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Greece

Greek Election, The Real Reason Any Winner Is Doomed

Despite some hopes inside and outside of Greece that a political coalition will emerge in Athens to lift the country out of crisis, the nation's deeper forces do not bode well.

For a third time, Greeks have come out to rally. But what will it change?
For a third time, Greeks have come out to rally. But what will it change?
Jean-Marc Vittori

-Analysis-

PARIS — Democracy, to borrow from Pascal, has reasons that reason cannot know.

Greeks will go to the polls Sunday to vote in their third national election of the year. In January, they entrusted political power to the left-wing Syriza party on a double promise: to end budget austerity and to keep the euro as the country's currency. But the elected Prime Minister Alexis Tsipras and his Finance Minister Yanis Varoufakis couldn't, or didn't know how to, convince their fellow European countries.

In a July referendum, Tsipras asked the Greeks whether to accept the demands of international creditors. Following his call, they refused. But to abide by his second promise to keep the euro, Tsipris eventually accepted the creditor demands, even as he condemned them as wrong-headed and unfair, before ultimately being forced to resign and make way for new elections.

Sunday's vote will represent the voters' third chance to speak their minds. German Chancellor Angela Merkel wants to believe that "the elections in Greece are part of the solution, not the crisis," and that the results will see the emergence of a coalition government with pro-European parties, capable of finally making the reforms that will put the country on a more favorable path. Alas, Madame Merkel is wrong.

Firstly, the agreement reached with much effort between Athens and its partners over the summer won't begin to solve the country's two main problems: too much debt and too little growth.

According to the European Commission, public debt will top 200% of Greece's GDP next year, despite the forecast less than a year ago that it would be "just" 158%. Nobody pretends that such a level of debt is sustainable. Even though repayments have been spread over time as thinly as butter on toast, they still represents a crushing burden on the Greek economy. The International Monetary Fund believes far more should be done and recommends forgiving at least 30% of the country's debt, on top of granting Greece a 30-year grace period before it starts paying off to give it time to recover.

History repeats

The most unfortunate truth about this situation is that, just like their creditors, the Greeks continue to repeat the same mistakes. In a fascinating academic paper published recently, economists Carmen Reinhart of Harvard University and Cristoph Trebesch of the University of Munich pointed out that the same kind of Greek tragedy happened in the 1820s, 1880s and 1920s. Private investors from Europe had placed too much money in Greece, payment difficulties arose, governments took over and imposed suffocating budget conditions on Greece to bail it out.

Of course, the plans developed over the summer also include measures aimed at restarting the economy. But they risk being crushed under the budgetary restrictions imposed on the Greek state, combined with an explosive cocktail of higher taxes and spending cuts, especially in social programs. And without growth, the weight of debt will only increase. Europeans seem to have forgotten that.

But the illness goes much deeper. The Greek government has no grasp on reality. Many reforms that were promised when the first bailout was signed in 2010 still haven't been implemented. For example, astonishingly, the country still lacks a property registry, which explains why it's so difficult for the state to levy property tax. And the Greeks who do pay the tax feel they're paying for the others. But the fiscal disaster hardly ends there.

In the decades before the crisis, Greece's public expenses were in line with the European average (45% of its GDP for an EU average of 47%), but its revenues were much lower (40% versus 45% for the EU). So the deficit stems not from extravagant expenses but from tax revenues that are too low. To make matters worse, when Tsipras was elected in January, many taxpayers simply stopped paying.

Economists have worked a lot over the past few years to understand the connections between culture and cooperation. In a 2008 study, university researchers Benedikt Herrmann, Simon Gächter and Christian Thöni explained how they traveled to 16 different cities around the world to measure the willingness of people to participate in financing a public project.

People were initially asked whether they wanted to help finance the project. As the process was repeated, fewer and fewer people agreed to contribute, understanding that others would enjoy the benefits of the project without paying for it. In a second experiment, it was possible to punish those who didn't pay. After the punishment was introduced, the proportion of contributors went up significantly in Boston, Chengdu, Copenhagen and Melbourne. But in Athens, the number of people who agreed to participate started very low and, most importantly, didn't go up at all with the threat of punishment.

Of course, the importance of this research shouldn't be overstated. But all the evidence suggests that the Greeks are culturally more predisposed to dislike taxes than people in other countries. And more generally, they seem more likely than others to defy the authority of the state. Ancient Greeks indeed passed onto us the beautiful concept of democracy. But the notion of "state" comes from the Romans.

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Russian conscripts departing for their military service with the Russian Army

Anna Akage, Chloé Touchard, Meike Eijsberg and Bertrand Hauger

Russian President Vladimir Putin officially addressed the nation early Tuesday to announce the “partial mobilization” of Russian forces that will see military reservists sent to Ukraine to defend “the territorial integrity of our motherland.”

The decision marks a major escalation of the war Putin launched seven months ago, which until now he has tried to downplay domestically as a “special military operation.” The mobilization comes as Ukraine troops have made major advances this month, and follows Tuesday’s announcement of referendums in occupied parts of Ukraine that are expected to lead to their annexation as part of Russia.

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In the highly anticipated speech, Putin restated his claim that Russia is fighting against “neo-Nazis” who have seized power in Ukraine, and made allusion to Moscow’s nuclear arsenal. “We will certainly use all the means at our disposal to protect Russia and our people,” the Russian president said, adding: "This is not a bluff."

In terms of the impact inside Russia, Putin again tried to quell possible public opposition. "I repeat, we are talking about partial mobilization, i.e., only citizens who are currently in the reserve will be called up for military service, especially those who have served in the Armed Forces and have certain military professions and relevant experience," Putin said in his address.

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