Greece: Back On Track After 10 Years

On August 21st 2018 the third and last Greek memorandum came to its agreed end. Today, a full account of the political and economic developments during the past six months proves that the end of the memoranda era was not only of symbolic but also of important practical value, bringing Greece back on (economic, social and political) track.

The Greek “success story”? – Not thanks to, but despite the memoranda

After years of economic stagnation and recession, Greece has indeed entered a period of growth, whose annual rate is estimated to 2,1% and 2,5% for 2018 and 2019 respectively, while the primary surplus for 2018 is estimated at 3,98% of GDP against a target of 3,5%. At the same time, unemployment that had skyrocketed up to nearly 30% (even higher among the younger cohorts of the labour force) de-escalated significantly to 18%.

Of course, this is not quite a “success story” – at least yet – since there is a lot to be done in order to be able to talk about a complete and actual, economic and social, recovery. Nevertheless, the improvement was significant, especially concerning the available income of households and the conditions of living of the lower classes.

What is more important is the explanation of this improvement. The dominant mainstream rhetoric, as expressed for example by the EU and the Eurozone officials, praises the Greek government for successfully implementing all the measures included in the third memorandum, thus achieving these positive results. Instead, the truth is quite reverse. This “success story” didn’t become possible thanks to the memoranda but despite them.

The SYRIZA government never fully “adopted” the basic economic choices and the political reason behind the memorandum – and was heavily criticized both by the troika and by the neoliberal opposition in Greece for lack of “ownership” of the programme. Instead, between the summer of 2015 and the summer of 2018, a continuous negotiation with the troika took place on a number of issues, with the objective from the Greek part of minimizing the impact of the memorandum measures. It is, therefore, the result of this “bras de fer” that explains the “success” of Greece and answers the question why SYRIZA succeeded, at least partially, where previous governments of New Democracy and PASOK failed.

More degrees of freedom in the decision-making

Six months ago, only someone with first-hand experience of the decision-making and legislative procedures under the memoranda mechanism would fully understand the importance of what the Greek government said about how “with the end of the memorandum we now gain more degrees of freedom”.

However, the end of the third memorandum marked indeed a change in the substance and the procedure of decision-making. Under the memoranda mechanism, all decisions – even for minor issues – were under supervision by and negotiation with the troika. On the contrary, currently, Greece has undertaken the obligation to achieve certain budgetary and fiscal goals, is however free to choose the specific means through which this obligation will be fulfilled.

This change is not only symbolic, nor did it just make easier and more effective the function of the Greek government and public administration. “Increased degrees of freedom” means that it is the government and the parliament – and thus the political forces – who are now responsible for the hierarchisation of national priorities according to social needs. And this is the first step for the return of politics to the forefront. Of course, the obligation to achieve high primary surpluses in the near future and the subsequent budgetary restrictions remain as a major obstacle, but the decisions on how to use even the limited fiscal space available are nonetheless political.

A series of positive economic and social measures

After August a series of positive economic and social measures was decided and put in place. According to the government, the objective of those measures was twofold: On the one hand to enhance production and economic activity, with special emphasis to those measures supporting a different model of production (e.g. tax cuts and reduction of social security contributions for self-employed, farmers, small businesses and cooperatives), and on the other hand to restore social cohesion, to enhance employment and to strengthen the labour forces (e.g. restoration of collective bargaining and expansiveness of sectoral collective agreements, annulation of the pre-legislated pension cuts, distribution of the primary surplus that exceeded the 2018 target as a social dividend to citizens with lower income and vulnerable social groups, subsidy for social security contributions for young employees under 24 years old, new housing benefit with financial and family criteria, school meals for all students, recruitment of permanent staff in crucial social services like special schools or the “Help at Home” programme for the elderly).

The most important initiative and a central political battle for the current government for the post-memoranda period was beyond any doubt the substantial raise of the minimum wage (previously 586 euros) to 650 euros (11% raise) and the abolition of the sub-minimum wage for employees under 25 years old, that was previously 511 euros (27% raise). This raise – although the new minimum wage remains low given the cost of living in Greece – is expected to have a positive impact not only to the available income for the households that will benefit from it but also to the total domestic demand and the general economic activity.

