On life support, and yet unable to die

Greece’s trouble is deepening, this much is clear. Most aspects of the crisis – like the government and public’s attitude toward a fresh bailout and how the European Union is coping with Greece’s alternating ambivalence, rebellion and reluctant capitulation – are quite muddy now and will likely become more so. Many factors are combining to make the looming financial disaster a dangerous phenomenon, not just economically but also politically.

Fresh protests have erupted in the country that gave birth to democracy. Politicians have gone from the extreme defiance, which led to a national referendum aimed at snubbing the EU, to what could be viewed as a hesitant expression of remorse. The Greek parliament’s acceptance of tough bailout conditions left observers wondering why politicians engineered the referendum in the first place. The messages coming out of Greece are confusing, although such can only be expected from a nation overwhelmed by debt and disgruntlement.

The parliament voted to accept strong bailout terms. The “rescuers” have called for reform of the tax code to raise additional revenue. This will make restaurant meals more expensive as sales taxes in the food and other sectors climb to as much as 23 per cent. Tax discounts on vacations among some Greek islands will be eliminated. Luxury taxes will rise on big cars, boats and swimming pools.

The bailout conditions cover more than just buying. The pension system will be overhauled, and the standard retirement age will be raised to 67 to discourage people from retiring early. Rules will be imposed to make sure the government meets budget targets, which could require additional spending cuts. Corporate tax will rise from 26 to 29 per cent for small companies.

What will happen next? Will protests spiral out of control? No one can dismiss the possibility of more cabinet resignations or the collapse of the entire government. If street and political turmoil come to an end, will Greeks be able honour the tough rescue conditions? Is the bailout money enough? What if there’s another default?

No one knows the answers to these questions. Greece is like a person in a coma – long-term treatment is secondary to emergency measures. And if Greece is a man on life support, with major international political stakes in play, who will decide whether the plug should be pulled? With the “non-democratic” world watching, led by rich China and Russia, this patient can’t die at the hands of the EU and its fiscal mechanisms.

Greece has become an ideological proxy for the world, not just a nation drowning in debt. Already, extremely hard questions are being asked about the EU, populist democracy and capitalism as a whole. The best the democratic West has done so far is to scold Greece, like any good parent would do to a stubborn child. When push comes to shove, however, money has to be found to help Greece, albeit with conditions attached, even if their ability to foster the necessary changes remains unknown.

Prime Minister Alexis Tsipras said he had had to choose between a deal he didn’t believe in and a chaotic default. 

He opted for the former, but Greece’s problem is that both of these unfavourable choices are intertwined and one could easily lead to the other. Having seen Greece through its crisis thus far, Tsipras should know better than anyone that his country is stuck in a vicious cycle and needs all the help it can get to break free.