Greece managed to pull itself back from the precipice at the final hour and survive without the government collapsing completely. There is little point in entering a debate about who is to blame for bringing the country so close to disaster. Democratic Left leader Fotis Kouvelis clearly balked when he saw that the deal he had previously agreed to was going to be put into force.
It is a mistake to lambast Kouvelis or Democratic Left’s Administrative Reform Minister Antonis Manitakis for the debacle. They were carrying an incredibly heavy burden and went as far as they could with it. The fact is that the blame lies equally with those who failed to proceed with reforms and with various senior ministers from the other parties in the coalition government. The ministers who are dragging their feet and resisting changes are not limited exclusively to Democratic Left.
The rapid developments of the last two days may end up being for the best. It appears that our foreign partners hadn’t realized just how tenuous things are for the Greek political system right now, so perhaps the recent upheaval will convince them to relax some of their demands, which have more to do with breaking taboos than fiscal measures. A bit of leeway would also allow the government time to tighten up its act.
The fact that the government’s parliamentary majority will be smaller than it was also has its upside, because it will make it be a lot more cautious about making blunders in the days to come knowing that every decision hangs in the balance. MPs now know that every one of their decisions will have a serious impact.
Estimating how long the government can operate under the present circumstances is anyone’s guess. It will depend on the course of the economy and on its relationship with the troika. If, for example, we see no signs of growth by the beginning of 2014 and unemployment continues to climb, things will get very sticky indeed. As far as the troika is concerned, we shall see what direction it will take with the German elections in the fall. There will be a lot of issues regarding Greece that will need to be addressed and it remains to be seen whether our international partners will increase the pressure on Athens or cut it some slack.
The worst thing that has resulted from the recent developments is that Greece is back on the watch list of the markets and foreign investors have started getting the jitters again. And at the end of the day, nothing has taken such a big toll on the economy as political uncertainty.