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Storm over Athens

Economics
Greece
15.07.03-Parthenon-590x393.jpg

Clouds descend over the Parthenon, Athens, Greece. Rob & Lisa Meehan under a Creative Commons Licence

Despite speculation on Tuesday that Greek Prime Minister Alexis Tsipras was going to cancel Sunday’s referendum, the Syriza government will go ahead with the vote, asking the Greek people whether they accept the latest austerity deal agreed by the country’s creditors. This is despite warnings that the chaos in the banking system caused by Tuesday’s default will spook the Greek people into voting ‘Yes’, against the government’s wishes.

Greece has become the first developed nation to default on international financial obligations, having missed its payment of 1.6 billion euros ($1.8 billion) to the International Monetary Fund (IMF). ‘I never expected a democratic Europe not to give space and time to hold the referendum,’ Tsipras said in his public address on Tuesday, referring to the decision not to extend liquidity to the country for a few more days until the vote was cast. ‘I call on you to say no to the recipes of bail-out and say yes to the prospect of a viable solution.’

From now until Sunday, it seems, decision-making lies with the Greek people. There are storm clouds over Athens. Though graffiti and posters calling for a ‘No’ vote, (‘Oxi’ in Greek) are scattered in the streets, on Tuesday night, over 18,000 protesters gathered in Syntagma Square, waving flags saying ‘In Greece, in Europe’ and shouting ‘Yes, yes, yes!’ in favour of a government deal. Georgos Defekaros, an attorney at law, was there to express his support for Greece within the EU and the euro: ‘Greece is at the heart of Europe and must remain in Europe,’ he said, ‘The last time we were this divided was 1922.’ He was referring to the end of the Greco-Turkish War that partitioned the Ottoman Empire, after the First World War, a time of intense conflict and uncertainty for Greece. A 'No' protest took place on Thursday night, and a big night of demonstrations is due on Friday, with a large 'No' and 'Yes' presence planned at locations only a short walk from each-other.

While the ‘Yes’ side cast themselves as ‘pro-European’ and ‘pro-euro’, the government continues to deny that a ‘No’ vote to the austerity package agreed by the IMF, European Central Bank and European Commission (the ‘Troika’) will lead to the country leaving the euro. Speaking after Tsipras’ speech, Syriza’s Alternate Minister for Administrative Reform, Giorgos Katrougalos, accused the creditors of waging ‘psychological terror’ on Greece. However, in the same breath he referenced the economist Paul Krugman, whose op-ed in the New York Times advises Greeks to vote No and the Greek government to ‘be ready, if necessary, to leave the euro’ as the situation looks ‘like a point of no return’.

Europe, of course, doesn’t equal the single currency. But if Europe’s institutions and the IMF decide to effectively push Greece out of the euro, for many Greeks it will feel like a rejection of their European identity. This is particularly the case as on Tuesday Tsipras sent a proposal for a conciliatory last-minute deal in a letter outlining quite moderate proposals, following 5 months of negotiations. Remaining sticking points are relatively minor, including on pension reform and the issue of special exemption of VAT for the Greek islands. This was dismissed, with German Chancellor Angela Merkel saying there will be no more negotiations until after the referendum.

When Tsipras held hands with Spain’s Podemos party leader Pablo Iglesias in his pre-election rally in January, he said ‘First we take Athens, then we take Berlin.’ It was a euphoric moment, meant to herald a new vision of Europe, freed from brutal and ineffective austerity measures. But Spain’s elections are in December, and that country’s current leader, Mariano Rajoy, is one of the fiercest critics of Syriza, fearing it will fuel the rise of Podemos and other Spanish Left movements.

The Greek Prime Minister accused Europe’s powerful creditors last week of having ‘political motives’ in how they have conducted the negotiations, a veiled accusation that they are plotting Syriza’s downfall. It looks likely that the government will resign in the event of a ‘Yes’ vote, and it appears to be losing support amidst the chaos of desperate Greeks queuing for their maximum cash withdrawal of 60 euros a day.

Following the default, Turkey was quick to say it was ‘ready to help’ Greece survive the economic crisis, with ‘co-operation in tourism, energy [and] trade.’ Indeed, the crisis has provoked discussion about where Greece belongs, geopolitically and culturally, as well as financially. When Greece joined the European Union (EU) in 1981, then Prime Minister Constantine Karamanlís said that European culture ‘is a synthesis of the Hellenistic, Roman and Christian spirit’. The ‘Hellenistic spirit’ was itself a synthesis of Ottoman, Arab, Levantine and European influences.

Much has been made of the link between Greece and Russia as Christian Orthodox nations, but as political scientist C J Polychroniou has argued on Al Jazeera America, fears of a Russia-Greece axis may well be overblown. Yes, there will be the extension of a Russian gas pipeline through Greece, but Russia is in no position to bail the country out.

When Syriza came into parliament it was viewed as a relief and shining light by many on the European Left. Their mandate was to reform Europe from within. It looks increasingly likely that Greece will not be permitted to do that. Talk of a ‘Grexit’ is no longer taboo in Brussels, and German industry leaders are beginning to agitate in favour of Greece exiting the eurozone, in line with a turning public opinion.

European Commission President Jean-Claude Juncker referred to Greece as ‘Plato’ in his speech after the referendum was announced, saying it was impossible to imagine Europe without it. But given the violent language of ‘betrayal’ in that speech, it seems likely that he also cannot imagine a Syriza-led government in Greece.

We will see, on Sunday, whether Greeks are willing to agree to more punishing austerity measures, and the further submission of their financial sovereignty to the ‘Troika’ institutions, albeit by another name. In return, they will be allowed to stay within the single currency and within the EU. A poll published in the Efimerida ton Syntakton newspaper shows ‘No’ in the lead with 54% versus ‘Yes’ with 33%. Yet support for the euro is still high. It is clearly not a question of whether Greece wishes to ‘stay in Europe’ but what kind of relationship with Europe the country is willing to accept.