In Greece’s wartime economy, Tsipras claims mantle of stability
ATHENS, Greece: Rarely has a prime minister overseen so much financial destruction in so little time while tightening his grip on power.
After winning an election on a wave of populism in January, Greece’s Alexis Tsipras finds himself running a country in a state of economic emergency.
His government rations money to the parts of society that need it most; bank stocks have collapsed more than 60 per cent in three days; and some officials fret that Greece is still one accident away from leaving the euro.
And yet, Tsipras’ popularity remains unchallenged. While his critics say no one deserves more blame for playing a game of brinkmanship that he could never win, polls show his Coalition of the Radical Left, or Syriza, has as much as twice the support of its nearest rival.
One senior aide said his shift toward the centre of the political spectrum makes him the only guarantor of stability ahead of another possible election in coming months.
“The only way he can survive politically is to move to the center-left, and the only moment he could do this is this very moment,” said Aristides Hatzis, professor of law and economics at the University of Athens. “Tsipras has to move forward to hold elections, come into collision with his party, escape the image of the ‘good kid’ and become a national leader.”
For Tsipras, the defining moment so far was his decision to keep Greece in the euro after six months of political chaos that pushed the country to the brink of financial collapse.
That move, made after an allnight European summit on July 12, required a U-turn to yield to the terms for another bailout, this time worth 86 billion euros ( RM367 billion).
In doing so, he was left in charge of a country that had staved off collapse, but is now effectively in economic shock and facing further austerity.
Three weeks later, five Greek financial and government officials told Bloomberg how they are trying to put Greece’s finances back together, all of them speaking on condition of anonymity because the talks are confidential.
Their first task is to keep afloat an economy that’s still hemmed in by capital controls and reliant on a drip feed of liquidity for survival.
Officials, working with the country’s banks, must decide on an almost daily basis where cash is needed the most.
Drugs, energy and food imports are generally given the highest priority. They then apply a sliding scale that runs down through capital equipment such as machinery and consumer goods like clothing and electronics.
All of this is strangling a nation that until the end of 2014 harboured hopes of exiting the bailout regimes first put in place in 2010.
A Greek parliamentary committee expects the economy to shrink as much as four per cent this year, and bankers are divided on whether the damage is permanent. Unemployment has been above 25 per cent for almost three years.
As officials labour to keep the economy going, political infighting continues in the background.
The deal with creditors prompted the communist and radical factions of Syriza to defect and wipe out Tsipras’s parliamentary majority.
Tsipras’ response will be to see them off at a party congress in September and then fight a snap election on an agenda of political stability that pledges to keep the country in the euro, a senior official in the administration said.
Among supporters, it plays into the narrative of the young firebrand leader as national saviour. — WP-Bloomberg