Monday, 18 June 2012

Now The Hard Part Begins

He won, but can he govern? Having narrowly won an election where the real contest was fear of isolation versus anger at austerity Antonis Samaras and his New Democracy party now face a much larger challenge. They must reach out to all factions in a deeply divided Greece and replace despair with hope.
Antonis Samaras
Is this too much to ask from a professional politician known mainly for obstruction rather than bold, creative thinking? One can only hope that the struggles of the last six weeks have opened his eyes to the failure of traditional tribal politics and the need for radical change. He has spent his entire political life believing that the enemy was PASOK (the Socialist party). PASOK has now been made irrelevant by coming in a distant third in the election. The real enemy is not any of his political opponents, not even the new challenge of loose coalition of leftist parties called Syriza. No, the real opponent is the very social, economic and political status quo that nurtured him, that created this mess in the first place. 

If he can convince people he wants to change this ossified status quo, if he can paint the main anti-austerity party Syriza merely as a defender of the status quo but with new people, and if he has enough skill and dexterity to change the debate from austerity to building a stronger Greece for their children he just might win over some of the sceptics.

It would help if he could develop some of the communications skills of his young opponent Alexis Tsipras, head of Syriza. Samaras unfortunately bears a close resemblance to former U.S. President Richard Nixon with his dark 5 o’clock shadow, rigid demeanour, and total inability to inspire trust. 

Although those that know him say he is well-meaning, he comes across more as a bank manager reminding you of your large overdraft than a person who has any sympathy or understanding of your problems in finding money to feed your children. Tsipras, in contrast, is young, vibrant, and telegenic. The fact that his message offers merely a slightly updated version of the same old system is lost in the sparkle of the presentation.

It would also help if Greece’s European counterparties stopped sounding like an old-line school master about to give ‘six of the finest’ to some errant student. “This is going to hurt me more than you, you wretched little boy.”

Now is the time for a more nuanced approach instead of lectures. The northern Europeans have made their point about the ‘profligate’ Greeks. Now they have to help Samaras build the kind of structure that will really integrate Greece into the European family rather than leave it dangling as some distant, slightly unwelcome southern Balkan relative. Put the so-called austerity on the back burner. The country simply cannot afford it right now. Stress the structural changes that will actually generate growth and offer hope for the future.  In short, demonstrate and communicate a little more flexibility than a bill collector trying to re-possess a car when the payments come a little late.

There are still a great many people betting on the ‘Grexit’ – Greece’s exit from the Euro zone. Some of these are serious economists, but much of this comment can be dismissed as financial actors merely supporting their own investment decisions. I doubt very much that Greece will in fact leave the Euro. There is absolutely no political will in Europe to test the consequences of such a move. They may not like the Greeks very much, but they like the idea of a crumbling Euro even less. It is almost impossible to predict right now what steps European leaders will take to keep Greece in the Euro or possibly to re-configure the Euro. Ask any five ‘experts’ and you  get at least seven answers. On paper, the Greek financial situation continues to look dire. But if European leaders have been good at anything, it is ripping up the paper upon which old agreements were written and coming up with something to fit changed conditions of the moment. I suspect there will be a lot of ripping and feverish re-writing over the next several months.

Samaras has now won his long-cherished goal. He will be prime minister of the Hellenic Republic. What will he do with this opportunity? The old economic and political mould is shattered. The people are confused, distressed, and angry. Will he adopt the words from Abraham Lincoln’s famous second inaugural address as the American Civil War ended -- ‘with malice toward none and charity for all’ -- or will he try to patch together the broken, discredited  mould? There is a great deal riding on the answer.

Wednesday, 13 June 2012

Turkey Looks OK . . . By Comparison

During the media storm surrounding Greece's continuing efforts at self-immolation its large neighbor across the Aegean has been getting a relatively free ride from the international press. Apart from a few semi-critical pieces in The Economist and various small items about the Kurds, critical analysis of what is going on in Turkey tends to get buried under the Greek and Syrian avalanche of news.

Part of the reason is that compared to the very, very low standards of the neighbourhood Turkey seems pretty good. When the comparisons are Greece, Bulgaria, Syria, Iraq and Iran you don’t have to do much to be the star of the class.

