Greek Referendum: A Series of Blunders

Alexis Tsipras, Syriza
Teaser Image Caption
Alexis Tsipras visits the European Parliament, February 2015

Greek society is divided over the question of the referendum. The Syriza government ended up toying with democratic processes and institutions, says Dimitri A. Sotiropoulos. A commentary.

How come a left-wing government in a EU country which had won a fresh electoral victory just five months ago and had the ear of its country’s lenders for a considerable time period after it came to power, is now governing a country in which long queues of citizens are continuously formed in front of ATM machines, while old age pensioners form other queues to receive a fraction of their pension? How come the same government, which had promised a better life to the victims of the economic crisis, has rocked the boat of the country’s economy, bringing economic life to a standstill and thus provoking further dismissals of private sector workers from the already ailing and starved-for-cash businesses? And how come the same government ended up toying with democratic processes and institutions, including among others the referendum procedure? 

Two possible answers

Perhaps the answer to these questions can be couched as a dilemma: Syriza, which won a spectacular victory in the parliamentary elections of January 2015 (obtaining 149 out of 300 parliamentary seats), either a) is not a left-wing party in the way the Left is understood in today’s Europe or b) it is a left-wing party which is composed of fanatic anti-EU amateurs, who were never up to the task of managing the ruins left by the previous center-right and center-left (ND and PASOK) coalition government which had implemented austerity policies in Greece in 2010-2014 and to reap the benefits of fiscal consolidation achieved in an albeit socially unjust manner by its predecessors in power (ND and PASOK).  It is difficult to tell which of the two alternative answers is correct.

No relation to the Left?

There are arguments for the first option. This is that Syriza is not a left-wing party, interested in redistribution of income and democratization of institutions. Indeed, the first move of Syriza after its electoral victory was to form a coalition with a small, chauvinist/populist party, the Independent Greeks (Anel), ideologically placed to the right of the conservative ND party. An alliance with such a far-right party, like the Anel party, was all the more surprising given that about one-fourth of Syriza’s party cadres, at least in principle, belong to a radical left, probably neo-communist faction, exerting influence on the party’s leadership, while another faction of the Syriza party is recognizably anti-nationalist. 

Then, over the last 5 months, the Tsipras government took measures to help only the public sector workers of the relatively higher-income levels. Examples are the hiring of 2600 employees and journalists of the former state-owned public broadcaster (ERT) which had been closed down in June 2013 and the granting of pay raises to highly-paid workers of the state-owned public power corporation (DEI).

As it had happened before Syriza’s victory, the private sector workers were left on their own. But this time a strong anti-business agenda of the Syriza government has led to the closure of many small and very small businesses. The poor who had expected additional social protection after the fall of the previous government, found out that, in its first ever bill of law submitted to the Parliament, Syriza earmarked 200 million Euros for the so-called "humanitarian crisis". This is to be contrasted with the 450 million Euros which the ND-PASOK government had earmarked and legislated as relief fund for the same target group in the spring of 2014. In other words, Syriza has proven to be a political representative of the "insiders" of the Greek labour market.

Moreover, the economic climate worsened and the private economy gasped for breath, as banks withheld credit, while the fanatic anti-EU stance of Syriza fed into the strong neo-liberal policy guidelines followed by some EU officials and a few Finance Ministers of other Eurozone Member-States. After Syriza's ascent to power, in January 2015, the EU, the ECB and the IMF were probably open to some modification of the five-year long austerity policy of the two Memoranda of Understanding (MoUs), signed in 2010 and 2012 respectively.
The initial willingness of the three "institutions" to collaborate with Syriza is explicable. They had been disappointed with the coalition government of ND and PASOK, which in the second half of 2014, after losing the European Parliament elections of May 2014 to Syriza, had not proceeded with almost any reforms.

Not up to the task of governing a modern European democracy and state?

This is the point at which one starts to think that the second answer is correct, namely that Syriza’s governing elite, blinded by its anti-EU fanaticism and ideological ties to the party’s neo-communist faction, was incapable of understanding what is at stake and to steer the country out of the crisis.  In the first half of 2015, the evasive negotiating tactics of Syriza, which prolonged the conduct of negotiations with the "institutions", and personal vitriolic attacks by Syriza officials against Greece's lenders and officials of Eurozone countries eroded trust between the two sides. Greece's lenders and segments of the international press responded with vehemence which was fueled by the less-than-professional  performance of the Greek Minister of Finance in Eurogroup meetings. Soon, polarization between Greece and its lenders at the level of political rhetoric was translated into a stalemate in negotiations over the terms of Greece's receiving the last tranche of the Greek programme (over 7 billion Euros).

The Syriza government used the stalemate of negotiations to create ripples of anti-EU sentiments in the Greek public and cornered itself to hardened positions regarding reforms. Eventually, as time was running out, in the last week of June the government presented its interlocutors with a list of reforms which amounted to austerity measures costing 8 billion Euros. This was a bold U-turn for Tsipras, as before winning elections Syriza had promised to the Greek electorate to increase public spending by 12 billion Euros, whereas now it opted to engage in reforms which would raise public revenue by 8 billion Euros (primarily through increased taxation). 

Greece’s interlocutors committed a major blunder by not closing the negotiations, at that point, with minor amendments on Syriza’s reform proposals. They demanded different measures, such as immediate VAT rises and pension cuts, because they did not trust the Greek government and the tax administration to be able to carry out the spending cuts and personal income tax reforms included in the Greek list of reforms. Then Syriza made an even larger mistake. Tsipras responded by launching a referendum on the reforms suggested by the "institutions". He asked the Greek people to accept them or reject them (the "yes" or "no" vote in this Sunday’s referendum).

The problems of this move by Tsipras and his government are obvious. Tsipras has not submitted to the Greek electorate a referendum on his own list of austerity measures, which in some respects was marginally different from the corresponding list of the "institutions". In other words, he has backed down from his responsibility to conclude the negotiations. Second, given that he took everyone by surprise, there was a bank run, that led to the closing of Greek banks last Monday and the imposition of capital controls. Third, he made this move, which alienated Greece’s lenders and Eurozone partners, just a few days before the deadline to repay part of Greece’s debt to the IMF, thus effectively slashing any chances to avoid default on the IMF loan.  Fourth, he launched the referendum on an economic issue in the midst of the tourist season, i.e., the period that the Greek economy usually receives large injections of Euros and foreign currency by tourists coming from all over the world. And fifth, as the Council of Europe officially noted this week, the question of the referendum is unclear and the time allowed for public debate (less than a week) insufficient. Indeed, the government, which campaigns for the ‘no’ vote, has issued a referendum ballot in which the word ‘no’ (in Greek, ‘ochi) and the corresponding box to tick is printed above the word ‘yes’ (in Greek, ‘nai’) and the corresponding box to tick. Notably, this reverses the usual ‘yes or no’ sequence of words and obviously also reverses the order of the alphabet in which ‘N’ (the letter with which the word ‘nai’ starts) comes before the letter ‘O’ (with which the word ‘ochi’ starts). 

The most severe blunder

As things stand now, the Greek electorate is divided. Polls made available just two days before the referendum, show that the outcome will be a close call. In the meantime, Greek society is divided over the question of the referendum and a new political schism has risen between supporters of the 'yes' and 'no' vote. Perhaps creating a new political divide in a society already bitter after five years of austerity was Syriza’s most severe blunder, the wounds of which may take a long time to heal, particularly if Greeks, by voting 'no', voluntarily let their country slip out of the Eurozone.