Alongside with economic and social measures, the end of the memoranda provided for the necessary space, time and political capital to the SYRIZA government, in order to also deal with major pending institutional and political issues:

Constitution Amendment

On this level, important in the mid- and long-term (since it will be completed after the next national election) is the amendment of the Constitution. The responsible Committee of the Parliament recently concluded its work and submitted its proposal to the Plenary, where the final decisions are due until mid-March. The proposal contains provisions concerning:

a) Civil rights, such as the religious neutrality of the Greek state and the enhanced protection of the religious freedom, the introduction of a non-discrimination clause on the basis of gender identity and sexual orientation etc.

b) Social rights, such as the introduction of a state guaranteed decent standard of living for all through universal social services and income support, the right to health and the obligation of the state to provide universal access to the National Healthcare System, the public control of basic social goods, such as water and electricity, aiming at the constitutional recognition of commons, the prohibition of age discrimination in labour, the constitutional protection of collective bargaining, the recognition of a right to social security through a public redistributive insurance system based on the principles of solidarity and reciprocity etc.

c) The establishment of institutions that broaden the democratic function of the state and the people’s political participation, such as the mandatory referendum for the ratification of international conventions that transfer sovereign powers of the Greek state to international organisations, the provision of referenda and legislation with popular initiative, the constitutional protection of the proportionality of the electoral system, the introduction of a limit of 3 consecutive terms for MPs etc.

Prespes Agreement

The second major development that gained public attention both in Greece and abroad was the signature and recent ratification of the Prespes Agreement, through which was resolved a longstanding dispute with FYROM and, from now on, Northern Macedonia and which was praised as a model for dealing with identity issues internationally. With the closure of this agreement both Greece and Northern Macedonia regain diplomatic capital, necessary for dealing with other major pending issues in the region, enhance peace and stability and facilitate the bilateral relations, especially at the economic level, that will be mutually beneficial.

It is in fact difficult for someone to understand the popular reaction to the agreement without taking into consideration that identity issues are always sensitive and usually not defined with objective rational criteria. However, it was the attitude of the opposition that inflated this reaction and, sadly, legitimized the nationalistic outburst, including hate speech (about “traitors” etc.), but also threats and even violence targeting MPs and other people that supported the agreement. It was an unfortunate and dangerous choice, not only by the right-wing opposition of New Democracy, but also by the social-democratic PASOK, to identify themselves with a coalition of ultra-conservative groups and organisations, a part of the clergy and, of course, the neo-nazi party of Golden Dawn.

Towards a revival of the Left/Right cleavage

The heated political confrontation with the occasion of the Prespes Agreement was the catalyst – and not the only cause, in fact – of a certain political mobility that suggests a possible reformulation of the Greek party system. Minor parties, and especially the “centrist” Potami or the populistic right party and former government ally of Independent Greeks (ANEL), but to some extend PASOK also, are under increasing pressure due to the escalating polarisation between SYRIZA and New Democracy.

The above-mentioned return of politics to the forefront has two sides. On the one hand, all the economic and social measures in favour of the working class and the lower strata, the small entrepreneurship and the cooperative projects indicate the social alliances that SYRIZA pursuits on a class-oriented basis. On the other hand, the institutional and political initiatives, such as the amendment of the Constitution and the Prespes Agreement, posed questions about civil rights, democracy and peaceful international policy, the various answers on which marked the border between progressive and conservative forces.

In the post-memoranda period both the pro-/anti-memoranda cleavage and the idea of a confrontation between “new” political forces against the “old establishment” have lost their political value and thus faded away. Instead, the two-dimensional split according to the “classical” axes of low/upper class on the one hand and of progressists/conservatives on the other, currently revives and re-formulates the Left/Right cleavage in Greece. Only this twofold cleavage could provide a solid basis for political initiatives and social and political alliances that might inaugurate a new period of stability for the Greek political and party system.