Will Europe let the Greek political centre fall?

  • 13 June 2012
  • From the section Europe
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A broken window in front of a poster featuring Euro banknotes Image copyright Getty Images

With three days of campaigning left, what's important in the Greek election is what has not happened.

There has been no lifeline thrown to Antonis Samaras, leader of the conservative New Democracy (ND) party, from Brussels. No promise to tweak the austerity conditions. No Munich-style piece of paper for either Samaras or Pasok leader Evangelos Venizelos to wave, saying to voters: come back to the mainstream, we have gained concessions from the wider European polis.

Likewise, the soft power apparatus of euro conservatism has not deployed in support of ND. Nor is there any tangible foreign campaign to undermine, blacken or destabilise the far left party Syriza.

From this, and from numerous conversations with people inside the policy loop, I draw the following conclusion: Samaras is being hung out to dry.

If Germany does indeed have a plan, a vision for a post-crisis Europe, its actions are conveying the strong impression that Greece will not be part of it. George Osborne let this slip yesterday, when he said Greece leaving might help the Germans do what is necessary to stabilise eurozone fiscally.

Numerous contacts confirm this: German policy, de facto, is to force Greece to choose to leave. That would be a building block for a north European, stable eurozone, but only one stage in the process.

The problem is, Greece will only choose to leave if there is chaos. It would be a swift action, forced by bank defaults or non-payment of civil service wages, or the suspension of ECB liquidity support.

But the vast majority of Greeks don't want to leave. And there is no way of expelling Greece.

The problem, in the event of a Syriza victory, and a Syriza, Dem Left coalition with some Pasok MPs, is the gap between its aspiration to stay in the euro, and the maths of Syriza's programme.

Image copyright Getty Images
Image caption Many economists believe Syriza's economic plan for Greece does not add up

This involves a massive hike in the tax take to balance the books and stabilise the deficit. Most professional economists say it's unfeasible - the weakest link in a programme that is not ultimatist but not mainstream either.

That gap will either be filled through a post-election concession from Brussels and the IMF, or it will leave a Syriza-led coalition presiding over fiscal chaos.

One thing I don't think most Greeks have yet realised is the way the focus of EU policy has shifted to Spain.

There, the furious row over the terms of the bailout is still going on, with the Partido Popular again vetoing any attempt to launch an inquiry into Bankia. If the Spanish political elite - both main parties were implicated in the mismanagement of the cajas - thinks it can get away with things as normal, covering up the shocking collapse of a bank built on political patronage, then the Germans intend the Greek example to be a salutary lesson.

(Incidentally, unlike in Greece, numerous people I met in Spain in the last two weeks were quite cool about the euro: they know their economy could survive outside it, and that Brussels can't rip up the miles of road and railway track laid with EU structural funds.)

So Greece is no longer the front line of a global financial crisis: Spain - indeed the entire European banking system - is the front line.

The problem is, it may make economic sense for the EU mainstream to let the Greek centre collapse and force Greece into an exit crisis, but politically it will leave a bitter taste.

Because one of the reasons Greeks remain so wedded to the euro project is the international guarantee of governance it provides: a check and balance on crooked politicians. Another reason is they feel they have contributed to the project historically - not just through Athenian democracy but in the liberation struggle against the Ottoman Empire, and through the heroic resistance to Nazism which still haunts the memories of elderly people here.

If, by a series of actions and non-actions, Berlin and Brussels allow the political centre to collapse here, so that you get the first government of left communists, feminists and ecologists in a western country, while fascists roam the streets, pulling migrants out of hospital beds as threatened, that might not be seen as Europe's greatest act of statecraft.

It remains possible that you get a government of national unity with, as attempted before, ND, Pasok and the euro-communist Dem Left in coalition.

But all three of those parties still go into the election committed to a renegotiation of the austerity terms, so for such a last-ditch centrist government to cohere, Germany has to want Greece to stay in the Euro.

My sources within the euro policy world are indicating today, quite simply, that it does not.

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