Greece, Bombarded by Taxes, Is Sinking

21.09.2015

The Greek people went to the polls on September 20 not knowing whether they would elect a government. The electoral system and the polls both made it quite clear that nobody would emerge victorious on Sunday evening.

Disappointment with most parties’ performance during the seven-month tenure of the last parliament has resulted in a lack of enthusiasm for the elections and a decisive split in voter preferences as indicated by the lack of turnout.

Few doubted that SYRIZA would finish first, and moreover, that the conservative ND would struggle near the top. But what about the events of the next day? Who would form a government, and who would form coalitions? Greek political parties are not known for cooperation and honest dialogue. They seem to prefer conflict and partisanship. How, then, can a government be formed, and have the potential to endure…

Greek politics work within these limits. The parties do not usually talk with each other. They design policies based on the interests of their rank and file. The general prosperity of the country and the future of society very rarely play a significant role. The public sector functions as the operative hand of the parties, thus, nobody from the party system talks against efforts to insulate the state and its organizations from reforms, which might unseat its current occupants. Consequently, not even one of the approximately 19 parties which took part in the elections offered specific proposals to cut spending through limiting public sector employment. Building on the preference of other European Union governments for direct or indirect taxation over reductions in public sector spending and abolishing useless state entities, all bailout agreements were centered on new big tax plans.

Greek voters were clearly aware that, regardless of the winner of the elections, due to the recently signed agreement with the country’s lenders, the people would have to shoulder unavoidable new taxes. Regardless of who they voted for, their already heavily burdened incomes would be further strained by more taxation, social security contributions and increases in public service rates. Incomes will shrink while costs will rise. Despair undermined any future expectations.

In such an atmosphere, the elections were not a cause for elation or celebration. They merely signified further hardship down the road and a rising atmosphere of uncertainty and ambivalence. For an average Greek, deeply imbued with the ideas of statism, nothing indicated any kind of exit from existential agony. SYRIZA, however, finally won by a comfortable margin. With its ANEL partners in government gaining parliament seats as well, it appears that a winning majority was formed. The debate about how a new government would be formed is now over. The question is how viable the new administration will be – with only a five seat parliamentary majority.

For the country, the future holds few surprises. The far right nationalistic Golden Dawn is well placed to take advantage of most frustrations. The failure of a new government scheme to endure will lead to a new general election. The extreme neo-Nazis are posed to gain under these conditions, potentially leading the nation into a perilous situation with possibly grave consequences.

For democracy’s sake, the new government needs to not only survive but to succeed. But if the same policies remain, this is unlikely to happen. To save the day, liberal and conservative political forces need to wake up to the imminent danger and follow a radically different course, abandoning traditional ideas and practices. It is time for radicalism. In the Greek context, this means a rush to entrepreneurship, creative innovation, meritocracy and market driven solutions.

The economy must become more emboldened and business endeavors more risk oriented. Joint ventures with foreign businesses should proliferate while the country’s external approaches should be aimed at penetrating new markets and encourage daring business endeavors.

A society tied to suffocating tax entanglements has little chance for success. Greece can only recover if it can attract foreign investment. To achieve this, it would need to reduce taxes substantially, establish a stable fiscal regime, abolish bureaucracy and get rid of scores of useless and money consuming public sector entities. This would signal that the country is prepared for the future. This election’s results do not signify that this lesson has been learned; but the country has no time to waste. My prediction is that soon Greece will fall into another political crisis. If this lesson hasn’t been learned, the extreme right will become the protagonist, with whatever negative consequences that implies for the country, its people and the region at large.

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.

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