Angela Merkel in Athens: The bitter after-taste

As protestors chanted anti-austerity slogans and clashed with riot police, the German Chancellor did nothing but look after her own electoral interests.

Of course it was going to be surreal. Air raid sirens were supposed to sound at 11am, only a couple of hours before the German Chancellor arrived. Despite the fact the routine drill was cancelled the night before, the signs of a strange day were all there. Why is Angela Merkel visiting Greece now?

Merkel flew to Athens in search of momentum, leading up to German elections next September. Despite hope, or fear in some cases, that something important regarding the future of Greece and Europe as a whole was to be announced, nothing like that happened. “I am aware that the situation [in the society] is tough.” she stated during her meeting with President Carolos Papoulias. “I came here to support Greece”. But her general stance, doesn’t actually “support” this. If anything, an impression that Merkel visited the country looking for her “Thatcher moment”  is one of the things left unsaid. Since there are no laid off miners around, Greece would have to do.

Last time the German Chancellor visited Greece was in 2007, before the financial crisis blew up in our faces, back when the euro was still considered to be the greatest thing since sliced bread. Now the Greek economy is down the drain and European politicians are desperate to hang a “nothing to see here, move along” sign over the country. But everyone knows it is not so and can’t help but wonder: A simple meeting at the VIP lounge of the airport would do, why the theatrics that cost the Greek state almost two million euros? Why ban demonstrations from moving on all streets surrounding the parliament using a law drafted in 1971 by the Greek Junta?

A protester holds a placard of German Chancellor Angela Merkel featuring a Hitler moustache near the Greek parliament

I arrived at the demonstration that took place despite the ludicrous ban outside the parliament, at around the same time Alexis Tsipras and Bernd Riexinger (of the German party Die Linke) did. Only a few thousand people on and around Syntagma square were present before I left my house, but by the time I got there, there was barely enough space to stand.

“We will give her the welcome she deserves” the leader of SYRIZA proclaimed.

Blocks of young people stood around the main SYRIZA one, while the usual chanting took place in front of the parliament. This was all before the time Merkel actually arrived. While making my way there, I tried to count how many policemen in riot gear I encountered getting there: I couldn’t. Every alley around syntagma was crawling with them. Minutes later I was notified that pre-emptive arrests were taking place all over Athens. Official sources, at the time, placed the number between 35 and 50. Unofficial info provided by veteran reporter Vassiliki Siouti of Eleftherotypia spoke of almost 2,000.

Demonstrators march in front of the parliament building during Merkel's visit

The trouble didn’t start before 3pm, when the first tear-gas canisters fell, next to the parliament, where the police had placed an iron fence to stop the demonstrators from reaching Vasilisis Sofias, the road from which Angela Merkel would reach A Samaras’ office. Pepper spray was used to hold back the demonstrators. The game often played between demonstrators and riot police began and stones were hurled at the police who tried to break the crowd and push them towards Panepistimiou street. Before the show was over a couple of hours later, 30 protesters were hurt, twelve people have been arrested and 193 detained. Right in front of me, as I was making my way through the backstreets of Syntagma, a hand-cuffed girl was used as a human shield by riot police against stones hurled at them by demonstrators. She was then dragged by her hair, probably towards the nearby Acropolis police station. This was not an isolated incident unfortunately, as many cases of police brutality against those detained were reported throughout the day.

In the meantime, news of the joint press conference were coming in via Twitter: Merkel reminded Greeks that she hopes Greece will be able to remain in the eurozone but has to stick to reforms. Specifically, she mentioned 89 reforms Greece must enact in the next few weeks (as well as €9bn in cuts), in order for the next 31.5bn tranche in loans to be released. With protestors chanting anti-austerity slogans, Merkel offered nothing. Instead, the ideological leader of austerity supporters in Europe stuck to her guns and spoke soft words of comfort to people who’ve just had enough of that.

Angela Merkel and Antonis Samaras make a joint statement

She tried to re-assure Greeks that reforms and cuts will pay off in the long-term, while helicopters patrolled the skies above 50,000 demonstrators burned Nazi flags and called for an end to the nightmare of recession. As Megan Greene of Roubini Global Economics, an expert on the eurozone crisis, put it: “At the end of the day, Merkel's political gesture won't plug the Greek government budget gap and won't stop the economy from contracting further.” All Angela Merkel did was put on a political show to remind Greeks of their obligations, and win votes back home before departing for the Hilton hotel to meet with Greek and German businessmen and investors.

A protestor burns a Nazi flag

As I made my way back, hundreds of police officers were stationed outside the Acropolis tube station, right across the street from tourists filling the popular cafés in Makrygianni Street. A platoon was heading back towards the square, despite the fact demonstrators had scattered and Syntagma square was now occupied by police in riot gear. This, I realized, is the image of Austerity Europe. This is the image of governments who need to treat their populations like prisoners in order to stay in power. And this, is an image from the future: Leaders, hidden away from the public eye in Hilton hotel talking business with Greek and German investors, while people are sidelined, marginalized, stripped of rights and future, labelled as reactionaries who don’t know what’s good for them.

A fire burns as demonstrators clash with riot police

There’s still a heavy smell hovering over down-town Athens. Nostrils burn as they welcome the future. The bitter after-taste is but a warning of things to come.

Yiannis Baboulias is a freelance journalist. Find him on Twitter as @yiannisbab

All photographs from Getty Images

UPDATE 10/10/2012 16:30

Angela Merkel last visited Greece in 2007, not the 1990s as previously stated. The article has been updated to reflect that.

