All across Europe, a collection of left-wingers, eurosceptics, Occupy activists and anti-globalisation protesters took to the streets as the election results from Greece came in. The PASOK and the New Democracy parties, the old parties of corruption and clientelism that had led Greece to its knees, had been annihilated by a hard left alliance of small parties on a platform of resistance to austerity. Thousands of students danced in the streets of the Greek capital, and the people voiced their opinion. In Ireland, Richard Boyd Barrett of People Before Profit spoke excitedly of a Irish “Greek Revolution”, whilst Joe Higgins of the Socialist Party spoke ominously of a military coup.
Within days, the new Greek government had expelled the EU and IMF monitors, and announced plans to nationalise the major Greek businesses. Of course, the fact that nearly every commercially owned Greek vessel had left Greek ports in the days leading up to the election had not been missed by the media, nor had the streams of expensive Porsches and Mercedes and haulage trucks that had choked up the border posts leading into Turkey or up into Europe. Some border guards had attempted to delay them, but bundles of euronotes had eased the bureaucracy in a way the old Greece would have been proud of. The new prime minister’s exchange controls on banks were merely symbolic, given the billions that had fled the country in the previous weeks.
Angela Merkel was quick to welcome the new government, stating very clearly that the EU would not force Greece to take any more of its bailout funding. The will of the Greek people must be respected, she said.
Within a month, the Greek government defaulted on all of Greece’s debt, and announced that it was leaving the eurozone. Greek banks began to collapse, the ECB providing assistance to other eurozone banks to assist them with their Greek losses. Greek banks began issuing euronotes with “New Drachma” stamped on them, at an exchange rate of one half of their euro value. As a result, food prices soared in shops, and Greeks continued to haggle using unstamped euronotes, until the government announced that hoarding unstamped euronotes was a criminal offence. Then the government announced that it could no longer pay pensions or public sector workers in notes, but would issue scrip until the New Drachma could be printed, which must be honoured in shops. Despite this law, many shop-owners refused to accept scrip, or gave preference to customers with euronotes.
There was a sense of excitement when the New Drachma finally reached the banks. Although the central bank attempted to restrict the amount printed, the new government, eager to restore public order, continued to print notes to pay public sector workers and restore cuts to wages and pensions. Prices in shops began to rise sharply, fuelled by internal inflation and the collapse in the New Drachma against other currencies. Tourists did begin to return, but were surprised to find themselves pestered by tour operators to be paid in euro. Given the almost daily price rises, tour operators going to Greece found themselves forced to admit that they could not guarantee prices, especially as imported fuel, food and consumer goods were soaring in price.
Trades unions demanded price rises to keep place with inflation, which the government agreed to, funding with more printed notes, which fuelled higher inflation. The daily demonstrations, a regular feature during the IMF programme, returned to protest outside parliament, complaining of the soaring prices. The government attempted to instigate price controls, forcing business to sell products at prices below import cost. Not surprisingly, this plan did not resolve the issue. Far right protesters started marching, suggesting that the problem was caused by an alliance of Turkey and Jews, and demanded that Greece must make a military gesture to restore her national dignity. President Obama quickly dispatched secretary Clinton to Europe to London, Paris, Berlin and Ankara to make sure that Athens got the message that the rest of NATO would not tolerate such action.
By now, rioting was a daily occurence, with empty supermarkets being torched, and the government struggling to find a solution. The much hoped boost to tourism fuelled by the much devalued New Drachma didn’t arise, possibly due to the unattractive nature of rioting and tear gas dispersal on European television screens.
Then the army moved, seizing parliament and announcing a National Salvation Council to restore order. Martial law was imposed, and demonstrators were shot dead. Joe Higgins and Richard Boyd Barrett, who had been curiously quiet in recent months, immediately appeared, demanding that this “fascist putsch” be countered. When asked would they be going to Greece to lead an international brigade against the fascists, journalists were told “eh, we’ll get back to you on that”. The EU immediately imposed sanctions on Greece, freezing bank accounts and military imports. NATO suspended Greek membership within days.
Within two weeks of the coup, even the army were beginning to protest, with the shortage of food and fuel causing massive army desertions as soldiers returned to their families. A group of younger officers then staged a counter coup, overthrowing their superiors in a lightening operation, and returning power to the government, provided the prime minister agreed to one policy, which he assented to.
Two days after being restored to power, the Greek prime minister addressed the Greek people, and announced that his government would put the EU bailout package to a national referendum.