Populism: Lessons to be Learnt from Greece

Greece, the center of the old world civilization, had been suffering from a grand failure since 2009, all because of a massive budget deficit caused by the twin ills of overspending accompanied by under-taxing at a time when the world economy was passing through one of its worst financial crises.

Indeed, this accumulation of massive debt, as often accused by the EU leaders, started right in 1974 when Greek came out of its military rule and its successive governments rolled out social benefits—higher pensions, universally accessible healthcare, even salaries to orthodox priests, etc.—quite liberally running huge fiscal deficits year after year. 

With its traditional businesses such as shipping and tourism industries getting hit by cyclical recession, its trade deficit worsened further. And it became much worse once it joined Euro, for it could no longer devalue its currency to make its exports competitive and pay off the debt with a much devalued currency. 

As a result, its trade deficit and budget deficit shot up from 5% of GDP in 1999 to around 15% by 2009 and the public gross debt level to more than 127% of GDP in 2009. Being not able to refinance its huge debt, it finally secured a bailout loan of 110-billion euros on May 2010 from the European Commission (EC), European Central Bank (ECB) and International Monetary Fund (IMF) to cover its financial needs through June 2013, of course, subjecting itself to implementation of austerity measures, structural reforms, and privatization of government assets to stabilize its economy. But the hastily designed and poorly implemented program had only heightened Greece’s economic crisis: triggered a brutal economic depression accompanied by massive unemployment. 

All this made Greece a fertile soil for populism—much before Trump crashed onto the scene and Briton’s exit from the EU—while it still could not bounce back and deliver the public goods to its citizens. Populism, of course, still remained ambiguous— it is not clear if “it is a creed, a style, a political strategy, a marketing ploy, or some combination of them”. Niall Ferguson (2016) found five ingredients as the movers of populism: one, rise in immigration, actual or perceived; two, increase in inequality; three, corruption; four, an upheaval in the form of a financial crisis; and five, an inflammable demagogue who would react vituperatively and explosively against all the others. 

Whether it is Donald Trump with his ‘America First’ or Nigel Farage with his Brexit zealotry or Alexis Tsipras of Greece, populists emerged as defenders of the underprivileged, the avengers and the vigilantes of the corrupt elites. These demagogues, indeed prey on the hardship and despair of those hard hit by the crisis by raising right questions such as about the social and economic fallout of globalization, mounting corruption in the administration and the draconian corrective measures initiated to cure its economic ailment, etc. In the process, they bring the populist parties from the margins to the center stage and joining them together with empty slogans and old-fashioned economic ideas, stirr voters’ sentiments against pragmatism followed by traditional parties. 

Another interesting tool that came handy for today’s populists in Europe for political mobilization is: “European integration as an absolute perpetrator of abstract globalization”. For instance in Greece, the left and right parties amazingly coming together in their populist approach, suggested a return to drachma despite the fact that its current value vis-à-vis Euro hardly make any sense.   

But after winning the elections in 2015, they could not deliver on their promises, instead they delivered the opposite to Greeks. Even after protracted negotiations with its European creditors, Syriza-led government could not secure any relief. On the other hand, even after people voted out the austerity measures under the referendum, the populist government proved Ferguson was right: “populism tends to have significantly more economic costs than benefits”, for the populist government finally accepted a deal from the European allies, which is worse than the one they had earlier rejected. 

Come 2019 elections—thanks to the existence of the right-wing Nea Dimokratia (ND) party in the political spectrum of Greece—an enormous change in the political behavior of the Greek people could be noticed. This change in voters’ perception had not only led to the defeat of populism but also led to the defeat of the erstwhile government of Syriza which had overpromised but under-delivered. 

This positive choice of ND clearly reveals that people of Greece have finally brought the left-wing populism to an end, perhaps believing in “pragmatism”. It indicates that the people no longer believed the hostile stance as projected by the left-wing parties against the European allies, instead are ready to work out a market-friendly economic model that best suits Greece. 

This power shift in Greece clearly tells the whole of Europe and the world at large that mere populism cannot survive for long. It also tells that mainstream parties, be it in the West or East, are required to “up their game and offer real alternatives”. Then only they could undo the havoc wrought by the populists. That alone aids political parties to stay in power for long!

 

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