Euro crisis | Uprising against Merkel in Greece

It's no coincidence that Angela Merkel is presenting her memoirs in Greece right now – at an event hosted by the daily newspaper Kathimerini. It's been ten years since the Greek people responded to the creditors' austerity dictates with a resounding "Oxi" ("No") in the referendum on July 5, 2015 – despite the threat of a Grexit, or Greece's exit from the euro. The confrontation with Greece's creditors, especially Germany, thus reached a climax. In the end, the German government won.

In 2010, EU member states averted Greece's bankruptcy with bailout loans, demanding massive austerity measures in return. After four years of pension cuts, mass layoffs, social cuts, and austerity policies, Greek economic output was a quarter lower than in 2009. The wave of protests brought the left-wing Syriza coalition to power in 2015, which demanded that creditors – especially Germany – ease the austerity measures. In vain. Faced with immense pressure, the then-left-wing Prime Minister Alexis Tsipras opted for a decisive blow: the people themselves would decide whether the creditors' austerity demands should continue. A referendum in the middle of the crisis program – that was a taboo.

Threat of expulsion from the euro

The initiative also surprised Chancellor Angela Merkel, as this form of direct democracy was considered a risk to the stability of the eurozone. Merkel viewed the referendum as a dangerous game. When Tsipras answered her in a telephone call with "Of course not" when asked what recommendation he would make in the referendum, she was speechless. Merkel later said she understood that Tsipras wanted to create the impression that he had tried everything before giving in. One thing was clear: Federal Finance Minister Wolfgang Schäuble was waiting in Berlin – with the Grexit scenario in his drawer, i.e., expulsion from the eurozone.

What followed is well known: Tsipras transformed the popular "Oxi" into a political "Nai" (yes) – and further years of social devastation followed. Tens of thousands of young people left the country , and state assets were privatized at ridiculously low prices. In 2019, the right-wing conservative Kyriakos Mitsotakis replaced Tsipras as prime minister. According to Mitsotakis, the country experienced rapid transformation between 2019 and 2023: Unemployment fell, economic growth picked up after the pandemic, and Greece regained market confidence. In 2023, Mitsotakis won the elections again with the narrative of a "success story."

In fact, according to the IMF, average economic growth since 2018 has been around two percent, and the unemployment rate has fallen from 27.5 percent in 2014 to 9.4 percent today. The Greek economy has therefore recovered by capitalist standards – even national debt has been reduced. But firstly, this success is put into perspective by the fact that Greece's real economic output is still 22 percent below its 2008 level . Secondly, the "successes" of recent years are based on the preparatory work of the Tsipras government, which implemented the toughest reforms: making the labor market more flexible, increasing taxes, and cutting pensions. The decline in unemployment was achieved through drastic wage cuts, reducing protection against dismissal, and using poorly paid internships. Although the minimum wage has recently increased, real purchasing power – due to inflation and high living costs – remains at the level it was before the debt dictate.

In a recent speech, Alexis Tsipras drew attention to the resurgence of poverty: "We inherited the share of households below the poverty line at 21.4 percent in 2015 and gave it up at 17.9 percent in 2019 [...] In contrast, the Mitsotakis government, which found everything it needed outside the memoranda and under conditions of economic relaxation, increased the poverty rate from 17.9 percent to 19.6 percent in 2024."

The dark side of the upswing

While macroeconomic indicators are improving, the social divide is widening. Rents have doubled, and affordable housing is scarce. At the same time, privatization in the health and education sectors continues to advance, and the public system is chronically underfunded.

Merkel summed up the situation herself at the event: "I am pleased that you in Greece have overcome the crisis and are making progress," she said – and added, with a view to booming tourism: "But there are young people in the cities who are observing the rapid increase in short-term rentals and are asking themselves: 'What will become of us?'" Wages must rise, she emphasized.

Left-wing economists agree on their analysis of the situation, but differ in their assessment of (missed) solutions. Costas Lapavitsas, a former Syriza MEP, was always a supporter of Greece's exit from the euro. As finance minister, Yannis Varoufakis attempted to negotiate with creditors within the eurozone and achieve debt restructuring – but continues to criticize the Tsipras government's lack of preparation for alternatives. His successor, Efklidis Tsakalotos, pursued a reform program from within that was intended to secure at least limited social gains – despite warnings that the scope for this was limited. Everyone agrees: Greece is a neoliberal crisis laboratory – and a warning signal for all who believe that social justice can be easily achieved within the existing EU structures.

Mitsotakis' government has so far struggled through a series of crises: surveillance of journalists and politicians, a dilapidated railway system that led to a train disaster with 57 deaths, an underfunded fire department, and most recently, a scandal surrounding EU agricultural subsidies. But the fragmented opposition has so far been unable to capitalize on these crises: Syriza, once Europe's left-wing hope, is now splintered into five parties. It is therefore once again up to grassroots politicians to build pressure – as on February 28, when over a million people remembered the government's failures in connection with the train disaster. Can this anger be expressed politically? A return of Alexis Tsipras is no longer out of the question.