In times like these, it’s comforting to know there’s a European country where things seem to be going relatively well. Populist leaders have upheld democracy and steered toward the center. The economy is picking up speed. The government even solved a foreign policy problem that had festered for decades.
Even so, those populists just lost an election – and handed over power to a new center-right government without a lot of fuss.
Europe may be baking in heat waves, but politically things don’t look so hot. With the clock once again ticking toward Brexit, Britain has just handed the job of prime minister to Boris Johnson. Italy and Austria are embroiled in scandals about alleged Russian influence operations that have tainted major political parties. In Poland, critics say the government has encouraged a wave of homophobia. Hungary continues to be, well, Hungary. Spain is having trouble forming a government. Chancellor Angela Merkel’s tremors have made Germany jittery.
Amid all this uncertainty, the island of relative stability, at least for now, is … Greece. Seriously. That’s the legacy of former Prime Minister Alexis Tsipras, a populist and former Communist who lost the election earlier this month. It will be interesting to see whether the vibe can last, or whether Greece is simply on a different cycle of dysfunction from the rest of the continent.
As recently as four years ago, having already undergone years of wrenching cutbacks to bring its budget back in balance, Greece nearly crashed out of the eurozone after a referendum rejected even more austerity. The economy contracted by 25 percent, unemployment reached 28 percent and the country needed the biggest bailout in history.
There is a serious argument that conditions imposed on Greece were unnecessarily harsh – that their first priority was protecting banks and the markets, and that they created too much hardship from which many people may never recover. Maybe that’s true. Maybe it could have been done differently. All the same, the turnaround is undeniable.
Even though he called the referendum, Tsipras decided to cooperate with the EU and international lenders. Next month, Greece marks the first anniversary of exiting the bailout program. The huge deficits are gone. The government is taking in more money than it is spending. Unemployment, now 18 percent, is still too high but going down. And the economy is growing. The IMF expects the Greek economy to grow by 2.4 percent, not in the top tier of European countries, but much better than Italy, Germany, France or Britain. Overall, the eurozone economy is expected to grow by 1.3 percent.
Politically, Greece always has had relatively high numbers of extremists on both sides of the political divide, but they’ve largely been sidelined. The far-right, nationalist Golden Dawn didn’t even get enough votes this month to make it into parliament.
Earlier this year, Tsipras also finalized an agreement resolving a dispute over the name of Greece’s northern neighbor that had dragged on since the breakup of the Yugoslav federation in the 1990s. That country, which suffered with the clunky label Former Yugoslav Republic of Macedonia for the first quarter-century of its existence, is now North Macedonia. With Greece no longer standing in its way, North Macedonia is poised to become a NATO member, and has some momentum to begin talks about joining the European Union.
Greeks tend to be more skeptical of the United States than people of most other EU countries. And, as Orthodox Christians who were assisted by Moscow in their struggle against Ottoman rule, the country has a longstanding bond with Russia. But under the former Communist Tsipras, Greece has had good relations with the Trump administration. Even while Russia seeks to make inroads elsewhere in Europe, Greece has been keeping it at arm’s length. That is partly the result of geopolitics. Greece sees an opportunity to improve ties to the West, Dimitar Bechev writes here, as regional rival Turkey’s relations with Europe and the United States sour. The United States is unhappy with NATO member Turkey’s improved relations with Moscow.
Greece is buying new U.S. weaponry and American liquified natural gas, and building an alliance with Cyprus and Israel encouraged by Washington. Bechev, who has written about the power politics of southeast Europe, calls Greece “one of the United States’ closest friends in the EU right now.”
Can it last?
As long as the geopolitics of the Middle East and Europe don’t change, the rapprochement with Washington probably stays on track. The incoming prime minister, Kyriakos Mitsotakis, a Harvard-educated former banker with a Cabinet full of technocrats, is likely to continue moving closer to the EU and the United States.
Economically, Mitsotakis speaks the language of tax cuts, privatization and cutting bureaucracy, which he says will make Greece’s economy a “pleasant surprise” for the rest of Europe. Many Greeks still are hanging by a thread in the gig economy. After what they’ve been through, they won’t wait forever.
Analysts say Mitsotakis’ New Democracy party has moved right to crowd out more extreme movements. But the far right isn’t dead, and Mitsotakis will have to work to keep it in check.
Things are not great in Greece. But they’re not terrible, either, particularly considering where matters stood a few years ago. In Europe these days, that’s enough to make it a star.