Follow Us

Follow us on Twitter  Follow us on LinkedIn

22 January 2015

Blog Post: Greece: Are more bailouts inevitable? No – if Syriza wins

Default: Change to:

Is this the best opportunity for 40 years to vote for genuine and permanent reform?

In a few days, 10m Greek voters will be entitled to vote for a new Parliament and perhaps two-thirds of them will exercise their right. A central problem of democracy is that you can only vote for someone whose name is on the ballot paper, so many voters may have to choose the “least bad” candidate. Greek public opinion is clear-cut about staying in the euro, wanting more economic co-ordination in the euro area and significant reforms at home.

The result of rule by New Democracy or Pasok for 40 years has been utter ruin for the vast majority of Greeks, but great enrichment for a tiny minority of `oligarchs’. After 17 triumphs of hope over experience, perhaps the time has come for Greece to try something completely different. The only realistic name on the ballot paper is Syriza.

If they had the opportunity, could Syriza instigate the “significant reforms to improve the performance of our economy” that 72% of Greeks want? Could Tzipras be demanding something that is quite likely anyway – though perhaps on a more moderate scale than the political hyperbole suggests? In politics, presentation is everything (nearly).

The European Commission’s Autumn Forecast was very positive about the outlook for Greece. The government that can claim ownership of such a turnaround would earn great plaudits from the electors as `austerity’ would indeed have ended.

“Cutting the annual cost of servicing the debt”: With little fanfare, the EU has already extended the maturity of it loans from the EFSF and given a 10 year moratorium on interest payments. As EFSF CEO Klaus Regling put it, these policies produce “there is no debt overhang in Greece over the next 10-20 years, despite very high debt to GDP ratios.” Plenty of opportunity to declare victory.

The alternative policy of forcing a default – perhaps associated with “Grexit” (though it has never been clear how that could be achieved within the existing EU Treaties) would create massive economic disruption. The absence of an interest moratorium for a decade would probably cause an increase in interest payments as the `new Greece’ might find it difficult to borrow in the markets at the same rate as the EFSF and pay interest every year from now on.

The final case for a Syriza vote is their declaration of war on the `oligarchs’ and Syriza’s “demands” seem on the verge of happening anyway.

Is this the best opportunity for 40 years to vote for genuine and permanent reform?


This is a summary prepared especially for the Friends of Graham Bishop. The full article is available for clients or on the Europe's World website (this may be subject to subscription)

© Graham Bishop

< Next Previous >
 Hover over the blue highlighted text to view the acronym meaning
Hover over these icons for more information

Add new comment