One banker said the relatively rosy picture of the Turkish economy masks a real vulnerability. “We are extremely vulnerable to external events. We need a steady flow of foreign funds to cover our deficits. We need low global interest rates. The minute these stop is the minute the Turkish economy starts to wobble.”

But the real risk, according to an experienced foreign banker, is political.

“The risk here, as always, is political. We have seen this chain of events often. At the first sign of political problems people rush to the U.S. dollar, the currency collapses, interest rates sky rocket, people stop spending, the ‘feel-good’ factor disappears overnight. We have seen this many, many times,” he said.

The ruling Justice and Development Party (AKP) came to power in 2002 promising an increase in ‘democracy’. What has actually transpired over the last decade is a re-emergence of familiar rigid Turkish autocracy, but with a different cast of characters running the show. Instead of the Kemalist military, bureaucratic and business elite the country is now run by and for the conservative Anatolian-based masses. Prime Minister Tayyip Erdoğan has emerged as the undisputed, unchallenged leader of the country, more in line with one of the early Ottoman sultans than any modern democrat.
Prime Minister Recep Tayyip Erdogan
 The few checks and balances that once existed have all but disappeared. The once-powerful military has been humbled, any remaining political opposition has been emasculated, and the rapidly diminishing number of critics silenced. “He can do anything he wants,” said one foreign businessman referring to the prime minister. “This is a democracy in structure, but not in function.”

The press has been one of the major victims of this disturbing trend toward thought control. Never known for its accuracy, the Turkish press was at least lively with several different versions of the same story appearing in different papers. Now, as one friend put it, “the press has been reduced to bread and circuses.” Front pages are dominated by scandal-ridden Turkish football, the inevitable bus accident, crime, or pictures of aging starlets displaying embarrassing amounts of cellulite. In many ways the press now resembles Jack Nicholson’s lobotomized character Randle McMurphy at the end of the great film One Flew Over The Cuckoo’s Nest. Challenge authority too much and this is what can happen.
Jack Nicholson in One Flew Over The Cuckoo's Nest
Scores of journalists have been jailed or fired for daring to criticize any aspect of the government in general or the prime minister in particular. As Yavuz Baydar points out in a column in Today’s Zaman this timidity does not require overt government censorship. He says the courage of media owners, never that strong in the first place, has completely wilted in the face of potential threats against any of their other business interests. They all remember with horror the very large tax claim against the country’s leading media group. It was a very effective shot across the bow.

This self-censorship does not apply only to papers that once used to challenge Erdoğan. A journalist from a strong government supporter Yeni Şafak was recently fired for veering from the company line over the killing of 34 Kurdish teenagers who were thought to be terrorists. The reality was that they were smuggling goods back and forth between Iraq and Turkey, an activity in that area that goes back at least as far as Xenophon in 401 BC.

A recent column in the English language DailyNews by Semih Idiz points out dangerous trends in the judiciary, politics, social and cultural life as the ruling party tries to impose its narrow views on Turkish life. The government is moving against state-sponsored theatres after the prime minister lashed out against ‘arrogant, alcoholic actors’ who he said insulted his daughter. Erdoğan  says he wants a ‘religious generation’ to emerge. A prosecutor recently brought a case against internationally-renowned pianist Fazıl Say for allegedly insulting Islam in a Twitter message.
State Theater Workers Protesting A Government Crackdown
 In yet another outburst the prime minister compared abortion to the massacre of the Kurdish teenagers at Uludere and said anyone who had an abortion was committing murder. Predictably this has unleashed a wave of protest. But as long as that protest does not reach down into the deep AKP voter base Erdoğan really doesn’t care.
Turkish Women Defending The Right To Abortion
 One Turkish analyst says two of the major problems facing Turkey are the Kurdish issue and succession within AKP if and when Erdoğan moves up to the presidency.

“The Arab Spring has reached our borders, but our leaders don’t seem anxious to apply the lessons they’re preaching to others. Turkey is such a one-man show right now, that no one can predict what will happen if Erdoğan ever leaves active daily politics for the rarefied atmosphere of the theoretically neutral presidency.”

For the moment the prime minister can afford to ignore any of the voices raised in protest. The Teflon shield surrounding him won't crack until the economy hits the wall or the violence of the Kurdish protests
increases. Then he will need more than simple, loud bombast.

