GREEK SOCIETY is in deep crisis, its political system is disintegrating and its economy is collapsing under the weight of inherited debt and imposed austerity. These problems are not Greece’s alone, since their resolution will profoundly affect neighbouring states and its partners in the European Union — including Ireland. Whether the fresh general election likely to be called by President Karolas Papoulias will help resolve them is very much an open question. But Greece deserves continuing sympathetic solidarity from the EU, in recognition of its democratic choice and the dangerous wider consequences of any state failure there, including the rise of fascist movements and even talk of a military coup.
It is not surprising that the radical left-wing alliance Syriza has refused to join a coalition supporting the existing EU-IMF bailout programme, since its dramatic electoral success in the elections was based on a demand for its complete renegotiation. Polls predict Syriza will become the largest grouping after new elections.
This is part of the fundamental reordering of its political system which must be given time to work itself out. The pervasive clientelist networks, bloated partisan recruitment to state employment, cynical manipulation of state finances and inability to bring in effective taxation that have made the Greek crisis so serious require political reordering.
New elections will certainly throw up political forces for and against the current bailout terms, which should be revisited in light of Greece’s democratic choices and the wider changes under way in European politics. A shift towards a more expansionary growth strategy as demanded by French, Irish, Spanish and Italian leaders and voters, preferably by building on the commitment to budgetary consolidation and discipline, should also open a fresh perspective on Greece’s deep-seated problems.
It should be recognised that most Greeks want to remain in the euro and the EU. Deciding whether that is possible if the current bailout terms are rejected poses a much larger question of whether the euro could survive Greece’s departure or whether this prospect should speed up decisions on how best to reinforce the currency’s defences. The Greek issue cannot be separated from such decisions. Its problems are special to itself but also exemplify the euro zone’s structural weaknesses which must be tackled if the currency union is to survive.
Such major periods of political change pose huge challenges to established ideas and institutions. So it is within the European Union now. Ireland’s referendum debate is part of that process and we can make a constructive contribution to it in our own interest, since we too would suffer if Greece fails. Its continuing crisis, along with Spain’s rapidly developing financial problems, necessitate a radical reform of banking structures, for example, along the lines suggested by Central Bank Governor Dr Patrick Honohan. Unless some way is found to mutualise and write down debt within the euro zone the currency will remain under threat. Solving these problems would ease Greece’s burdens too.