Tsipras. (Alkis Konstantinidis, Reuters)

Tsipras speaks openly of experiencing the ills that have tormented Greek society: cronyism, corruption and the lack of meritocracy.

For his fans, who increasingly include members of Greece’s decimated middle class, he is a visionary who has dared to tackle the self-defeating policies perpetuated by the dark heart of capitalist power. This week he declared that a Syriza victory would bring hope and with it “the decisive end of national humiliation and humanitarian crisis”.

Dangerous ideologue
But in a country still blighted by the fault lines of a bloody left-right civil war, Tsipras is also seen as a dangerous ideologue.

As the election campaign intensifies, it is that image Samaras will seek to convey. Few believe Syriza will not emerge as the first party on January 25, although in a climate of deepening fear, it remains doubtful whether it will be able to muster an outright majority. That makes smaller parties, including a new movement launched by the former premier, George Papandreou, potential kingmakers in any future government.

But what is certain is that, when voting day comes, the personalities of two very different men will have played a significant role in charting the course of a country in one of its most crucial hours. – © Guardian News and Media 2015

Chances of a messy Grexit put European markets on edge

The attempts by the eurozone’s big beasts to bully Greeks into voting the “right” way in their general election have begun.

Der Spiegel magazine reported at the weekend that the German government believes the eurozone could cope with a Greek exit from the single currency and that such an outcome would be almost inevitable if the “anti-austerity” Syriza party wins on January 25.

Inevitably, this was followed by a soft statement from the German government that nothing much has changed. But this was not quite a denial of the Spiegel story. The threat from Berlin seems reasonably clear: German Chancellor Angela Merkel will not tolerate Syriza’s demand to write off a chunk of debt and Greeks who want to stay in the eurozone (which is said to be the majority) should vote for a mainstream party.

Such meddling in other people’s elections may work or backfire – it’s impossible to say. But Berlin ought to be careful about regarding Grexit – or Greece’s exit from the euro – so lightly. For at least three reasons, financial markets are unlikely to be relaxed if the prospect becomes real.

First, a precedent would be set: countries can leave the euro. Anti-euro parties in Spain, Portugal and Italy would be encouraged. Bond yields in periphery countries might shoot up on the renewed fears of a break-up. The job of the European Central Bank (ECB), after its tortuous progress to quantitative easing, would become harder.

Second, Grexit would make sense for Athens only if accompanied by default, or default on the part of the debt not owed to the International Monetary Fund. That would be expensive and embarrassing for eurozone lenders because two bailouts would have failed. Voters would ask why so much time and money was deployed in trying to keep the club intact in the first place.

Third, Grexit would happen against the wishes of the majority of Greeks, if the polls are correct. Investors would wonder whether Germany would also be so sanguine about other accidental departures.

It is true, of course, that the eurozone has better fire-fighting equipment than in 2010 or 2012, the last times the Greek crisis took centre stage. There is a bigger bailout fund these days and a bond-buying mechanism for the ECB to support strugglers. That’s the basis of the apparent confidence in Berlin.

But the power of the financial armoury lies in the fact that it has never been tested properly. As think-tank Capital Economics argues: “Not only is the ECB’s bond-buying power unproven, but it is unlikely that the bailout funds are big enough to resolve serious problems in a country like Italy.”

The most likely outcome, even if Syriza emerges as the largest party, is another helping of euro-fudge. Syriza, almost certainly, would have to govern in coalition with more centrist parties and tone down its demands. For their part, Germany and others should be able to see that Greece, with a debt-to-gross domestic product ratio of 170%, remains miles away from debt sustainability.

In theory, then, there is scope for a deal: Athens would not get a debt write-off but could be given gentler conditions on its loans.

But that is only if the script follows past form. If Merkel is determined not to give an inch, as opposed to merely talking tough, it is a new game. Markets would tolerate a well-managed exit from the euro, which might benefit Greece in the long run. But that’s the least likely outcome. A chaotic, half-hearted exit – not the way to bet, but clearly possible – would be very different. – Nils Pratley © Guardian News and Media 2015