ATHENS, Greece — Alexia Stellatou has a ritual: Every morning she rushes to her local square in central Athens to read the newspapers festooned on the neighborhood kiosk. This, she said, satiates an “urgent need” to keep up with the fast pace of events unfolding in the Greek capital — and beyond.
She is far from alone.
The sight of Greeks huddled around kiosks, necks craned as they peruse the newspapers headlines overhead, is not uncommon. In a nation where many confess to “an addiction” for politics, their country’s drama to remain solvent and in the eurozone is rarely out of the news.
In recent weeks, debt-plagued Greece has experienced quite a few surprises in its high-stakes face-off with Europe to avert default and economic collapse. That doesn’t look likely to stop anytime soon, since the country’s crisis is far from over.
“I read every headline of every single newspaper,” said Stellatou, who at 76 has never mastered the Internet. “Life here is a thriller. You never know what the new day will bring.”
Last month’s elevation to power of a far-left government has put Athens on a knife edge. New Prime Minister Alexis Tsipras was catapulted into office promising to end the grueling austerity that Greeks have endured as the price of 240 billion euros in emergency bailout aid from its troika of creditors at the EU, European Central Bank and International Monetary Fund.
The small right-wing Independent Greeks party, with which the leftists were forced to cohabit after narrowly missing an absolute majority, hold similarly strident views. With rescue funds that were set to expire Feb. 28, the pre-election pledges of both put the country on a collision course with the bodies that had tossed it a lifeline. Last week, after several rounds of high-level talks in Brussels, much hand-wringing and two abortive meetings of eurozone finance ministers, a crash was averted when creditors grudgingly agreed to a four-month extension of its bailout program.
The 11th-hour deal helped avoid the country’s dropping out of the currency bloc — which could have had catastrophic consequences for the eurozone at large.
The flamboyant Finance Minister Yanis Varoufakis caved in after it became clear that Greece’s fragile banking system was unlikely to survive without restrictive measures being enforced. Capital flight on the back of political tumult had reached worrying heights, with an estimated 12 billion euros being withdrawn from local lenders by anxious investors in January alone.
The capitulation saw Athens’ newly installed government walking back many of the promises it made to voters hit by record levels of austerity-fueled poverty and unemployment, even if Greece succeeded in ending oversight by the troika — now referred to as “the institutions” — and drawing up its own reform program. For Tsipras, 40, the country had won “a battle but not the war.”
Greeks, on the street at least, have reacted to the climb-down with equanimity. Their nation’s journey from brush with bankruptcy to economic recovery has been a roller coaster ride — one that has culled five prime ministers, elicited fierce street battles, taken it through massive demonstrations and, more than ever, exposed its flaws.
“When you are indebted, you don’t have much choice,” said Yiannis Kanatselis, who edits a newspaper in the port of Piraeus. “These guys,” he said, referring to Greece’s new leaders, “may be young and inexperienced, but it has to be said they are fighting our corner. They are putting up a defense. Before politicians just went along with everything the creditors said.”
As Tsipras and his supporters see it, little Greece is doing what is long overdue. It is standing up to Germany, Europe’s powerhouse, and stating the obvious: that austerity doesn’t work.
The leftist government has won plaudits among a people worn down by humiliation and, to some degree, despair. For the first time, hope and optimism have soared. “Everybody suddenly has a smile on their face,” enthused Vali Papadopoulou, a corporate lawyer who said she signed up for Twitter to be better apprised of the news. “We were all so sick and tired of the troika meddling in our affairs, changing legislation overnight, acting as if we were their slaves. If elections were held tomorrow, Syriza would win a landslide.”
Polls show that is the case. But as Tsipras unveiled a host of feel-good reforms on Friday night — announcing that the country had emerged “stronger and prouder” from the negotiations — there was no denying that Greece is stuck between a rock and a hard place. Last week’s agreement is but the starting point of a longer rescue deal’s negotiations, which are likely to be more tortuous than any before, amid growing signs of impatience with Athens’ perceived foot dragging. A vote in the German Bundestag approving the bailout extension on Friday was preceded by ill-tempered debate about Greece.
“Germany is hardening its stance. Increasingly, the government is going to be left with fewer degrees of freedom,” averred Eleni Panagiotarea, a senior research fellow at Eliamep, a leading Athens think tank. “Its honeymoon is over. The enthusiasm we are seeing could easily evaporate.”
‘When you are indebted, you don’t have much choice. [Syriza] may be young and inexperienced, but it has to be said they are fighting our corner. They are putting up a defense. Before politicians just went along with everything the creditors said.’
Greek newspaper editor
Mounting anger over concessions has sparked dangerously high levels of dissent within Syriza — with the party’s hard left faction reacting furiously to the prospect of abandoning its anti-austerity platform. Critics have included Syriza’s chief economist, John Milios, and the World War II resistance hero Manolis Glezos, 92, the oldest politician in the European parliament.
“The dissent makes it difficult for Tsipras to adopt politically difficult measures,” adds Panagiotarea. “And the greater the dissent, the more he will be pushed into a corner.”
To make matters worse, Greece is about to run out of money fast. State revenues have dried up as tax collection (never robust) has fallen precipitously amid the political uncertainty. And while the bailout extension gave Athens breathing space to enact change, it did not unlock any funds. A 7.2 billion euro tranche of aid (pending since May) will be disbursed only after the new government has satisfied creditors by implementing reforms.
Greece is faced with nearly 22 billion euros in maturing debt this year. The first hurdle comes next week when it must pay back just under 2 billion euros in loans to the IMF — money Athens does not have.
How the financing gap will be covered when the country remains shut out of debt markets is unclear. Fears abound that the government could soon not have enough to pay pensions and public sector salaries. In Brussels on Friday, eurozone officials were quoted as saying Greece’s only option was to press ahead with measures, which could wreak havoc domestically.
As the week ended, protesters representing Greece’s KKE communist party staged a mass rally outside the Greek parliament, firing a warning shot across the government’s bow that if it goes too far, the opposition will swell. “The country is in a strategic vacuum,” lamented socialist leader Evangelos Venizelos, who until December was Greece’s deputy premier. “Just one month after the general elections, everything is in the air.”