Greece Is Over Its Crisis, but Europe Isn’t

In Greece, a cycle is ending, and the country is returning to political normality. But across Europe, the legacy of its crisis is still a factor.

Riot police stand guard outside the Greek Parliament in 2015.
Riot police stand guard outside the Greek Parliament in 2015, when the country was gripped by protests against austerity. (Yannis Behrakis / Reuters)

ATHENS—It has been a problem child, a sick man, a canary in a coal mine, a warning sign, and a long-running experiment into where economics meets politics, with a significant social toll. It has become a rallying cry for Brexiteers and right-wing populists, and has revealed some of the deepest fissures in the European Union.

Nearly a decade after it required a bailout in 2010, Greece remains one of the most polarizing issues in Europe, and politicians across the EU draw different—and politically convenient—lessons from how European institutions handled, or mishandled, its crisis.

Here in Greece, a cycle is ending, and the country is returning to political normality and stability. On Sunday, it will hold national elections—its first since exiting a bailout regime last year—in which Kyriakos Mitsotakis’s center-right New Democracy party, a pillar of Greece’s pre-bailout establishment, is expected to defeat the left-wing populist Syriza party, led by Prime Minister Alexis Tsipras. Syriza came to power in 2015 demanding an end to the crippling austerity Greece was forced to undertake as a condition of its bailout, but ended up having to implement it anyway—at the behest of the European Union and the country’s other creditors.

That apparent tension—between national sovereignty and continental unity—still animates much of the debate in Europe about Greece. It is a dynamic that is as much psychological as it is political, and goes beyond the financial and moral obligations of membership to a common-currency area. It is about how much austerity a country can withstand without breaking, about whether Greece needed to be punished, and about whether being part of the EU (and the euro) is a help or a hindrance.

In Italy, for instance, few days go by without Matteo Salvini, the country’s right-wing populist interior minister and the man widely seen as a leader-in-waiting, saying that Italy doesn’t want to “meet the same fate as Greece.” In Salvini’s rhetoric, winding up like Greece means ceding national sovereignty to the baddies of the European Union, who in turn would impose an emasculating austerity regime on Italy. His party has long flirted with the idea of exiting the euro, or even creating temporary IOUs as a parallel currency—a notion that fires up the base, but is not likely to happen because it’s illegal and would cause the single currency to collapse.

On social media and in the piazzas where he’s been campaigning, Salvini frequently cites a figure from the past: Mario Monti, who led Italy at the height of Europe’s debt crisis, from 2011 to 2013, during which the country raised the retirement age in a pension reform that the current government in Rome is working to overturn. For Salvini’s voters, the mere mention of Monti, an unelected technocrat who governed Italy with the blessing of Brussels, triggers a sense of outrage.

That’s because in Italy, membership in the European Union has always been seen as an external constraint, something that forced the country to get its house in order before the introduction of the euro and that helps keep it in line now. The general perception is that Italy wouldn’t step up on its own unless compelled to. Monti’s government embodied that, and the current populist government came to power as a response to a perceived loss of national sovereignty.

Last summer, when forest fires ravaged an area outside Athens, killing 103 people, Federico Fubini, a deputy editor of Italy’s leading daily, Corriere della Sera, wrote a column asking whether budget cuts to Greek state services might have made the fires harder to contain. “You cannot imagine how viral that article became. I think I’ve never written an article that was received so violently,” Fubini, the author of a new book, Per Amor Proprio: Why Italy Should Stop Hating Europe (and Stop Being Ashamed of Itself), told me.

Euroskeptics from Salvini’s League party cited his column as evidence of how “austerity kills,” Fubini said, while “the pro-Europeans attacked me very violently because they said my data was fake.” Greece’s so-named troika of lenders—the European Commission, the European Central Bank, and the International Monetary Fund—is on the defensive about the social and human toll of the austerity it imposed on Greece in exchange for the country’s bailout. After Fubini’s column appeared, a senior European Commission official wrote a letter rebutting his argument. “The minute I provided the data, the whole discussion died out,” Fubini told me. But it showed how sensitive the issue of Greece remains in Europe.

