Greek government backtracks on anti-austerity but keeps support – for now

Finance Minister Yanis Varoufakis, who had rejected a version of the deal that was later signed, cast the extension as a victory because now Greeks could be “co-authors of the reforms that we want to implement, which we are going to dictate.”

German Finance Minister Wolfgang Schaeuble, also under domestic pressure to maintain a hard line, couldn’t resist a jab. "The Greeks,” he said, “will certainly have a difficult time explaining this deal to their voters.”

Schaeuble’s prediction appears to be correct, at least for hard-line anti-austerity activists. Athens saw familiar images of turmoil on the streets late Thursday night, albeit on a small scale, when about 50 anti-government protesters clashed with police. The Communist Party of Greece is set to hold a protest on Friday.

But public opinion polls indicate that most Greeks still support Syriza.

“Maybe most Greeks just wanted to see the government stand up just a little bit to Brussels, and what Syriza did was, at least for now, enough,” said Giorgos Kyritsis, the managing editor of the online edition of the Syriza-affiliated newspaper Avgi. “They weren’t expecting a lot because previous governments just did whatever they were told, without any pushback.”

Also, previous governments were corrupt, said Melina Kotzaki, a 70-year-old retired airline worker who attended many anti-austerity protests after previous governments agreed to the 2010 and 2012 bailouts. She’s now a regular at pro-government rallies.

“The other guys before, they were corrupt,” she said. “And I never want to see them again. I want to give this government a chance, because if they fail, I am worried that the corrupt politicians will come back.”

Varoufakis, who has likened bailout-era Greece to Weimar Germany, has predicted an even darker scenario if the Syriza government fails. In an interview earlier this week, he warned that “racists and nationalists” would rise if European leaders brought down his government.

The neo-Nazi Golden Dawn party finished third in last month’s elections in Greece even though most of its leadership is in jail facing charges that include homicide and running a criminal organization. 

Syriza faces a revolt within its ranks. Some party leaders were angry that Tsipras reneged on election promises by continuing the bailout and the policies prescribed by creditors. Manolis Glezos, a 92-year-old World War II partisan hero and a Syriza member of the European Parliament, called it capitulation and mocked Tsipras’ attempt to mask the compromise with new language. “It’s like renaming meat as fish,” he wrote.

His concerns were echoed by some Syriza parliamentary deputies and even Cabinet members. “They’re afraid if you start backtracking now, you might not be able to stop,” Kyritsis said. “They’re also afraid that if you change your motto, the very motto you were elected on, it’s going to erode public trust.”

Syriza’s central committee will meet this weekend to discuss the deal, and the next steps could be rough. He said the government is now under pressure to show rapid results on reforms important to Greeks, including cracking down on corruption and tax evasion — especially among the rich — and streamlining the public sector.

But these are issues previous governments also promised to tackle, without much success, said Platon Tinios, an economics professor at the University of Piraeus. “What Syriza lacks and has always lacked is an explanation of what went wrong in 2009,” when the center-left government of George Papandreou announced that Greece was deeply in debt. “Syriza blames all of the [economic] problems on the [bailout] memorandum. They have confused the medicine for the disease.”

Austerity may be the wrong medicine, Tinios said, but the Greek economy has long been uncompetitive and rife with cronyism. “Austerity may have worsened the problems, but you don’t solve them by turning back the clock,” he said. 

Tax evasion, for example, has been a problem for years, with Greek evaders often justifying it by citing corruption and poor public services. But Diomidis Spinellis, a computer science professor who helped oversee tax collection in the Finance Ministry during Papandreou’s government, said “massive” structural problems in the judicial and public-administration systems, poor management and training and tax-code complexity make it very hard to crack down on tax evasion.

“You aren’t going to raise revenues significantly just by going after the wealthy tax evaders,” he said. “It’s a bigger problem than that. But in theory, the new government has one huge advantage. It is not captive to entrenched special interests. It can make a fresh start.”

It may not feel like a fresh start to Lantzanaki and other disillusioned Greeks. Still, she will give the government more time. Unlike other young doctors who have left Greece in record numbers for Northern Europe, she chose to stay home, even though she hasn’t found paying work yet. “It’s up to us to make this government keep to its word,” she said.