The smell of wood burning in fireplaces all around Athens has become a metaphor for the gradual pauperization of Greece’s middle class. Seventy years after the Nazi occupation and famine of 1941, the capital’s residents are once again burning through the country’s forests to keep their houses warm at a time of sky-high heating costs.
The austerity measures imposed by the European Union and the International Monetary Fund are tearing through the fabric of Greek society and transforming the political landscape. The coming election is expected to reconfigure parliamentary geography, producing a fragmented scene of eight to nine parties.
This outcome will inevitably lead to a coalition government of the two weakened centre-left and centre-right parties that have dominated Greece for the past 40 years. This coalition of the unwilling will face an array of extreme left and right parties, strengthened by their reflexive anti-European and anti-austerity message. The new government will also have to deal with shrinking GDP, a collapsing pension system and the slow demise of the middle class, the main supporter of Greece’s European journey.
The EU and IMF policies, in effect, have pushed large segments of the Greek population toward poverty and the extreme political fringe. It will be the unenviable task of a new Greek government to keep implementing necessary structural reforms while providing an answer to the country’s social ills. If the coming coalition government fails, the Berlin-Brussels approach to the European debt crisis may well result in Europe’s first failed state since Yugoslavia.
EU countries such as Greece find themselves in a financial mess as a result of internal political and economic inefficiencies, but also because the euro zone is a monetary union that operates without the requisite political infrastructure. Often forgotten in the blame game is the fact that the EU and the euro zone were driven by political, not economic, considerations.
The path toward federalization was stymied by selfish national agendas at odds with the European ideal. The failure to create common political, economic and defence infrastructures created uneven financial challenges for some of the EU’s members, while delivering benefits to others. Thus, Greece’s defence costs are roughly double those of Germany’s, the main beneficiary of the country’s outsized military orders.
Ironically, the idea of a European guarantee of Greece’s frontiers has never been countenanced. Greece, therefore, is saddled with debt from the purchase of faulty German military hardware, when a true gesture of solidarity would have strengthened the European ideal even while drastically helping the Greek balance sheet.
These are not arcane economic theories. They are realities fully digested by an increasingly demoralized Greek population angry that their curtailed salaries appear to finance German and French bank bailouts without offering any prospects of hope for the country’s economy and society. Greeks, not surprisingly, have taken to the streets to vent their frustration.
All Greece needs is a responsible European response to its current predicament. Austerity and fiscal responsibility are necessary as the country adjusts to new realities. But they’re not enough. Without growth, it’s unclear how Greece is expected to pay back the crippling EU loans while still remaining a functioning, cohesive society.
André Gerolymatos is director of the Stavros Niarchos Centre for Hellenic Studies at Simon Fraser University.