The buyback of Greek bonds at one-third of their nominal value was successful despite the obstacles that cropped up along the way. Greek banks were initially skeptical of the scheme, but given their small number – just five – and their close ties to the political system, their cooperation – though coerced – was taken for granted. They were also influenced by Finance Minister Yannis Stournaras’s appeal to their patriotism.
However, succeeding in solving a problem by swaying a small group of people is one thing, while dealing with the rejectionist tendency of an entire society is quite another, and an issue that can only be dealt with politically. Unfortunately, though, the coalition government has proved incapable of reaching out to the people and ensuring their support. And the real problems will emerge when this rejectionist bent vis-a-vis the policies of the pro-European parties starts growing into a general rejection of the reasons for Greece remaining in the eurozone. We are already beginning to see signs that more and more people are starting to think along such lines.
Paradoxically, the increasing popularity of this dangerous trend can be attributed almost directly to the three leaders of the coalition, because it was they who brought up the euro-or-drachma dilemma during both pre-election campaigns earlier this year, casting themselves as fervent champions of the common currency. It was a naive and dangerous ploy.
Crucial questions such as whether or not to remain in the eurozone should not be put during an election. The average citizen cannot possibly understand what leaving the eurozone would mean in macroeconomic terms. Most people feel that remaining in the euro will mean a return to prosperity and stability. However, as they see their salaries and pensions continue to plummet while the unemployment rate skyrockets and the middle class continues its slow demise, their support for the euro will also diminish.
In order to overcome this skepticism, the government began making empty promises, such as that this round of austerity will be the last. Prime Minister Antonis Samaras vowed during the vote for the new loan deal that there would be no more cuts to salaries after the last ones. His credibility will be tested in the next few months.
Instilling a sense that the reforms are just, meanwhile, might rally more people behind the measures which are meant to revamp the Greek economy, but in this regard the new tax bill that is being discussed is another monumental failure.