Greece howls but the debt mon­ster re­mains

The Washington Times Weekly - - Commentary -

Cer­berus, the Greek mytho­log­i­cal mon­ster charged with guard­ing Hades’ gates, is tra­di­tion­ally de­picted as a huge dog with three car­niv­o­rous heads. This dire hell­hound has a dread­ful job. He (or is it a “they”?) sinks his teeth into Hades’ new ar­rivals, mak­ing cer­tain the re­cently de­ceased don’t ac­ci­den­tally lug their bod­ies into the Un­der­world. Yucky, huh? Well, Cer­berus is, for­tu­nately, an imag­i­nary mon­ster.

Greece’s lat­est mul­li­gan na­tional elec­tion, held June 17, ap­pears to have left the coun­try with a three-headed dog of a po­ten­tial govern­ment. Three “pro-Europe” Greek po­lit­i­cal par­ties clawed out enough votes to try to form a coali­tion. As I write this col­umn, the cen­ter­right New Democ­racy Party (ND), the old guard con­ser­va­tive party that took 30 per­cent of the votes cast in the elec­toral do-over, is at­tempt­ing to reach a power agree­ment with its “old left” (but fel­low old guard) an­tag­o­nist, the Greek So­cial­ist Party (PA­SOK) and the small, “moderate left” Demo­cratic Left Party (DL). This triad coali­tion would nom­i­nally con­trol 179 out of 300 par­lia­men­tary seats.

While sev­eral eu­ro­zone of­fi­cials call an al­legedly “probailout” coali­tion in Athens very good news (which they add may lead to bet­ter news), no one un­der­es­ti­mates Greece’s eco­nomic and po­lit­i­cal dif­fi­cul­ties. Ex­actly how “pro-bailout” an ND-PA­SOK-DL coali­tion would be is not cer­tain. ND and PA­SOK are de­mand­ing new bailout terms from lenders. They main­tain the elec­tion demon­strates that a ma­jor­ity of Greeks want to re­main in the eu­ro­zone.

This demon­stra­tion has cre­ated po­lit­i­cal con­di­tions jus­ti­fy­ing less-strin­gent loan con­di­tions. Cred­i­tors, they ar­gue, can trust the Greek peo­ple to work to re­pay Greece’s debt.

Greece’s debt, how­ever, is a gen­uine mon­ster. Cred­i­tors have good rea­sons to ques­tion a rosy in­ter­pre­ta­tion of the elec­tion. The ND’s 30 per­cent was the largest sin­gle party vote to­tal in the elec­tion. Deep and un­re­solved po­lit­i­cal frac­tures di­vide Greece.

OK, the Greek peo­ple want to re­main in the eu­ro­zone; they pre­fer hard cur­rency euros to de­val­ued drach­mas. How­ever, they haven’t de­cided what to do, not de­ci­sively, about their struc­tural debt.

In fact, a stri­dent Greek plu­ral­ity, sup­port­ers of SYRIZA, the Party of the Rad­i­cal Left, still be­lieves the debt mon­ster is hype. If they cast blame enough, shout and scream per­sis­tently, just wish hard enough, the debt mon­ster will go poof — or some­one else will pay it off.

Fan­tasy eco­nomics and blam­ing for­eign­ers has po­lit­i­cal siz­zle. SYRIZA ran sec­ond be­hind ND, tak­ing 27 per­cent of the vote. SYRIZA re­fuses to par­tic­i­pate in any govern­ment that, to para­phrase SYRIZA polemi­cists, kow­tows to for­eign­ers who would dom­i­nate and im­pov­er­ish Greece.

SYRIZA’s young and charis­matic leader, Alexis Tsipras, a former col­lege Com­mu­nist, con­tends ND and PA­SOK are cor­rupt and spent po­lit­i­cal forces.

A re­cent Tsipras in­ter­view with Reuters in­cluded this fist­pound­ing as­ser­tion: “Greece needs coura­geous and de­ci­sive lead­ers who can use the rage of our peo­ple . . . as a weapon to ne­go­ti­ate for the ben­e­fit of the coun­try.” He sees him­self as that de­ci­sive leader, of course.

He has de­ci­sive rhetoric. But is he de­ci­sive eco­nom­i­cally? If SYRIZA led the govern­ment, what would it ac­tu­ally do? SYRIZA touts a con­ve­niently vague “na­tional re­cov­ery plan” promis­ing ef­fi­cient govern­ment and pun­ish­ment for wealthy tax cheats.

Truly ef­fi­cient govern­ment would ul­ti­mately re­quire fewer pub­lic-sec­tor work­ers. Is SYRIZA ef­fi­ciency stealth aus­ter­ity? A prior PA­SOK-led govern­ment ad­vo­cated tax re­form.

At­tack­ing for­eign lenders stirs na­tion­al­ist pas­sion. It also un­der­mines lender con­fi­dence. Tsipras and SYRIZA don’t of­fer real so­lu­tions, they sim­ply chan­nel pop­ulist rage.

In the face of the debt mon­ster, pop­ulist rage is a spent force. Even if lenders of­fer Greece new bridge loan terms, and EU of­fi­cials sug­gest they will, de­feat­ing the debt mon­ster ul­ti­mately re­quires force­ful cuts in spend­ing.

Which is why this 21st cen­tury Greek tragedy will likely end with Greece de­part­ing the eu­ro­zone.

De­feat­ing the debt mon­ster de­mands a po­lit­i­cal will Greece has yet to muster.

Austin Bay is a na­tion­ally syn­di­cated colum­nist.

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