ATHENS – The ascension of New Democracy leader Kyriakos Mitsotakis as Greece’s Prime Minister in July 7 snap elections finished Greeks with the Radical Left SYRIZA, showing the lessons populists get when they tangle with the markets and mainstream politics.
That was the assessment of The New York Times which reviewed Mitsotakis’ crunching victory over SYRIZA leader Alexis Tsipras, shown the door after reneging for 4 ½ years on anti-austerity vows and running into the brick wall of the European Union.
Tsipras stormed into power in January, 2015 on the back of promises to defy Greece’s creditors and stage a Leftist revolution across Europe, sounding like other populists and governments in Portugal and Italy which tried the same before being equally tamed.
Tsipras surrendered only seven months into his reign, seeking a third bailout of 86 billion euros ($96.97 billion) after saying he wouldn’t because it came with more crushing conditions he vowed to reject but implemented.
His brief defiance with the Eurozone he threatened to pull Greece out from before the European Central Bank said it would cut emergency liquidity and brought him to heel, was one of the stormiest periods in the EU’s history and rattled world markets a while.
But once he relented, he was on a path to defeat, even if it took another four years and some half-hearted counterpunches at the creditors with Mitsotakis’ victory, the paper said, bringing “the end of Greece’s flirtation with radical left-wing populist politics,” and made Tsipras less radical, pushed toward the center-left.
“The Tsipras experiment may hold important lessons for Europe and its new ranks of anti-establishment populists. While many, as in Italy, gleefully thumb their noses at the European Union and its rules, once in power the risks of following through on their rebelliousness may corral them from the extremes,” the paper wrote.
HE DIDN’T START A FIRE
Greece represented a special, wrenching case, but its experience showed that, especially for small countries, if you are in the Eurozone, “you’re not free to run a radical financial policy,” Charles Grant, Director of the Center for European Reform told the paper.
Mujtaba Rahman, Managing Director for Europe of Eurasia Group, agreed and said that, “The SYRIZA experiment is consistent with the experience of other E.. member states that also tried to defy the E.U. and capital markets and failed.”
He added the forces are too strong for populists to win because the reality of governing and need for money supersedes rhetoric and slogans, which Tsipras found out fast when he quickly buckled after spitfire speeches of defiance.
“When the EU and capital markets align, in seeking changes that will make a country’s finances more sustainable or improving the environment in which the private sector operates, governments — no matter how radical — have no real choice but to reform,” he said, which Tsipras discovered to his surprise.
Mark Leonard, Director of the European Council on Foreign Relations said some good came of Tsipras’ spanking. “Populists are not always as scary in office as they may appear,” he said, and the Leftist leader sure wasn’t, quickly cozying up to EU leaders such as German Chancellor Angela Merkel, who he said had been an archenemy of Greece.
German banks put up much of the 326 billion euros ($367.62 billion) in three bailouts that began in 2010 and propped up a Greek economy weakened by generations of wild spending and runaway patronage, continued by Tsipras who said he would stop it.
Indeed, he seemed to shine under the spotlight of praise put on him by EU leaders once they had corralled him and he reveled in the trappings of power while backing off promises to tax the rich, crush the oligarchy and bring Greek shipowners to heel before he did.
THE PRICE OF DEFIANCE
There was a big cost to Greece though, with Tsipras’ brief stand forcing him to seek the third rescue package. “The last four years have been a waste and totally unnecessary,” Maria Demertzis, Deputy Director of Bruegel, an economic research institute in Brussels, who is Greek, told the paper. “Tsipras learned fast, but not before he had inflicted such a cost on the economy,” she added.
She said it was the waste of a crisis that could have been used to modernize the Greek state. For that reason, even though Greeks may be poor and exhausted by the long debt crisis, “there will be no honeymoon,” for Mitsotakis he said.
The New Democracy leader said he would cut taxes but Tsipras, in a last-ditch effort to win re-election, cost the state coffers some 1.7 billion euros ($1.92 billion) with a barrage of pension bonuses and tax cuts after he had slashed benefits and raised taxes.
The pro-business Mitsotakis’ aim to lower a primary surplus of 3.5 percent of Gross Domestic Product (GDP) has already been shot down by the Troika of the European Union-European Central Bank-European Stability Mechanism (EU-ECB-ESM) and tourist revenues are expected to fall after five straight record years.
Growth is expected to be a modest two percent after the GDP fell 25 percent during the crisis that began in 2010 and with Greece not being able to make a full market return even though the bailouts ended on Aug. 20, 2018.
Panos Tsakloglou, who teaches economics at Athens University and served as Chairman of the Greek Council of Economic Advisers from 2012-14 when a New Democracy-led coalition was in power under former Premier Antonis Samaras, said Tsipras didn’t push market liberalization because he didn’t believe in it.
“Mitsotakis will be better placed to go ahead with some of these reforms, he understands what kind of reforms are needed and knows how to do them,” he said.
Leonard said the EU had learned something from Greece’s populist period too, that, “You need to have a more balanced economic deal.” Greece, he said, “was an important petri dish for strict German economics, which haven’t succeeded.”