An austere people riven by bailout referendum... what happens next?, Irish Examiner

The past week has taken its toll on nearly everybody in Greece. What’s next, asks Europe Correspondent Ann Cahill from Athens.

Syriza wants to create a socialist Venezuela in the Mediterranean. Germany wants Greece out to frighten the rest of the eurozone into deeper political and economic union. The speculators are on the sideline, waiting to pounce at the first drop of blood spilled.

It’s all true, but it’s not all that simple.

In the middle are the Greek people, being regularly described as “proud” to explain their loud demonstrations against ongoing austerity. This austerity saw their GDP fall by 25% and cut their deficit three times faster than Ireland.

They are riven by yesterday’s referendum as they have not been probably since their 1946-49 civil war. Yale professor and Greek political scientist Stathis Kalyvas, a specialist on order, conflict, and violence, says referenda polarise society, forcing people to adopt one of two opposing sides.

It was the spark that lit the tinder-dry public, prepared by a few years of nationalist rhetoric from neo-Nazis in parliament and from the far left of Syriza. People are being called unpatriotic traitors for their views, with phrases not used since the Nazi occupation being thrown about.

Germany obliged by assuming the role of the enemy — feeding into the traditional Greek suspicion of foreigners and the west, usually represented by Britain and the US that were seen as using Greece for their own designs. The result is a tendency to blame outsiders, according to Prof Kalyvas.

While in opposition , Syriza did little to reform the administration of the state so taxation was fairer and applied to everyone. In government they have not succeeded in doing much in this respect, either.

The centre-right New Democracy government applied the cuts, including firing thousands of public servants, many of whom took early retirement while others continued to be paid while not coming to work because of legal issues.

Syriza sent many of them back to work and didn’t move against the rest of the public sector — although they formed the backbone of the yes camp in the referendum.

Much of the population appears to be in a panic while, at the same time, seems oblivious to their real situation, saying that everything will work out, that there will be a deal on their debt. Syriza has been cultivating the situation, says Prof Kalyvas.

“They say not to worry, Greece will not be out of the euro and banks will reopen. People believe them irrespective of the fact that nothing they have said has panned out. It is incredible. It’s like the rhetoric used in Serbia — we just have to be nationalist and defiant.”

It has been working, too. A poll in the past few days shows that 81% of people support keeping the euro, many more than voted yes.

Eirene, who works in a chocolate shop on Ermou St in central Athens explains why she voted no. “For five years, everything has been for the banks, nothing for me. We want it to end. Now it’s between bad for another five years out of Europe, or 25 years in it,” she said.

Since the imposition of capital controls, Athens feels a little like a Soviet state. Public transport is free, with drivers shrugging their shoulders if you try to pay. Banks refuse to transfer taxes for people to the state, blaming the controls.

Irrespective of what happens next, Antonis Zairis, representing more than 700,000 retailers whose businesses have been frozen over the past week, said they have lost the trust and confidence of their external suppliers.

The government needs to reopen the banks quickly and get money flowing again. This will need a new government to forge a new agreement with the creditors and make the changes necessary to get the country growing and working again.

Athanase Papandropoulos has worked as a journalist in Brussels since before Greece joined the EU. He believes the only option is that the president insist on a government of national unity with respected non-politicians as prime minister and finance minister. Under the Greek system, this government could change the referendum, weakening the powers of the administration and introducing changes.

Former centre-right minister Thanassis Skordas — who introduced changes such as small shops opening on Sundays, making it easier to set up a company, and combating transfer pricing — believes there should be a major drive to encourage the use of plastic rather than cash as a step towards tackling tax evasion.

First they need to recapitalise their banks, which they will do either with loans raised by the EU or by seizing deposits in the banks and printing a new currency.

Ann Cahill, Europe Correspondent in Athens