Why Europe is suddenly rediscovering Greece's financial instability

The World
Alexis Tsipras, leader of Greece's far-left Syriza party smiles during a meeting with Greek President Karolos Papoulias (not pictured) at the Presidential palace in Athens November 3, 2014.

Alexis Tsipras, leader of Greece's far-left Syriza party 

REUTERS/Yorgos Karahalis

Looking at Greece’s current political and economic turmoil, you’re immediately tempted to write: “It’s back.” But that presupposes that the crises that left the country financially bankrupt and politically rudderless for the past few years went away in the first place.

They didn’t.

The Eurozone and International Monetary Fund did lend Greece billions of dollars, largely to service the country’s debt. And the Greek government, led by the center-right New Democracy party, tried to stem corruption and enact tax reforms, not to mention jump-start business development. How much did the government try? That depends on whom you ask.

Suffice to say that many Greeks don’t think their current politicians are trying very hard at all. And now, parliamentary elections have been called for the end of January.

At the moment, many Greeks are throwing their support behind Syriza, a left-leaning, anti-austerity party headed by Alexis Tsipras, who earlier this week told the party faithful “Syriza is not the enemy of Europe’s future. It’s the policies of [German Chancellor] Mrs. Merkel that are a threat to Europe.”

If elected, Tsipras has vowed that priority number one will be to try to renegotiate the terms of its austerity deal with the Eurozone.

But here’s the problem. Other Eurozone leaders say those deals are not up for negotiation, that they were made in a good-faith attempt to save the Greek economy and thereby keep the Euro from crumbling into the dustbin of history.

Current polls suggest many Greeks support the idea of a lot less austerity. After years of such measures, Greeks have little to show from their belt-tightening.

At the same time, the majority of Greeks say they want to remain in the single currency. An exit from the Eurozone, dubbed a “Grexit” the last time around, and a return to the drachma might be catastrophic for the country in the short term.

And for the rest of the Eurozone, the new threat of a Greek departure (call it Grexit 2.0) raises a spectre that’s been hanging over the currency union for the past few years. Namely, first Greece goes, and then maybe Spain, perhaps even Italy.

Germany, the Euro’s powerhouse, has long said it supports doing whatever it takes to keep Greece in the currency union. But this week, Der Spiegel magazine quoted some high-ranking German government officials as saying that Germany could certainly survive a Greek exit, and might be willing to let them go if the Greeks really intend to renege on their fiscal commitments.

Amid all this talk of Grexit 2.0, I contacted Katarina Vrana, a Greek comedian who has been splitting her time between London and Athens for the past few years. I met her back when I was reporting in Greece during the height of the crisis back in 2011-2012.

Vrana recently opened a comedy club in the Greek capital.

When I asked her if politics is a hot comedic topic, she laughed. “You can feel the audience just go — 'OH NO ... I don’t care about those idiots.' There’s such a backlash against all politicians in Greece, that the audience just says, ‘Can’t we talk about something else, please?’”

As for Greece’s current economic health, Vrana quips: “It’s not crisis, crisis, crisis, but it’s still there. Also, other countries have gone to absolute mayhem, so they make us look stable. We thank them for that.”

“In the end,” Vrana says, nodding toward the situation in Ukraine, “people would rather invest in a country like Greece that’s bankrupt, but trying, than in a country that’s at war with Russia.”

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