A collective sigh of relief ran through the world on Sunday when Greeks gave the center-right political party New Democracy the largest share of votes in an election that determined who would form a new government for the embattled Mediterranean country.
Why should Americans care?
New Democracy vows to pay Greece’s bills, even if that means Greeks must for years live under austerity, a pleasant term for less government spending, higher taxes, shorter vacations, no pay raises and perennially high unemployment.
Other parties, including the left-leaning Syriza, wanted to renegotiate the bailouts the country has received to help it service its crushing debt. Renegotiating the bailouts would likely create more chaos in the Eurozone, an economy that is intertwined with that of the United States.
National salvation government
If Greece couldn’t renegotiate its debt, it could default or even stop using the euro, a move that might persuade Spain and Italy to go down the same path. American banks hold some Greek debt. They hold a lot of Spanish and Italian debt. It’s unclear how much debt they hold, but it’s surely enough to wreak serious instability in the U.S. and world economy, which is the last thing Americans need now.
The Athens News reports that New Democracy party leader Antonis Samaras, in declaring victory, said he would respect Greece’s commitments and join other smaller political parties to create a coalition he described as a “national salvation government.”
“The Greek people voted for the country’s European course and for us to remain in the euro,” Samaras said on national television, the News reports.
World leaders of the Group of 20 who are scheduled to meet on Monday and Tuesday in Mexico will surely be discussing how the election results will play out as Samaras tries to build a government in the coming days.
We’ve heard promises of leadership and reform from Greece before. Who knows if this time will be different, but Greeks continue to suffer under austerity, Spain and other European countries are also teetering on the edge of default and the U.S. economy seems to be sputtering. Ugh.
The good news? The neo-Nazi Golden Dawn party won only 18 seats in Greece’s 300-member parliament, the Associated Press reported. That’s three fewer seats than they held before.
Go Tea Party, young man
Just when you thought it was okay not to think about the economy, it turns out Washington DC is prepared to screw up the potential for economic calm after the Greek vote.
You see, the U.S. is racing towards a fiscal cliff, a series of imminent tax increases and government spending cuts that could put a damper on the US’s anemic economic recovery. Imagine if your taxes went up and the government stopped spending money on, say, food inspectors. Yeah. It would stink.
But British economic historian (and Harvard professor) Niall Ferguson says that an American version of austerity might be just what we need, especially young people, who he said should welcome attempts to pare down government debt that their parents and grandparents are enjoying now but which they will have to pay back when they are older, The Telegraph of London reports.
“If young Americans knew what was good for them, they would all be in the Tea Party,” Ferguson tells the newspaper. Referring to the trillions of dollars of American debt as well as the trillions of dollars in Social Security and other entitlements that the federal government will have to pay retiring Baby Boomers, Ferguson continues:
“These mind-boggling numbers represent nothing less than a vast claim by the generation currently retired or about to retire on their children and grandchildren, who are obligated by current law to find the money in the future, by submitting either to substantial increases in taxation or to drastic cuts in other forms of public expenditure,” he said.
Ferguson teaches at Oxford and Harvard, the kinds of elite institutions Tea Party members often say produced the very financiers and others who drove the world economy into a ditch four years ago. Somehow I don’t think many of Ferguson’s students are going to take his advice.
U.S. and Russian minds meeting on Syria
In Mexico, G20 leaders will discuss more than economics.
U.S. President Barack Obama is reportedly going to have a sit-down with Russian President Vladimir Putin to discuss the countries’ differences on Syria, where rebels and the government of dictatorial Syrian President Bashar Assad are fighting and killing civilians in the process.
Dubai-based Al Arabiya described the slaughter: “The fighting included clashes in the town of Hamuriya, near Damascus, that killed at least nine men who were allegedly butchered with knives.”
In recent weeks, the U.S. and Russia have gotten nowhere in working together to cool off the situation. The U.S. recently accused the Russians of supplying the Syrian army with attack helicopters. The Russians, in turn, said they were only maintaining aircraft they already sold to Syria. It was a typical example of the back-and-forth between the two powers on the issue.
Now, however, as the butchery worsens, it seems as if Russia is becoming more willing to put the squeeze on Assad, at least if Russian Foreign Minister Sergei Lavrov’s long-winded op-ed in the Huffington Post is to be believed.
“Russia keeps working with the Syrian authorities almost every day urging them to fully comply with the six points proposed by Kofi Annan and to resolutely abandon their delusion that the internal political crisis in Syria will somehow go away,” writes Lavrov.
Still, ever diplomatic, American officials scaled down expectations of a major breakthrough.
“We were talking about the general direction that we want to see Syria go, the general principles that the secretary has outlined for a post-Assad transition,” said U.S. State Department spokeswoman Victoria Nuland, reported Al Arabiya.
So the writing might be on the wall for Assad. The question is, when will he read it?