Sunday, 10 June 2012

Which Greece Will Show Up?

Which face of the Greek electorate will show up at the polls next Sunday in the second general election within six weeks? The angry, petulant, anti-everything voters who cast their votes for the extreme left and right in a fury of protest against the so-called ‘establishment’ blamed for bringing humiliation and poverty to Greece? Or will the slightly more sober side of Greece, afraid of being isolated and scorned outside the Euro,  hold its nose and vote for the charisma-challenged Antonis Samaras and the other parties ostensibly in favour of maintaining the tough reforms required to keep Greece in the Euro?
Will This Greece Win ?
This national schizophrenia was clearly seen in the latest polls that show a neck-and-neck race between the traditional centre-right New Democracy with its muddle-through policies and the anti-everything coalition of vaguely leftist groups under the banner of Syriza. The election rhetoric, if anything, has increased since the inconclusive results of the May 6 election when no group got enough votes to form a government.
Tourists Are Choosing The Baltic Over This
 While the politicians dither the economic situation deteriorates rapidly. The country is running out of money. Unemployment is at record levels with the proportion of young people without jobs topping 50%. Banks are paralyzed, and most sources of liquidity have dried up. Tourism bookings are dropping like a stone with many Europeans deciding that the North Sea or Baltic beaches are suddenly more attractive than Mykonos or Santorini.
No Comment Required
 Syriza’s cunning plans for breathing life into the comatose Greek economy range from unwinding all the half-hearted reforms made to date to increasing taxes on the rich and the shipping companies. Syriza conveniently ignores the fact that the rich and the shipping companies are much smarter than politicians and will always stay at last three steps ahead. Essentially, Syriza wants to maintain the very system that brought Greece to its knees. The only difference is that Syriza people would be in charge of the patronage.

New Democracy and its supporters don’t really have much to say, but thunder on anyway about the disastrous consequences of leaving the Euro. They say that only they can achieve the unachievable – have the creditors moderate the terms of the reform program and keep Greece in the single currency. Left unsaid in the New Democracy campaign is the humiliating reality that northern European technocrats will continue to exert enormous influence on the Greek economy and public administration.

The extremist parties have no real program other than yelling invective at each other, throwing glasses of water, and getting into slug-fests on television. The head of the neo-Nazi Golden Dawn party was quoted as saying he really didn’t believe in elections in the first place, and that they haven’t done any good for Greece.
Political Debate Greek Style
 International economists, like an ancient Greek chorus, offer a steady drumbeat of unsolicited advice. Most of them think Greece should leave the Euro and take its chances with the drachma. This might work if Greece had anything to export or had the industrial infrastructure to replace expensive imported goods with domestic goods. But it doesn’t. Other pundits wring their hands in desperation and moan that Europe really ‘should do something, anything’ to keep the grand Euro dream from becoming a nightmare. Unfortunately, they don’t really have a clear idea about exactly what should be done, or what could be done given the political realities of the European Union.
Will The Drachma Return?
There are faint whispers that voters just might opt for the reform program they know rather than jump into the unknown with Syriza. This theory says that Greek voters got all their complaints and frustration off their chest in the first election, but will ‘come to their senses’ in this election. Maybe, maybe not. But it is quite possible that the physical aggression shown by the neo-Nazi party Golden Dawn during a TV show might have shocked people into realizing the danger posed by extremes of either wing. Many people remember the vicious civil war that Greece suffered not that long ago, and they have no wish to repeat that particular tragedy.

There is another theory that says Greece would benefit from a total collapse that would force the entire system to be rebuilt from the rubble. As one Greek friend pointed out, the problem with this theory is who, exactly, would do the rebuilding. There is no obvious or credible alternative to the discredited existing political establishment.

Is there room to re-negotiate any terms of the existing program? The Germans continue to talk tough, but could this change slightly after the elections? The head of the IMF, Christine Lagarde, had a good point that may gain some traction. Her idea was to ease up on the budget cuts and give priority to the structural reforms that must be changed if the Greek is to have a chance to grow.  Maybe there is room to shift the priorities of the program and stretch out the savings program to ease the immediate pain.

The May 6 election seemed like a wake-up call for many Greeks. They were driven to the edge and didn't like what they saw in the abyss. This is their chance to pull back and return to the hard, long-term task of reforming their beautiful country.