The election of Syriza, the most leftwing government in Europe since the 1936 Spanish and French Popular Fronts , should be a profound wake-up call, not only to Greece but to Europe. The Greek people have said that enough is enough, Europe must change course. The politics and economics of austerity have dragged Greece into a downward spiral of crippling, unsustainable debt and decline from which there appears to be no escape.
The necessity for a state to honour its debts is not at issue. Nor is it disputed by Syriza. The reality, however, is that that repaying the €240 billion EU and IMF bailouts of 2010 and 2012 is simply no longer feasible without a growing economy. In its own way the ECB is admitting as much in its programme of quantitative easing, while more and more states, Ireland’s included, have spoken out to call for an EU-wide growth focus.
But the gap between Greece and the richer EU states is huge. Whether there is a will to bridge it is not yet clear despite the urgency – Greece’s bailout terms are due to be reassessed next month. If they cannot be renegotiated it will face an immediate funding crisis if the ECB pulls the funds that keep Greek banks afloat. On February 12th EU leaders meet in summit and it will be crucial that the outlines of an agreement are already becoming apparent. But it takes two to tango.
A Lula or a Chavez? On whether Syriza's leader Alexis Tsipras more closely resembles the former president of Brazil or that of Venezuela may hang the future of the euro and of the European economy. The choice, between conciliation and confrontation – Brazil in 2002 elected a revolutionary leftwing party committed to repudiating the country's national debt but chose the road of reconciliation and accommodation. Venezuela, cosseted by oil wealth, chose the other road and international isolation. It is important that Syriza chooses the Brazilian path.
The Government’s attitude to the Syriza challenge is highly political, and not in the best sense. On the one hand a bit of debt relief would not go amiss, and no one wants to see a deeply destabilising forced Greek exit from the euro. But Dublin also wants to burnish its reputation as the model pupil of austerity, not one of those irresponsible southern European states. And so we will appear unequivocally to oppose any outcome that would suggest welching on one’s debts can pay off, any outcome involving future “moral hazard”.
And there is “political hazard” too in compromise – the apparent success of Syriza would certainly give wind to the sails of anti-austerity candidates in our own looming election. Like German politicians, Ireland’s will wish to ensure that any deal reached with Greece will appear to be based on concessions already available, on rigorous Greek adherence to the terms of its Troika memorandum, and/or an apparent U-turn by Syriza.