Greece and its discontents

EVERYTHING that exists, taught Aristotle, is the same as itself, and is different from everything else. During the hot years of the euro crisis, leaders of the most troubled economies sought desperately to remind investors of this eternal truth. Portugal, insisted its politicians, was not Greece. Nor was Spain Portugal, Italy Spain or France Italy. In short, the problems of one country were distinct from those of others. Yet the bond markets, disinclined to follow ancient wisdom, saw things differently. The contagion caused by spiralling borrowing costs leaping from one country to the next was one of the most alarming features of the crisis—and it explained how problems in tiny Greece could threaten the single currency as a whole. For a time, whenever a finance minister assured investors that his country was different, one could bet that it would suffer the same treatment.

Lately the euro zone has appeared better protected. In June 2012, with Greece in political turmoil, yields on Spanish ten-year bonds topped 7%. This week they were near record lows, despite the election of an explicitly anti-austerity government in Greece. The early antics of Alexis Tsipras, the new Greek prime minister, spooked markets and again raised fears of Grexit. But the channels of contagion have narrowed, thanks to a partial banking union, a permanent bail-out fund and a restructuring of Greek debt, most of which is now in official hands. Investors at last seem to agree that Spain is Spain, not Greece.

Yet voters may be drawing a different conclusion. Over the past year the growth of Syriza in Greece has been mirrored by the rise of Podemos (“We Can”) in Spain, a radical far-left party that considers itself to be waging a similar war on German-sponsored austerity. Leftists from across Europe flocked to Greece on election night to savour the sweet taste of Syriza’s victory. Sympathetic pundits declared an end to the politics of austerity. Mr Tsipras’s decision to form a coalition with an unsavoury bunch of nationalists soured the mood somewhat. But overall, the message seems clear: if financial contagion is now less of a worry, the political sort may just be starting.

The ascendancy of Syriza is spreading political fears in two related ways. The first, much fretted over in Berlin and Brussels, is that Greece’s euro-zone partners may feel obliged to offer Mr Tsipras goodies as a “reward” for his victory, weakening the hand of reformers in other countries. Such concerns may indeed mean that Mr Tsipras finds it harder than his predecessors to win concessions. The second is that his victory will embolden Podemos and similar parties elsewhere. Spain and Portugal hold elections later this year; Ireland no later than April 2016. Today, polls suggest that anti-austerity parties will do well in all three.

Spain has a much larger economy than Greece and a more or less functioning public administration. It has not had to endure years of outsourced governance by the detested “troika”—the European Commission, the European Central Bank and the IMF, which together have enforced the rules of Greece’s bail-outs since 2010. Mr Tsipras owes his election largely to public resentment at the austerity imposed by the troika, which he vows to send packing. Barring a bail-out of its banks in 2012, Spain has remained master of its own destiny.

And yet the parallels remain striking. In Spain and Greece, both the centre-left and centre-right parties have held office during recent periods of hardship; many voters have therefore concluded that salvation lies in radical alternatives. In both countries public anger has had clear targets: in Spain, the banks, big business and corrupt politicians; in Greece, the architects of austerity and the executors of their policies. Spain and Greece have started to create jobs and growth, but unemployment in both stands at around 25%. For voters, politics-as-usual simply isn’t working.

Mr Tsipras’s rise to power represents a new threat to Europe’s German-led economic order, from both the far left and the far right. It is telling that Syriza, which has communist roots, has chosen to link up with the right-wing Independent Greeks: the two parties share little beyond hostility to Greece’s treatment at the hands of its creditors. Anti-austerity leftists across Europe cheered Syriza’s victory, but so did parties often described as “far-right”: Marine Le Pen, leader of France’s National Front, called it a “monstrous democratic slap to the EU”, and Matteo Salvini, the boss of Italy’s resurgent Northern League, said the Greeks had given the EU an “electric shock”.

Shocked and stirred

What populist parties really seek to do, argues José Ignacio Torreblanca, a Madrid-based analyst at the European Council on Foreign Relations, a think-tank, is to change the “axis of competition” in European politics from left v right to insider v outsider. Both Podemos and the National Front meet this description, even if they agree on little else. The weakening of traditional political loyalties opens a door for the populists. Economic stagnation helps their anti-elite case. The EU—plus, in some cases, immigrants—makes a convenient punchbag. And Syriza’s victory demonstrates that the old order can be toppled.

But it also throws up another test. Mr Tsipras has articulated well the rage of the outsider; now he must display the statesmanship of the insider. If he stumbles and Greece goes up in flames, voters elsewhere may be tempted to shuffle back to the safety of traditional parties. As for mainstream politicians, the lessons are not obvious. It is hard to do politics when an anti-politics mood is abroad. Something will have to give, but most of the old guard still cling to the arguments they know best. A day after Mr Tsipras’s win, senior figures from both of Spain’s mainstream parties found themselves repeating a mantra that some may have found wearily familiar: that Spain is not Greece.