Shortly before the presidential election in 2014, a corruption scandal engulfed the AKParty government of (then) Turkish Prime Minister Recep Tayyip Erdoğan. Despite heavy allegations against himself and his family he achieved a landslide victory. Baffled reporters interviewed voters and were told:  "For sure, the AKP are lining their pockets. But this time it's our people who are stealing."  What they meant is simple: In the past, the Kemalist middle class dominated Turkish politics and enriched itself. Now it is the pious Islamic lower class, represented by the AKParty, which feasts at the feeding trough.

   Giorgos Papandreou, ex-leader of the Greek Social Democrat PASOK party, expects the current leftist Syriza movement to continue dominating Greek politics for a long time to come. He should know. With sadness he may remember how his late father Andreas Papandreou in 1981, for the first time in Greece's history, managed to focus the traditional leftist majority of Greeks on himself and his new PASOK government, only to lose credibility and support in the following years tainted by corruption, clientelism and sundry scandals. When his son Giorgos now predicts a long future for Syriza leading Greece, he seems to suggest that Syriza and its leader Alexis Tsipras will avoid the mistakes committed by Andreas Papandreou and will not succumb to Greece's endemic vices of clientelism and corruption. A remarkable vote of trust by a political competitor who might be weak now but who is still waiting behind the curtains.

    When Alexis Tsipras and his crew took over Greece in January 2015 with an impressive show of necktie-less neoproletarian charisma, throwing gifts at the poor and pensioners, blocking the sale of state-owned assets and promising to resurrect Hellenic pride, the world took for granted that these new Greeks were radical enough to be honest. A new honesty was their basic sales pitch, and the Greek electorate reacted with enthusiasm. Tsipras rose within few days from the role of an anarchist madman to that of a national hero.

   Tsipras and Erdoğan have a lot in common. Both were charismatic mavericks heading a new type of political party. In Greece any populist opposition, to be successful, must belong  either to the extreme left or to the extreme right. By combining the extremes in his government, Tsipras showed clever management.  In Turkey, after almost eighty years of Kemalism the only fundamental opposition possible was the religious one. With his Islamist agenda, Erdoğan successfully attracted the disenfranchised, the poor and the uneducated irrespective of how pious they were.  Although both parties aim to represent the underclass, Syriza must deliver tangible social and economic goodies to the electorate whereas the AKP can prove its success simply by strengthening the role of (Sunni) Islam in all aspects of Turkish life. In this, Erdoğan is quite successful while Tsipras, in his role of Sisyphos, is faced with grim Greek realities.

   Looking at the major changes that took place in the Greek economy since 2008, it is apparent that the slimming diet prescribed by the Troika has not only impoverished Greece but exacerbated the social disparities. This, however, it not necessarily the fault of the Troika but the (partly unintentional) result of steps taken by former governments.  Overall, public sector staff have suffered much less than employees and self-employed in the private sector. This development has increased the load of the state the economy must carry. The unemployment generated by a shrinking economy and the need of the state to lay off redundant bureaucracy forced large numbers to opt for early retirement, inflating the drain of the pension scheme on the state coffers while depriving the economy of potential workers whom the pension option prevented from seeking other work in the private sector.

   On the whole, pensioners fared much better than workers because pensions suffered lower cuts than wages and salaries. This trend increased the share of  national income going to pensioners. Without the early retirement option, Greece's unemployment figures would be much higher. Typically, unemployment hit the youngest hardest who are deprived of an emergency escape to the pension scheme.  Small wonder that the "institutions"  (the ex-Troika) are now calling for a vigorous pension reform to redress the injustices and reduce the pension load to a more sustainable level. Interestingly enough, the share of the poorest among the Greeks has not risen much because the statistical threshold of poverty has been successively lowered as the economy contracted and incomes shrank.

   The picture Alexis Tsipras is facing is that of an economy excessively dependent on the state with millions of working age people going idle. Fortunately, the black or submerged economy is booming and keeping large numbers of people somehow economically active, although by dodging taxes and without any social security. Obviously, the situation calls for vigorous reforms to put the economy back on its feet and redress the inequalities. But unfortunately the Tsipras government is planning the opposite of what is needed. It rejects the idea of a pension reform. It protects the already over-protected state employees. It hinders the sale or closing down of unprofitable state enterprises with their politically inflated staff: "Privatizations in our country, and especially in strategic areas and public property of particular importance, must not and will not occur 

    In order to raise money for meeting its obligations, the government is raiding the coffers of public institutions and regional entities thus preventing them from functioning properly and finishing reforms and repair work. The government is still dragging its feet on the urgent total overhaul and strengthening of the tax collection system without which its promises of going after tax cheaters appear ludicrous. Out of nationalistic pride or fear of unpleasant surprises the Tsipras government continues to reject the German offer of foreign tax inspectors coming to train Greek staff and help establish a new tax collection agency. The government is still not taking up the offers of various European countries willing to identify Greek owners of black money accounts and make them pay. Syriza even assured the Greek shipping magnates that their essentially tax-free status will not be touched.

