What Democracies Can Learn From Greece's Failed Populist Experiment

Rambunctious outsiders often have no solutions to offer. But their obvious failures will not guarantee their demise.

Greek parliament employees raise a mast after they replaced torn-off Greek flag with a new one atop the parliament in Athens Syntagma (Constitution) square on April 18, 2012.
Greek parliament employees raise a mast after they replaced torn-off Greek flag with a new one atop the parliament in Athens Syntagma (Constitution) square on April 18, 2012. (Yannis Behrakis / Reuters)

While the crisis in Greece no longer captures international headlines as it once did, the country’s troubles never went away. Greece remains the only Eurozone country still subject to a joint Eurozone-International Monetary Fund fiscal adjustment and structural reform progra m. In the long-running saga’s latest episode, the recent completion of a crucial compliance review paves the way for the release of $7.6 billion in bailout funds to Greece from its creditors in exchange for further budget cuts and tax increases.

Greece’s troubles date back to the implosion of its economy in 2010. Faced with a massive budget shortfall caused by a combination of overspending and undertaxing at a time of swelling global financial risk, Greece found itself unable to refinance its huge debt. As a member of the Eurozone and a debtor to several major European banks, it was able to elude outright default, securing a bailout from its European partners who, with the assistance of the IMF, demanded an onerous fiscal adjustment. With or without a bailout, an adjustment of such magnitude was both necessary and painful. But the hastily designed, poorly implemented program exacerbated Greece’s considerable economic distortions—a large and inefficient public sector and an uncompetitive private one—triggering a brutal economic depression accompanied by massive unemployment. Combined with the inevitable political turmoil that ensued, this crisis sparked a global scare about Greece’s imminent exit from the Eurozone, which carried dire implications for the survival of the common European currency.

All this made Greece fertile terrain for populism, long before Trump crashed onto the scene and a referendum brought us to the brink of Britain’s exit from the European Union. In fact, Greece’s experiment in populism—broadly pointing to political movements that emerge from the margins to challenge mainstream politicians in the name of the people, while preaching a gospel of sweeping change and scolding the “elites” as failed, corrupt, and responsible for most social ills—has a great deal in common with those in America and Britain.

By upending conventional political practice and highlighting their status as political outsiders, populists secure a political advantage in a time of crisis, change, and uncertainty. Yet, as Greece’s experiment showed, such disruption is very costly. Embracing their outsider status might deliver victory to populists, but does little to help them navigate a complex reality that requires serious, long-term planning, and compromise. If anything, reality sets populists up for costly failure.

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In 2010, few in Greece saw the trouble on the horizon. When it arrived, voters were quick to blame the political establishment, as represented by the center-left PASOK and center-right New Democracy—easy scapegoats that had traded power for over 40 years. In control when the crisis exploded, PASOK absorbed the brunt of the fallout, its poll numbers dropping from 43.9 percent in 2009 to just 12.3 percent by 2012. Although New Democracy was dealt a serious blow, it managed to preserve a substantial part of its electoral base.

In the first elections of the crisis period in May 2012, several populist parties competed to fill the gap left by the faltering PASOK and New Democracy. They ranged from the Neo-Nazi Golden Dawn party and the far-right Independent Greeks (ANEL) to the Coalition of Radical Left (SYRIZA). They portrayed the elite as both corrupt and insufficiently patriotic, and promised a return to the good old days of debt-fueled prosperity. SYRIZA, a party of former student activists and far-left intellectuals that had hitherto struggled to win more than 4 percent of the vote, emerged as the strongest of the populist bunch. It advocated the repeal of all unpopular economic measures, including a particularly reviled property tax. Thus, SYRIZA, led by the 40-year old Alexis Tsipras, became the main opposition party. In January 2015, it defeated an unpopular coalition government led by the old political mainstays, New Democracy and PASOK.

While SYRIZA won a plurality, it lacked the parliamentary majority necessary to form a government. Its solution was to ally with the far-right ANEL, forming an unusual left-right coalition government united in its populist sentiment. (It was as if Donald Trump and Bernie Sanders decided to govern together.) The time had come to turn promises into policy.

Populists tend to ask the right questions. They raise legitimate issues about the economic and social fallout of globalization, and thrive on demands for political accountability. In Greece, they asked what brought the country to its current predicament, how corruption flourished, and why the economic medicine administered to cure its economic ailments appeared only to spread the contagion. Mainstream parties had failed to prevent the crisis; once it erupted, they could not manage its social impact.

