Greece on the Brink of Change
On Jan. 25, Greece approached a tipping point.
On that day, the left-wing SYRIZA party was voted into power on a platform of humanitarian reform, after seven years of strict austerity measures improved the Greek economy on the books but at a staggering human cost. Since the 2008 Eurozone crisis, the average household disposable income in Greece decreased by 34 percent, even as the economy showed positive growth.
Negotiations between SYRIZA and Greece’s Eurozone creditors have some speculating that the nation will remove the Euro as its unit of currency, with broad international economic ramifications. Unpacking the complex issue was the task of Cornel Ban, associate professor of International Relations at the Frederick S. Pardee School of Global Studies, and Iphigenia Kanara, the Consul General of Greece in Boston.
“What does the Greek Crisis Mean for Europe’s Economy and Democracy?” was held Tuesday, Feb. 17 at the Pardee School. Before a large crowd, Ban and Kanara walked through the history of Greece since the European debt crisis, and the implications of current fiscal policy on the Greek electorate.
“This crisis might morph into a Lehman moment for Europe,” said Ban, referring to the collapse of the Lehman Brothers bank in 2008 in terms of potential economic implications. “We have seen where austerity has led Greece. But if the Eurozone can accommodate the new Greek government this risk could be avoided. Then, the onus will still be on Greece to modernize its regulatory environment and boost the state’s tax collection and administrative capacity. The latter is important for the creditors as well as for the progressive agenda of the government.”
As Kanara explained, the SYRIZA election means a new mandate from the Greek people, which must be respected by any negotiation with the IMF and EU.
“Greece made a huge fiscal adjustment. We will have a €3.3 billion surplus in fiscal year 2015, and we have a positive growth rate and falling inflation. But these good results on paper were never reflected in the real economy,” Kanara said. “A third of our population is at risk for poverty, our youth unemployment rate is 60 percent. Many of our citizens are without electricity. It’s inconceivable for a nation in the European Union in the 21st century – and it’s led to the rise of social unrest and extremist politics.”
Addressing these concerns is of vital importance, but it remains to be seen how that will fit into the agreement crafted by the current negotiations in Brussels.
Greece’s bailout agreement expires on Feb. 28. Afterwards, the world could be a very different place.
“These two talks were highly comprehensive,” said Pardee’s Vivien Schmidt, director of the Center for the Study of Europe, who moderated the talk. “We are all wondering to what extent the powers that be will allow the new leftist government to succeed.”