Rubbish litters the ground as demonstrators clash with riot police in Athens. Photograph: Getty Images

Yiannis Baboulias is a Greek investigative journalist. His work on politics, economics and Greece, appears in the New Statesman, Vice UK and others.

Photo: Getty
Show Hide image

The Future of the Left: A new start requires a new economy

Creating a "sharing economy" can get the left out of its post-crunch malaise, says Stewart Lansley.

Despite the opportunity created by the 2008 crisis, British social democracy is today largely directionless. Post-2010 governments have filled this political void by imposing policies – from austerity to a shrinking state - that have been as economically damaging as they have been socially divisive.

Excessive freedom for markets has brought a society ever more divided between super-affluence and impoverishment, but also an increasingly fragile economy, and too often, as in housing, complete dysfunction.   Productivity is stagnating, undermined by a model of capitalism that can make big money for its owners and managers without the wealth creation essential for future economic health. The lessons of the meltdown have too often been ignored, with the balance of power – economic and political – even more entrenched in favour of a small, unaccountable and self-serving financial elite.

In response, the left should be building an alliance for a new political economy, with new goals and instruments that provide an alternative to austerity, that tackle the root causes of ever-growing inequality and poverty and strengthen a weakening productive base. Central to this strategy should be the idea of a “sharing economy”, one that disperses capital ownership, power and wealth, and ensures that the fruits of growth are more equally divided. This is not just a matter of fairness, it is an economic imperative. The evidence is clear: allowing the fruits of growth to be colonised by the few has weakened growth and made the economy much more prone to crisis.

To deliver a new sharing political economy, major shifts in direction are needed. First, with measures that tackle, directly, the over-dominance of private capital. This could best be achieved by the creation of one or more social wealth funds, collectively held financial funds, created from the pooling of existing resources and fully owned by the public. Such funds are a potentially powerful new tool in the progressive policy armoury and would ensure that a higher proportion of the national wealth is held in common and used for public benefit and not for the interests of the few.

Britain’s first social wealth fund should be created by pooling all publicly owned assets,  including land and property , estimated to be worth some £1.2 trillion, into a single ring-fenced fund to form a giant pool of commonly held wealth. This move - offering a compromise between nationalisation and privatization - would bring an end to today’s politically expedient sell-off of public assets, preserve what remains of the family silver and ensure that the revenue from the better management of such assets is used to boost essential economic and social investment.

A new book, A Sharing Economy, shows how such funds could reduce inequality, tackle austerity and, by strengthening the public asset base, rebalance the public finances.

Secondly, we need a new fail safe system of social security with a guaranteed income floor in an age of deepening economic and job insecurity. A universal basic income, a guaranteed weekly, unconditional income for all as a right of citizenship, would replace much of the existing and increasingly means-tested, punitive and authoritarian model of income support. . By restoring universality as a core principle, such a scheme would offer much greater security in what is set to become an increasingly fragile labour market. A basic income, buttressed by a social wealth fund, would be key instruments for ensuring that the potential productivity gains from the gathering automation revolution, with machines displacing jobs, are shared by all.  

Thirdly, a new political economy needs a radical shift in wider economic management. The mix of monetary expansion and fiscal contraction has proved a blunderbuss strategy that has missed its target while benefitting the rich and affluent at the expense of the poor. By failing to tackle the central problem  – a gaping deficit of demand (one inflamed by the long wage squeeze and sliding investment)  - the strategy has slowed recovery.  The mass printing of money (quantitative easing) may have helped prevent a second great depression, but has also  created new and unsustainable asset bubbles, while austerity has added to the drag on the economy. Meanwhile, record low interest rates have failed to boost private investment and productivity, but by hiking house prices, have handed a great bonanza to home owners at the expense of renters.

Building economic resilience will require a more central role for the state in boosting and steering investment programmes, in part through the creation of a state investment bank (which could be partially financed from the proposed new social wealth fund) aimed at steering more resources into the wealth creating activities private capital has failed to fund.

With too much private credit used for financial speculation and property, and too little to small companies and infrastructure, government needs to play a much more direct role in creating credit, while restricting the almost total freedom currently handed to private banks.  Tackling the next downturn, widely predicted to land within the next 2-3 years, will need a very different approach, including a more active fiscal policy. To ensure a speedier recovery from recessions, future rounds of quantitative easing should, within clear constraints, boost the economy directly by financing public investment programmes and cash handouts (‘helicopter money’).  Such a police mix – on investment, credit and stimulus - would be more effective in boosting the real economic base, and would be much less pro-rich and anti-poor in its consequences.

These core changes would greatly reform the existing Anglo-Saxon model of capitalism and provide the foundations for building support for a new direction for progressive politics. They would pioneer new tools for building a fairer, more dynamic and more stable economy. They could draw on experience elsewhere such as the Alaskan annual citizen’s dividend (financed by a sovereign wealth fund) and the pilot basic income schemes launching in the Netherlands, Finland and France.  Even mainstream economists, including Adair Turner, former chairman of the Financial Services Authority, are now talking up the principle of ‘helicopter money’. For these reasons, parts of the package are likely to prove publicly popular and command support across the political divide. Together they would contribute to a more stable economy, less inequality, and a more even balance of power and opportunity.

 

Stewart Lansley is the author of A Sharing Economy, published in March by Policy Press and of Breadline Britain, The Rise of Mass Impoverishment (with Joanna Mack).