I have been coming to Greece two or three times a year for more than 40 years and served as The Times’s correspondent in Athens from 1977 to 1980. Over those decades I watched succeeding Greek governments get into a vicious cycle that sent the national debt soaring higher than Mount Olympus and threatened to unravel the entire European Union.
Every time elections approached, the party in power would add thousands of new hires to public payrolls, raise salaries and pensions, and increase benefits. When some ministers would try to cut back even a little after elections, hordes of angry demonstrators would besiege the Parliament or block highways and ports until the politicians caved in and withdrew or watered down their meager reforms.
But over the past two years Greece seems to have undergone a profound sea change. The coalition government led by Prime Minister Antonis Samaras of the New Democracy party has passed some of the most severe austerity measures in the country’s postwar history, slashing public spending, cutting wages and pensions almost in half, imposing bruising taxes, and reducing the purchasing power of Greeks by more than 30 percent.
Surprisingly, all these afflictions have been accepted with considerable equanimity. There have been demonstrations, to be sure, including a national strike this Thursday, but they have been feeble and fleeting. Greek voters seized the opportunity to show their anger in last May’s election for the European Parliament when they gave the most votes to the radical left party Syriza and the neo-Nazi party Golden Dawn came in third, but that did not move the government to soften its policies.
What has brought about such forbearance in a people Thucydides described as “born into the world to take no rest themselves and to give none to others�
One reason is the grudging recognition that if the government did not accept the harsh terms imposed by the country’s main lenders — the International Monetary Fund, the European Commission and the European Central Bank — there would be no funds to pay them any salaries or pensions at all.
A second, and perhaps key, reason is that the strict economic policies of the government have begun to bear fruit and better days now seem possible.
Greece recorded a primary budget surplus of 2.28 million euros for the first half of 2014, compared with 2.5 million euros at the same time in 2013. Unemployment has started to inch lower, to 25.9 percent in August from an all-year high of 28 percent, recorded in November 2013, though it remains the highest in Europe. Greece has experienced a tourist boom, attracting 17.9 million international visitors last year, and income from it has fueled the economy. And the country’s credit rating has improved steadily. Last August, Moody’s raised it two notches, to Caa1 from Caa3, citing the “government’s progress in fiscal consolidation,†and later Standard and Poor’s raised its rating from B- to B.
Most important, the economy grew by 1.7 percent in the third quarter, in comparison with the third quarter of 2013, the first growth in six years — which prompted Mr. Samaras to declare: “This was the fastest growth in the quarter in the whole eurozone. Greece is back!â€
Do the resolve of the Greek government and the stoicism of the Greek people show that a new political maturity has descended upon the country?
For now it seems so, but the abyss is looming into view once again as the country moves inexorably toward another crisis next February, when the Parliament must assemble a 60 percent majority to elect a new president for the country. The ruling conservative-Socialist coalition has only 155 votes, and if it fails to muster another 25 from smaller parties and independents then new national elections will have to be held.
And there’s the rub. Current polls, reflecting popular frustration with the government’s austerity measures, show Syriza, the main opposition party, ahead by 3.6 points over New Democracy. But Mr. Samaras, a 63-year-old veteran politician and Harvard M.B.A., is still rated best choice for prime minister over the Syriza leader, Alexis Tsipras, a 40-year-old civil engineer and admirer of Che, Mao and Hugo Chávez.
What all this means is that no party is likely to win enough votes to form a new government and that a prolonged struggle would ensue to patch together another coalition. The last time that happened, in 2012, it triggered an outflow of more than €23 billion in deposits. Greek banks were unable to respond to the withdrawals, and planeloads of euros were flown in from the European Central Bank to avoid a bank run.
With the prospect that the next elections might be won by Syriza, financial experts believe that a run three to four times greater than 2012 is likely. While the €23 billion shortfall in that year was covered by the E.C.B., today a much weaker eurozone would hardly be in a position to transfer over €100 billion to Greece if another huge run were to occur.
In this scenario, the vacuum of currency would bring Greece to technical bankruptcy. The hard-won gains of the past two years would vanish. Access to loans would disappear. The faltering economy would come to a standstill, and the only recourse for Greece would be to return to the drachma, a disastrous move for a country that imports much of the goods it consumes.
So a lot more is riding on the selection of a president next February than who will be the new head of state. If the members of Parliament make a choice and avoid premature elections, a new sense of responsibility in the country may have a chance to take root and lead the Greek people to a promising future. If they don’t, the recent hardships Greeks have faced will pale in comparison with the troubles ahead.
Nicholas Gage has written four books on Greece, including Eleni and Greek Fire.