   Some observers said that Syriza succeeded in only a few days to wreck an economy which after years of contraction showed timid signs of recovery. Ideology combined with clumsiness, lack of experience and the constant menace of  losing a slim parliamentary majority might help to explain what happened.  Other observers, however, noticed fresh optimism in the country due to the hope for a revival fostered by a pro-poor and honest government.

   But how honest is this government?  Before assuming power, Syriza 's record in fighting corruption was poor.  "Syriza has been continuously undermining all efforts to combat these issues when legislation was proposed by other parties, either by voting “present,” or simply “no” to those bills."   In fact, an independent anti-graft authority created by the past government due to Troika pressure has been dismantled by Tsipras and integrated in the Finance Ministry.  The real estate tax ENFIA introduced by the earlier government will not be collected in 2015, Tsipras announced.  "The new Greek government is preparing an overhaul of the tax system, starting with a Large Property Tax (LPT) that will include real estate, bank deposits, luxury goods, works of art, with a tax-free threshold of 300,000 euros, and the abolition of the Single Property Tax (ENFIA)."  For the time being, however, there is no taxation.

   Although a crusade against tax fraud is a centerpiece of the catalog of reforms Tsipras submitted to the "institutions", the prevailing conditions for payment of tax arrears are so soft that they come close to canceling the debts. Just make a token payment, and your debt is wiped out. At a time when the world's tax haven countries are gradually losing their secrets, Greece seems ready to replace them. Not only are tax cheaters treated with generosity; the government is also shielding bank debtors by blocking foreclosures of properties under half a million euros' worth.

   Overall, Syriza's so-called reform agenda creates the impression of a party fighting for the well-to-do middle and upper classes. The poor among the Greeks can only dream of owning assets to the tune of 300,000 euros and their homes, if they own one, are certainly worth less than half a million euros.  If Syriza is talking to the left and acting to the right, what is the motivation behind it?  "Syriza depends heavily upon its clientelistic linkages with the unions and syndicates that voted for it, it has been continuously opposing any meaningful reforms since the beginning of the crisis

   In addition to the support of unions and syndicates, Syriza has also been busy establishing contacts with the old client system which has not failed to notice Syriza's velvet glove in dealing with reforms. If Tsipras succeeds in attracting fresh money without sacrificing much of Greece's convenient old ways, he will be the hero of the middle and upper classes, irrespective of his verbal radicalism. 

   Syriza appears well on the way of becoming part and parcel of the old Greek client system, as PASOK did before. Unfortunately, the "institutions" don't seem to be in agreement. They smell the rat and threaten to terminate the cooperation. For this reason, Syriza's hold on power could be short-lived. There is no guarantee that its government would survive a default, even if that does not mean leaving the euro. In this delicate situation the question arises whether Syriza's top brass will resist the urge to put money aside to ensure life after the cataclysm.  In this context, the observation seems suspicious that the Tsipras government is very reluctant to tap Greek tax cheaters' accounts in foreign countries, even if the accounts are offered on a silver platter.

   If in the longer run it turns out that Syriza is not as terribly clean and honest as it presented itself, the Greek electorate might be as generous as the Turks were when they voted for Erdoğan. The left-leaning majority of the Greeks might simply think "This time, it's our people..."  Maybe that consideration was on the back of Giorgos Papandreou's mind.

Ihsan al-Tawil

 

Update

Two rumours are currently circulating in Athens. One says Germany and Finland had jointly decided to eject Greece from the Eurozone. The other rumour says the government was working on the Plan B: what to do after the default. New drachma, nationalizing banks, stiff currency controls, etc.

Simply by not accepting the latest reform proposal submitted by Athens, any member of the "institutions" can force Greece to default. To avoid this, the Tsipras government would have to almost fully accept the conditions imposed by the donors. One condition says the reform program agreed must be approved by parliament before any funds are released. The Greek parliament will not accept the donor conditions for two reasons: for the radical wing of Syriza these conditions are utterly unacceptable, and the center-right opposition is likely to vote against the conditions to ensure that the Syriza government is soundly defeated and forced to call new elections.

The situation seems pretty hopeless. Tsipras has neither the political power nor the technical expertise among his staff to prepare a reform program acceptable to the donors. If Brussels and Washington are hoping that he will blink first, they are probably wrong.  Before the January 2015 election the Greek population was repeatedly warned that Syriza and the Troika were incompatible. By voting for Tsipras, Greece would lose the goodwill of the donors and risk default, the electorate was told. That is exactly what appears to be happening.