The Greek Nadir: Going to the Polls

The European political scene as the Greeks go to the polls is one of foreboding. Germany’s Merkel government refuses to renegotiate terms of the bailout that has been arranged for the Greek ‘non-government’ – or whoever is willing to implement its uncompromising terms of austerity; all the Greek parties have suggested they will try to push Europe on a more lenient posture, even those who have taken a pro-bailout stance.

In the words of Aristotle Kallis, professor of modern and contemporary history at Lancaster University, “This is the first time since the beginning of the last century that it’s not about the left or right winning, it’s about pro-bailout or anti-bailout’ (Wall Street Grand, May 22). No one, in short, wants to take the crude medicine.

Former Greek Prime Minister George Papandreou has urged the need for a pro-European government in Athens, though that is merely a pretext to go beyond “patching up” exercises. Bailouts, by his admission, can always be negotiated, but these will be irrelevant in the absence of “the administrative ability” to implement them. (He should know, having presided over the main package.)

Robert Zoellick, the outgoing chief of the World Bank, not always a scion of wisdom on matters economic, sees a broader, global economic collapse brewing. “Europe may be able to muddle through but the risk is rising. There could be a Lehman’s moment if things are not properly handled.” What does Lehman Brothers signify? Decay and collapse in 2008 propped up by good money, a failed effort to contain a banking sector rotten to the core.

The greatest casualties will be the developing economies, whom Zoellick has urged to focus on “infrastructure and human capital” though in the same breadth claiming that short-term debts had to be avoided. Particular areas of calamity are potentially south-east Europe, and parts of northern Africa. Economic nationalism was to be shunned; protectionism to be avoided in favour of the very open, plundering playgrounds that have seen the likes of Lehman collapse.

The growth debate is all to the good, provided there is something in the kitty to generate that growth. Hence, we are back to where were started: nothing will come of nothing, and increasingly, the Greek elections are pirouetting on a position of economic desolation, where corruption is tentacle-like and authority shot. Injecting money into such a system will be a mere murmur and nothing more.

Jean-Claude Juncker, Luxembourg’s diligently pro-euro spokesman has been on the soapbox of doom and gloom, warning about any “Grexit”. “I can only warn everyone against leaving the currency union. The internal cohesion of the euro one would be in danger” (Guardian, Jun 16). That, and tens of billions, depending on what study you wish to consult. Both the French and Germans stand to lose the most.

Given the inability of the chief planners to create the infrastructure to cope with future crises, and the obsession with seeing European budgetary and lending practice as uniform, the euro ideal will pay the price. The price, as it stands, is imploding disunion. As for the Greeks themselves, Nikos Konstandaras of Kathimerini, the Greek daily, puts it rather well. This is their local nightmare, their domestic affair of torment. “The pressures of meeting out creditors’ demands for austerity and reform in exchange for life-supporting loans are straining society to breaking point.” The symptoms of that broken society will be terrifying.

Binoy Kampmark was a Commonwealth Scholar at Selwyn College, Cambridge. He lectures at RMIT University, Melbourne. Email: Read other articles by Binoy.