But while the populists were right to blame the establishment, they had no solutions. While in the opposition, they peddled empty slogans and old-fashioned economic ideas, rejected necessary reforms, and argued that they could force Greece’s creditors to fund their policies. That makes for good opposition policy. But when the populists win, they must deliver. In Greece, the populists not only couldn’t deliver on their promises—they delivered the opposite of what they’d promised: even more austerity. Protracted negotiations between the Greek government and its European creditors failed to produce the breakthrough that SYRIZA had promised. In fact, they further damaged the Greek economy and killed the nascent recovery. The renewed fear of Grexit sparked a mass deposit flight from Greek banks, bringing the economy to its knees.

Even then, the populists refused to recognize what was possible, choosing instead to double down on their mistakes. In July 2015, they announced a referendum, asking the electorate to reject the deal on the table, which  entailed the continuation of fiscal adjustment and structural reforms. They argued that such an outcome would strengthen their hand and lead to a better outcome. But they were wrong, ending up with a worse outcome that necessitated even more austerity.

In Greece, many experts were appalled by the government’s call for a referendum on the deal, which they viewed as a dangerous gamble. In fact, Greece’s top economists advised against rejecting the deal. But their warnings went unheard. Facts did not matter; only emotions. With banks closed and capital controls in place, voters followed the populists, defiantly rejecting the deal. Faced with no realistic options, the populists then executed a complete U-turn, accepting a deal even worse than the one that had been rejected, but suddenly necessitated by the damage their tactics had inflicted on the economy. The estimated price tag of their policy error? A staggering 86 billion euros. The populist governed reacted to this failure by doing what all populists do: sow division and polarization, a strategy it honed while in opposition, and painting its opponents as puppets in the hands of foreign patrons, thus appealing to deep-seated nationalist feelings.

The abysmal incompetence of populists leads to the mistaken belief that their rule will end quickly. Although SYRIZA’s deafening failure looked certain to spell its political death, Tsipras engineered a snap election in September 2015, which he won easily. It was just too early for the stunned electorate to admit its mistake and turn back to the discredited mainstream parties. Through its complacency towards populist parties, the opposition placed itself at a marked disadvantage. By assuming that the populists’ inability to deliver on their promises would doom them, it ultimately helped them remain in power.

The lesson here is that voters often resist a return to mainstream parties once they have abandoned them. They also don’t like to be reminded that they were wrong to jump on the populist bandwagon in the first place. Rather, it is up to the non-populist parties, the fetid mainstream, to convince the electorate that they themselves have changed and are ready to offer credible solutions. In Greece, SYRIZA managed to reclaim power in September 2015, even after its policies failed, partly because it faced a tired, unreformed opposition. Only when the underdog Kyriakos Mitsotakis, a younger reformist, won New Democracy’s leadership, did this old, tired party gain political traction.

Paradoxically, this suggests that there’s nothing like a populist experiment to re-legitimize the mainstream. With their promises in tatters and their incompetence on full display, populist parties are eventually exposed. At this point, they face the choice to either go mainstream or disappear. Populism may well be a necessary, perhaps effective treatment for the belief that there are easy solutions to hard problems—for belief that one can escape reality.

It is when populists falter that their internal contradictions and hypocrisies are exposed. In Greece, the supposedly hyper-democratic SYRIZA government has adopted policies that have eroded the institutions that are supposed to check the executive, including tighter control of the Supreme Court and attempts to restrict media opposition by limiting the number of operating licenses given to television stations and awarding winning bids to pro-government oligarchs.

Populists also often show they’re not immune to the temptations of corruption, despite their promises. As outsiders rather than insiders, they play up the fact that they are untainted by corruption, unlike the political establishment. Yet, they fail to deliver. In Greece, the populist government has already been embroiled in an array of scandals, including one involving preferential loans for political clients; it has shored up its very own “capitalist cronies” and used clientelistic practices to reinforce its political power, appointing hundreds of supporters to public jobs.

However, where democratic institutions are strong, populists face the choice between political death or mainstreaming. When this is the case, populist experiments might reinforce democratic institutions. They can serve as a mechanism for the renewal of the political system and a wake-up call for mainstream politicians who have grown complacent and ineffective.

Transposing the Greek populist experience to America or Britain yields some clear insights. Trump and the Brexiteers succeeded politically by identifying and capitalizing on some real social concerns. However: They have no solutions to offer. They scammed their way to power, but now that they have attained it, they face some unforgivable realities. They will try to avoid them, of course, by dividing and polarizing, and by blaming foreigners and “unpatriotic” political rivals. They are likely to double down when confronted with failure, at considerable economic cost. Yet, their obvious failures will not, in and of themselves, guarantee their demise. This will require mainstream parties to up their game and offer real alternatives. Only then, with the support of resilient democratic institutions, can the havoc wrought by populists be undone.