The Eurozone’s Pyrrhic victory over Greece

Last week, the finance ministers and technocrats presiding over the Eurozone dealt a decisive blow against democracy. In a definitive confirmation that national elections have been rendered moot in terms of economic outcomes, Greece’s newly elected left-led government was crushed under the weight of a manufactured banking collapse. Prime Minister Tsipras was forced to capitulate, sign up to a third bailout agreement and accept all but the most outrageous demands of the German government and its allies.

Since then, the speed and scale of Tsipras’ climbdown have been astonishing. The character assassination of SYRIZA MPs who voted NO to the bailout deal and the large police mobilization against left-wing activists who came out to protest are just some of the most visible indicators that the Greek Prime Minister intends to discipline domestic opposition to further austerity in the same way that his European counterparts disciplined him and his left-led government over the past 5 months of failed negotiations.

Indeed, it seems that Tsipras and his inner circle of SYRIZA “pragmatists” do not appear content to go down in history as passive puppets for the creditor powers; they are already asserting themselves as the aggressive enforcers of the same disastrous austerity mantra they once opposed, even if they continue to exult that they “do not believe” in the measures. While Tsipras reinvents himself as a popular leader of the center, the sense of disillusionment within Greece’s radical circles has become palpable.

Some left “intellectuals” — both inside Greece and abroad — still try to somehow spin this tragic outcome into a happy Disney tale. Slavoj Žižek, for one, is already passing off Tsipras’ capitulation as “a patient guerrilla war against financial occupation.” Such proclamations are sadly divorced from reality. As SYRIZA MP Costas Lapavitsas put it, efforts to buy time in this context simply work for the enemy: “Sometimes reality is simply what it appears to be — a defeat — and you don’t have to look beyond the surface.”

Still, despite the crushing effect of Tsipras’ capitulation, the Eurozone’s victory has come at an incredibly high price for the single currency and its defenders. There are at least three ways in which the sheer cruelty of the creditor powers — and of the Germans in particular — may yet backfire on the European project as a whole.

First, it is absolutely clear that the program that the Europeans have just rammed down Greece’s throat is bound to fail. The catastrophic tax hikes demanded by the creditors will certainly be recessionary, the 50 billion euros in privatizations will never — ever — materialize, and even the IMF now openly argues that Greece will need debt relief on a scale far beyond anything the Germans and their allies are willing to contemplate. As a result, the debt-ridden country will remain mired in depression for years to come.

Second, it is equally clear that the Eurozone finance ministers have shot themselves in the foot by openly blackmailing the elected representatives of a fellow member state into submission. While the negative consequences of this naked cruelty may be contained in the short run, there is little doubt that the virulently anti-democratic nature of the Eurogroup and the open discussions about ousting a fellow member state constitute more than a mere PR disaster: next time the Eurozone enters into crisis, the specter of a certain country’s exit will undoubtedly return to haunt its defenders with a vengeance.

Third, the neo-colonial bailout agreement the European creditors have just imposed upon Greece will eventually render the country ungovernable. Tsipras is the third prime minister to be forced into a kiss of death by Greece’s creditors. The centrist PASOK and right-wing New Democracy already obliterated themselves by signing up to the previous two bailout agreements. SYRIZA is unlikely to be any different. Later this year, when draconian tax hikes start biting and Greece is inevitably tipped back into depression, Tsipras’ sky-high ratings will almost certainly start to fall. Even if new elections are to be held in the fall, it is unlikely that the new government will be able to serve out its full term.

While Tsipras’ demise will probably be warmly welcomed by the hardliners within the creditor camp, the truth is that the Eurozone has shortsightedly set itself up for a fall. What makes the third bailout different is that, after Tsipras, there will be no one left inside Greece to credibly manage the memorandum. With the centrist and right-wing opposition in complete disarray, the leftists were quite literally the last hope for political stability and reform. Now, with SYRIZA on the verge of a split and Tsipras bound to suffer growing popular opposition and the withdrawal of grassroots support, it is not clear who can step into the void and act as the creditors’ mouthpiece inside this newly acquired debt colony.

In short, the third bailout agreement destroyed everything and resolved nothing. Sooner or later, Greece and its creditors will be back in Brussels to continue their ritualistic late-night crisis talks. The Eurozone may have temporarily imposed a Carthaginian peace upon the unruly Greeks, but the lessons of King Pyrrhus still loom ominously over the smoldering battlefield: one more such victory would utterly undo the single currency.

Jerome Roos is a PhD researcher in International Political Economy at the European University Institute, and founding editor of ROAR Magazine. Follow him on Twitter at @JeromeRoos.

Leave a comment