The Greek Parliament has just passed the package of savage austerity measures and privatizations required to get the last tranche of a 110 billion euro loan from the EU and IMF; without it, the country would have been broke by mid-July. Outside in Syntagma Square, protesters in cycling masks are running from clouds of teargas. Since yesterday, the square has been filled with surging crowds pushed back by riot police; Greek TV reports that 500 people aged between 15 and 65 have been treated in the metro station for respiratory problems and injuries.
Ambulances can’t get anywhere near the scene. The Twitter feeds give the flavor: “Fog of chemicals around #Syntagma they keep gas bombing us situation getting worse again”—“People are trapped at the sqr gas bombed from all sides”—“More doctors and supplies needed urgently at Syntagma Square in Greece. Please help”—“Police just hit directly to us. We were running, I saw a man spitting blood, 3 more fainted 3 steps away from me. Its really bad”—“Greek ministry of finance is on fire.”
By the skin of its teeth, Greece has escaped imminent bankruptcy; the Eurozone is safe for another week or two as the EU and IMF try to hammer out a second rescue package. Jose Manuel Barroso and Herbert von Rompuy, the presidents of the European Commission and Council, have hailed an “important step forward along the path of fiscal consolidation and growth-enhancing structural reform.” But the long-term prognosis is far from positive. First, the cuts and privatizations will not be easy to implement, leaving plenty of wiggle room for lenders later on. Second, this year’s austerity program has only plunged the country deeper into recession; even the EU and the IMF project that the debt and the interest on it are likely to keep rising, and the consensus is that Greece will have to default sooner or later anyway. Third, it isn’t clear how much more austerity the Greeks are willing or able to take. Almost a quarter already live below the poverty line; 50,000 businesses have closed in the last year; youth unemployment is at 42 percent; people are at breaking point.
It’s very hard to predict what is likely to happen next. The government still has to pass an enabling law on Thursday to speed up the pace of reform; after that, it has to put the austerity measures into practice. If it stumbles and is forced to call elections, Antonis Samaras, the leader of the opposition conservative party New Democracy, is most likely to win. He has no substantive alternative solution to the crisis, but has made populist hay by promising to “renegotiate” Greece’s loan agreement and to rescind a law granting citizenship to children born in Greece to legally settled immigrants.