Europe’s handling of the Greek debt crisis also haunted talks last month about creating a common European budget for handling moments of extreme financial stress, something French President Emmanuel Macron has been pushing for, but which Germany opposes. That’s because in much of the German political and popular imagination, Greece has been the ultimate example of a spendthrift country whose soaring debts got it into trouble and that required the thrifty creditor Germany to solve its problems; never mind that for years before the crisis, Germany benefited from Greece buying German goods with money borrowed from German banks.

Half Mediterranean and half Northern, in geography and policy, France has an attitude toward Greece that is more complicated and is connected to France’s relationship to Germany, the de facto dominant power in Europe. “I think we’ve been very ambiguous,” the economist Jean Pisani-Ferry told me, speaking of France. Part of the establishment in Paris sees France in the same camp as Germany, a country that lent Greece money. But at the same time, there’s been more French sympathy for the plight of Greece under austerity. “Greece is sort of an exaggerated image of what we are ourselves,” Pisani-Ferry told me. In the end, “there’s a sort of permanent hesitation about whether we in fact feel we’re Greeks or we feel we’re creditors.”

In Brexit Britain, Greek lessons also abound, even if there is little consensus on what they mean.

Ahead of a general election in 2010 and just a couple of years after Britain allocated billions of pounds to bail out its banks, sending the country’s budget deficit surging, David Cameron, then the leader of the opposition, warned that five more years of Labour risked turning the U.K. into Greece. The comparison was widely dismissed by economists, but it resonated among voters: Greece had become a byword for chaos and crisis, of reckless overspending and turmoil, and Cameron became prime minister, at the head of a coalition government whose signature policy was to reduce government spending, arguing the country had to get its finances in line.

The warning was still being used five years later, as Cameron’s Conservatives swept to power with their first parliamentary majority in 23 years. By the time of the U.K.’s referendum on its EU membership in 2016, though, Greece had come to represent something else. For Labour’s Jeremy Corbyn and the left, the buzzword was “Pasokification,” after the Greek Socialist party, PASOK—the death spiral of the center-left when it supports austerity as in Greece. For them, the Greek example meant fighting austerity.

While the U.K. right and left drew their own, diametrically opposite significance from Greece, so too did the new camps in British politics: Leave and Remain. For Leavers, those who supported Britain’s exit from the EU, Greece stands as a warning of the folly of European integration and the national humiliation that Brussels will inflict on those who step out of line. Boris Johnson, Britain’s likely next prime minister, has warned that Greece’s experience is “a lesson in the absolute insanity of any country allowing itself to be bullied by EU negotiators.”

Remainers are also trying to own the Greek experience as evidence in their prosecution of the Brexiteers—particularly the claim by Johnson and others that they will be able to negotiate a better deal with Brussels by threatening to leave without a deal. Britain will be treated just like Greece, they warn.

This Sunday’s Greek elections, which Tsipras called early, after his party’s poor showing in European Parliament elections in May, in some ways mark the end of an era of crisis politics. Tsipras and his Syriza party came to power as a protest vote against establishment parties that had alternated in power, with one technocratic leader in the middle, ever since Greece requested a bailout in 2010. On Syriza’s watch, Greece has exited its bailout program, but the economy has continued to suffer.

In the hot summer of 2015, Tsipras challenged Greece’s creditors with a referendum on the bailout package, and for a moment, talk of Grexit was back on the table. Greek voters wanted to reject the terms, but keep the euro. After that, Tsipras had to do an about-face and stick to the terms of Greece’s bailout. This time around, a vote for New Democracy, the market-friendly old guard, is its own protest vote against Syriza’s handling of the economy and the country.

To some in Europe, Tsipras’s transformation from leftist radical to austerity-imposing European team player offers a lesson in how populists moderate in power, under the discipline of European institutions and markets. But that is “a dangerous conclusion to draw,” said Catherine Fieschi, the executive director of Counterpoint, a British think tank. The Greek situation was extreme and unique. “I don’t think that situation would be replicable across the board,” Fieschi told me. “It gives us a false sense of security.” Italy’s Salvini would moderate only if doing so was in his own interest, not Europe’s, she said.

While other countries in Europe are now sliding into populism, Greece has already gone through that phase and now looks poised to return to an establishment. This, too, may be another lesson from Greece. Things can change, and change back.

Tom McTague contributed reporting from London.