Greece: it is not about the austerity

Greek elections were not about the end of austerity and debt-write off. This was just an election narrative that captured the hearts of the Greek electorate and, surprisingly, dazzled large majority of the pundits, commentators and economists in Europe.

As good as it gets

As financial analysts are explaining, countries like Italy, Spain, and Portugal are spending larger share of their GDP to service their official debt than Greece. Much of the debt has already been written off or “hair cut”, a lot has been reprogrammed, postponed, the interest rates on the European loans are quite small. The troika is not requiring any substantial new austerity measures anyway. Much of what Syriza claims it wants has been done already.

In the words of Daniel Gros: “… in the end, the difference between a government that has never made good on its promises to pay and a government that promises not to pay might not be that large.”

If not much will change with respect to debt and austerity, what was this election really about then?


The problem of Greece is that it is not competitive, exports are sluggish and foreign investors are avoiding it. There is much to be done to make the country friendlier to entrepreneurs. This may include liberating the markets from the capture of tycoons and family networks that prevent fair competitive capitalism. It also includes a more efficient public sector.

The elections were hardly about this either.

Instead of a debate how to achieve that Greek economy would earn more, the elections were a mix of national and social populism. Like any populists, Syriza exploited natural and (in fact positive) instincts of compassion and patriotism.

National and social populism

The national populism was manufacturing an outside enemy in Europe and particularly Germany. The social one was spreading hatred towards capitalists and was promising hand-outs that the Greek citizens should be getting. Cheaper rents, cheaper oil, higher minimum wage, even more employment in the public sector …

National and/or social populism has proven a receipt for populists, anarchists and radicals to get to power. Generally few people fall for it. But under special circumstances, like war or major crisis, it works. As we have learned the hard way in the 20th century.

What is also needed is wishful thinking by democrats. A conviction that what populists say is what they really want. Like ending the humiliation of a country and all will be well; abolishing a treaty; some other small concession.

Economists (equipped with a hammer they too tend to see all problems as nails) are already proposing a compromise between what Syriza wants and what the EU and the creditors need to stick to.

Power. To the “people”

The real danger of Syriza and other populist left and right wing parties is their ambition for revival of ideology that has been proven wrong in the 20th century. Its essence is a disrespect for the human rights, the individual, her life, freedom and property.

The fight against domestic and foreign enemies in the noble name of social justice and patriotism was just a pretext, a side show, a slide show, to capture the hearts of the voters. Let’s not mistake this with the real agenda of the radical left – which is capturing of power and ruling the country, perhaps Europe, according to their ideological agenda. The agenda is to shape a “radically new post 2008 world”.

Center left and right

The radicals and populists may not be alone in this. Tony Judt once wrote that the Western European social democrats were always envious of their Easter European communist comrades. The latter could exercise the leftist agenda without the trouble of elections and without checks and balances of democratic society.

Today, traditional European left has a choice to make. Are left wing populists and radicals an ally or a competitor? Should they celebrate their success and join them in their struggle for a “better” world. Or see them as an enemy of democracy and liberty and therefore incompatible with modern Europe.

While the left may be inclined towards appeasement, the center right must confront populism with reason. That there are no free lunches. That hard work pays. That opportunities are there to exploit for everyone. That jobs are created by entrepreneurs and the role of the state is to make sure there is fair competition among them.

That solidarity is important too and it is not just an internal affair of each member state. 

Revival of populist and radical utopian regressions, not the debate about more or less austerity, is the story behind the curtains in Greece and beyond. Debating austerity and hoping for an economic compromise is a discussion about a smokescreen. Not entirely irrelevant, but definitively not central.