“The New Greek Tragedy: Behold the Market Coup”, an article by Dr. Leonel FernándezSeptember 14, 2015
As a literary genre, tragedy was born in Greece more than 500 years before Christ, with its three grand masters being Aeschylus, Sophocles, and Euripides. In its first stage, the Greek tragedy developed in three acts: a prologue, the different scenes, and an exit ode.
Now we’re seeing a new tragedy in the form of a market coup, which will stage one of its acts on Sunday, September 20, with a round of elections intended to choose a new
This time, however, the Greek people, rather than witnessing a work of theater, will face the dictums of a troika made up of the European Commission, the European Central Bank (ECB), and the International Monetary Fund (IMF), who together represent the interests of Greece’s creditors.
Their worry is that the Greek debt seems unpayable. At this moment, it stands at the astronomical sum of €323 billion, equivalent to 180% of the
country’s gross domestic product.
All this, obviously, has sent banks in Germany, France, and other European states into panic, as besides their worry over a Greek default they also fear that Greece might leave the Eurozone, spread contagion to other countries in the region, strike a blow to the stability of the euro, and prompt the collapse of the European Union as an institution.
Greece’s sovereign debt crisis began at the end of
2009 as one of several such crises to roil Europe in the aftermath of the global Great Recession.
In the specific case of Greece, that debt, which had been accumulating since the 80s, was affected by internal structural factors: very high interest rates, a loss of fiscal income, imbalances created by problems in the design of the Eurozone, and a lack of confidence caused by the manipulation and concealment of data on the country’s actual financial
First act: The rescue
In 2010, a credit rating agency classed Greek sovereign debt as junk bonds, meaning there was a high probability they would not be repaid. Naturally, this left the country without the access to capital markets needed to obtain resources for restructuring its budget deficit.
To face this situation, the Greek government requested a financial bailout in the sum of €110 billion, lent
by 14 EU member states and represented by the troika.
In exchange for this bailout plan, the creditors, via the European Commission, the ECB, and the IMF, demanded the application of a drastic austerity plan that led to tax hikes, cuts in public spending, mass layoffs of civil servants, an increase in the retirement age, an increase in unemployment, and the privatization of state enterprises.
This policy of austerity has caused immense suffering to the
Greek people. Youth unemployment has reached 60% and many retirees have seen their savings disappear. The purchasing power of the population overall has decreased and poverty has spread. The welfare state has been dismantled, and distress and anxiety now afflict the immense majority of the population.
To confront this situation, Greece, like other Eurozone countries in vulnerable economic circumstances, has seen the rise of a strong social protest movement against the
policies of austerity, called the Indignant Citizens Movement.
Second act: Hope
At the beginning of January 2015, five years after the first bailout and three years after a second, to the tune of another €130 billion, the Greek people, inspired by the appearance of a political alternative more in sync with their aspirations for economic growth and social redemption, voted for Syriza, a leftist party opposed to the policies of
Heading up this organization was Alexis Tsipras, a charismatic and eloquent young leader who rapidly became a symbol of hope in the battle of the Greek people to recover their dignity and national sovereignty.
Tsipras began by resisting the new macroeconomic adjustment projects proposed by the troika. He emphasized the need to prioritize economic growth and job generation, negotiating with enormous passion and intensity in the face of his
country’s creditors. His brave attitude garnered admiration and respect not just in Europe but around the world.
Nonetheless, he was subject to continuous pressure. It was made clear that should Greece fail to accept the austerity conditions set by its creditors, the country would buckle into an abyss. Greece was refused new credit and pushed toward a liquidity crunch and a virtual collapse of the country’s economy.
In the midst of
these circumstance, the Syriza leader managed to win some time and secure greater space for maneuver in the negotiations. He opted to call a popular referundum, with the aim of allowing the Greek people to choose their own fate.
And that’s just what happened. In the referendum, more than 60% of Greek voters came out in support of Syriza and Alexis Tsipras, giving rise to a broad feeling of having delivered a blow to the originators of Greece’s woes.
Hopes were pinned on the idea that Syriza could save the people from humiliation and their austerity nightmare. The euphoria over the triumph was contagious and the joy indescribable. The leadership of Alexis Tsipras had reached a degree of ecstasy.
Nonetheless, the festivities had scarcely ended when the Syriza leader, subjected to bullying, harassment, and cornering, was forced to negotiate with troika representatives under terms even more damaging to the Greek people
than those foreseen prior to the referendum.
Act three: The market coup
Clearly, a market coup had been carried out. Financial markets had proven they had more power than political representatives backed by the will of the people.
The Greek cased proved that in the 21st century military coups d’état are no longer needed to override the authority of democratically elected leaders who genuinely aspire to represent
the national interest. All that was needed was a display of the destructive capacity of a country’s exclusion from financial markets for their will to be imposed.
The Greek people, in response, were left feeling frustrated, let down, impotent. Syriza was rocked by an internal rebellion. An important nucleus of its members of parliament distanced themselves. Political confusion spread throughout different sectors of national life.
Tsipras declared that the negotiations were a choice to “stay alive over choosing suicide,” adding, “I have my conscience clear that it is the best we could achieve under the current balance of power in Europe, under conditions of economic and financial asphyxiation imposed upon us."
These words from the Greek head of state confirmed the newest tragedy wrought upon his people: the carrying out of a market coup. It also showed how
under current conditions the power of financial markets can humiliate politicians, bring governments to their knees, and steal the dignity of an entire nation.
A few days after the negotiations, Tsipras resigned as Prime Minister of Greece and called new elections to be held on September 20.
Of the more than 36% garnered in the January vote and mass support in the referendum, Syriza had lost some 10% of the electorate, disappointed as it was with
Tsipras’s agreement with representatives of Greece’s creditors, an agreement that ended up even more damaging to the wellbeing of the Greek people than anticipated.
Thus what will be in play in this next Greek contest, not just for Greece and Europe but for the world, is what the future of democracy will look like: whether it depends on the will of the people or on the power of the markets.
We hold onto hope that when the curtain
goes down, democracy comes out triumphant and forestalls the possibility of staging yet another Greek tragedy in the form of a market coup.