The calling of a general election in Greece at the end of January poses a challenge to democracy in the euro zone. The main challenger to New Democracy, the leading governing party, is Syriza, a left wing party which is challenging the economic policy which the government has adopted over the last three years. That policy has been largely in response to demands from the troika (European Commission, European Central Bank and IMF) in return for a loan programme which was needed to prevent a banking collapse which would have forced Greece out of the euro zone. New Democracy itself had in opposition challenged the policy imposed on the previous PASOK government by the troika but did a u-turn on winning the election which it to an extent has got away with in the eyes of a sufficient percentage of its voters to remain one of the leading parties. Syriza could not possibly implement its whole anti-austerity programme while staying in the euro zone as it says it wants to but it would have to implement some changes if it won to retain any credibility at all with those who had put it in office.
Spokespeople of the EU institutions and leading EU governments have a huge dilemma. On the one hand they may feel a need to state the realities of what it considers any Greek government has to do to stay in the euro zone. On the other doing so is likely to be seen in Greece as interfering in the election on the side of the government. Already Pierre Moscovici the new economy commissioner and the German finance minister, Wolfgang Schauble, have intervened in favour of continuing with the existing programme being implemented by the government as being the only one to return to growth while Mr Schauble has said that a change of policy would make it much more difficult to “help” Greece., though many in Greece would question whether the country is actually being helped. Immediate reactions to the announcement of the election are perhaps understandable but such people will have to restrain themselves during the campaign if the election is to look at all like a free choice for the Greek people between alternatives.
Three years ago a significant policy shift would have almost certainly led to Greece leaving the euro zone. However the situation is now different, at least to some extent. The euro zone has stabilized though not recovered from its economic doldrums and crucially the Greek public sector has a primary surplus. The latter means that the Greek taxpayer is fully funding Greek public expenditure with a bit to spare except for the servicing of debt. Syriza has a point when it argues that the Greek taxpayer cannot afford to pay this debt which was incurred by previous government with the participation of lenders who foolishly believed the Greek economy can absorb and eventually repay such loans and with the tacit approval of the European Central Bank including its then German chief economist Otmar Issing. No-one suggests that debt should be easily renounced but when it proves to have been a disastrous mistake the pain of tackling the situation should be shared between creditors and lenders and it is evident that the Greek public has suffered far more over the last six years than the financial creditors or the other governments of the euro zone who now indirectly hold much of the debt.
Syriza may not win the election given that it leads New Democracy by only a few percentage points in the opinion polls a lead which could be reversed and even it emerges as the largest party it will still be well short of an overall majority and may not be in a position to lead a coalition government.
If Syriza does lead the next government and its leader Alexis Tsipiras is the next prime minister, he will not be able to fulfill his promise to end austerity since the financial resources are not available to do so and would not be even if the debt could be wiped out. The primary surplus is a small one and it would not be possible to move into deficit. He will in this and other ways be faced with a reality which cannot be changed by the rhetoric that he has used to attack present policies. But that is for the Greek electorate to judge. The rest of the EU needs to stay out of the campaign and let the Greek people make up their minds. After that if Syriza were to form a government they will need to work out how to deal with it.