Forget the Greek hype, it’s business as usual

What would happen if Ireland elected a bunch of tie-less, Troika-bashing radical left-wing politicians who promise to solve all our problems by telling our creditors to get stuffed?

We will find out shortly and by proxy, because that’s exactly what Greece has done. The new radical left government there – led by Syriza – swept to power with the mandate to tear up its €245bn bailout deal.

Initially, the election result was greeted with some enthusiasm in Ireland.

Social media buzzed with comments along the lines of: ‘Down with austerity’ and ‘Up with people power’.

But aren’t all politicians elected ‘by the people’ in a democracy, i.e. through ‘people power’? Apparently not, if they wear a suit and tie. But a suit with no tie makes you a man of the people, apparently.

This also overlooked the fact that austerity is not really a policy; it’s a consequence of having no money. Electing a party on an anti-austerity mandate is not going to magically change that. Anyway, enthusiasm here for the new Greek regime waned somewhat when it emerged that we wouldn’t gain from any debt deal and would in fact lose, as we are a creditor and are owed €350m.

Syriza then carried out the easy part of its populist new plan by cutting taxes and backtracking on measures agreed as part of the last bailout. The hard part is coming up with the money to pay for all of this.

Their budget plans were to be partly paid for by a crackdown on tax fraud, a vague and optimistic measure (redolent of the radical left in Ireland).

It hasn’t worked so far. Instead of paying more tax, Greeks started paying less in anticipation of unpopular taxes being abolished.

Government revenues dropped like a stone and this year’s budget looks set to be derailed by March.

So the Greek government desperately needs more money. But all the new political movement has done so far is play a very oldfashioned style of populist politics that has only served to antagonise creditors.

These include the International Monetary Fund and ECB, which between them lent around €50bn.

But the bulk of Greece’s bailout came from other EU countries (including Ireland), which together lent €195bn.

If we became concerned about the likelihood of being repaid our paltry €350m, imagine how the Germans feel. They gave Greece a ‘digout’ of €16bn – only to be now portrayed as tyrants who wrecked the country.

Greece’s ‘new wave’ of politicians seem to behave in a remarkably similar way to old-style politicos. They embarked on a tour of Europe with lots of pictures taken shaking hands and backslapping.

Next Syriza delighted its supporters by demanding massive reparations for World War II. It wants the Germans to hand over €161bn. That would indeed solve all Greece’s financial problems (and create lots of new German ones).

But why now? It seems a populist but otherwise pointless stunt, ignoring the fact that Greece already accepted war reparations settlements in the 1950s and 1960s. More shenanigans followed when the Greek finance minister threatened to go to the US, Russia or China for funding if the EU doesn’t play ball. Good luck with that.

Piling debt upon debt without addressing core problems only makes the situation worse.

The Germans and other creditors are in no mood to be treated as a soft touch at crunch meetings tomorrow. Will Syriza stick to its guns and drive Greece towards an exit from the euro?

Or will the politicos just do what they always do: fudge the issue, hammer out a deal of some kind and kick the whole mess into touch yet again?

There are grounds for allowing some concessions on Greece’s debt – but these would have happened anyway whatever the government. Syriza would have its work cut out to convince supporters that any rehashed bailout is not yet another old-style broken election promise.

Ties or no ties, it’s just business as usual.