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A Wind of Change in Europe? Greece Takes Anti-Austerity Fight to Brussels, but Deal Remains Elusive

The new Syriza government in Athens hopes its international creditors will compromise over its debt program, but finance ministers say agreement is a long way off.
February 13, 2015, 4:45pm
Image via AP

"A wind of change is blowing in Europe," Pablo Iglesias, leader of Spain's Podemos party, told the crowd of Athenians gathered to listen to Syriza leader Alexis Tsipras make his last speech before Greece's national elections last month. "The name of that change in Greece is Syriza and the name of the change in Spain will be Podemos."

Iglesias was addressing the rise of leftist anti-austerity parties across Europe, campaigning on a platform of change and a new way of dealing with the economic problems that have plagued the EU since the 2008 financial crisis. With anemic growth, unemployment has risen to around 11.5 percent in the Eurozone, while the bloc is also suffering as a result of economic sanctions against Russia.


Once much more acute in the southern EU countries ?• Greece, Portugal, Italy, and Spain ?• economic stagnation is increasingly spreading to some of the more prosperous northern member states. Germany, Europe's economic powerhouse, also had a few quarters of near-zero growth before rebounding at the end of last year. France, the bloc's second largest economy, barely grew at all in 2014.

"I think that after five years of sovereign debt crisis, with extreme austerity in many EU countries, painful stabilization policies, and widely discredited political systems, an emergence of anti-establishment parties of right and left, was only a matter of time," Aristides Hatzis, a professor of law and economics at the University of Athens, told VICE News. "However, I believe that the Greek government will prove to be more conventional than expected."

Greece Is Playing Economic Chicken With the Rest of Europe. Read more here.

And it is that apparent caution — rather than the radicalism many expected — which has stirred domestic criticism on how the Greek government is handling its negotiations on its bailout program, one of the items on the agenda at the EU leaders' summit in Brussels on Thursday. The program expires on February 28, and either must be extended or leave Greece facing bankruptcy or a possible exit from the Eurozone. But Syriza's much-touted idea of proposing a debt write-off now seems to have been abandoned, and some voters are worried that the party will drop the promises it made before the elections and agree to go ahead with some of the scheduled privatizations required by its international creditors.


But following Thursday's summit, Tsipras, who has vowed to end austerity, insisted that unlike its predecessor, his government had the political will to implement reforms that were blocked because of powerful vested interests. "We're discussing a bridge-program that will lead us to a new social agreement in six months," Tsipras said. "In this, the government's commitment includes balanced budgets in order for growth to return."

Tsipras was only the second leader from the bloc's European United Left alliance ever to have participated in an EU summit. On the opposite side of the table was German Chancellor Angela Merkel, who has been the strongest advocate for austerity and told journalists that the discussion on Greece lasted only 10 minutes. "There are two possibilities for Greece: extension of the program or fulfilment of the program by the end of February," Merkel told reporters after the summit. "I hope we see suggestions soon."

Talks on the Greek crisis are scheduled to continue at a meeting of the Eurogroup of finance ministers on Monday. Tsipras has said he hopes it will produce an agreement on the bridge-program. But Jeroen Dijsselbloem, the head of the Eurogroup, played down suggestions a deal could be signed at the meeting.

"Let me seriously douse your expectations on that point," he said, according to AP. The talks would look at how a viable program could be produced that took into account Greece's ideas, Dijsselbloem explained, but he added: "It really will be difficult. We are politically far apart."


European leaders have raised fears that letting Greece off on any part of its debts could set a dangerous precedent, while financial markets have also been rattled by the possibility of a ripple effect as other high-debt countries such as Spain, where anti-austerity sentiment is also strong, become emboldened by Syriza's example. Timothy Geithner, the former US Treasury secretary, said earlier this week that the showdown with Greece highlighted the danger of political contagion that accompanied the single currency.

Some experts say that without a change in economic policy, the far right will continue to rise. Kurt Bayer, an Austrian economist and former director of the World Bank, who has been advocating an end to austerity in the EU, told VICE News: "If they abandon austerity as the main crisis-fighting policy, the strengthening of parties to the left and the right of the mainstream parties might subside."

He said he saw the rise of Syriza and Podemos as "fundamentally pro-EU movements and a chance to hold back the strengthening of xenophobic, anti-EU populist movements."

It was the far right, not the far left, that the bloc should fear most, Bayer added. "Since they support a deconstruction of the Eurozone, or even a dissolution of the EU, this would threaten the most important European project since the end of WWII."

Follow Nikolia Apostolou on Twitter: @NikoliaA