Grexit Would Delay Greece's Transition to Democracy

A man waves a Greek national flag while standing at the premises of the parliament building during a rally in front of the parliament building calling on the government to clinch a deal with its international creditors and secure Greece's future in the Eurozone, in Athens, Greece, June 22, 2015. Yiannis Liakos/Intimenews/Reuters

During the weekend of June 20–21, high stakes came into play for Greece and the European Union.

Prior to a summit of eurozone leaders scheduled to take place on June 22, Greek Prime Minister Alexis Tsipras and other EU heads of government tried to hammer out a compromise. The goal was to prevent Greece from defaulting, which would likely precipitate the country's exit from the eurozone.

Already, there was mounting speculation that some EU leaders and their publics were ready—almost sanguine—to accept that Greece could quit the single currency. After all, that would not automatically mean that Greece would leave the European Union.

But Grexit would have untold consequences for Greece and the EU. This is despite soothing words from some economists and analysts who have argued that the EU could weather a Greek exit, and that Greece would then have time to rebuild its economy and become competitive.

Who are they deluding?

For Greece, Grexit would delay—and in a dangerous way—the country's transition to a modern democracy. Any pressure or incentive to reform would be lifted. For the EU, Grexit would represent a dismal failure to nurture Greek democracy since it joined the union in 1981. Grexit would also contribute further to the fragility of this part of Southern Europe.

After the colonels who led Greece's military junta were ousted from their seven-year stint in power in 1974, the Greek political system almost reverted to that of the late 1950s and 1960s, when the Karamanlis and Papandreou families had been competing for power.

When military rule ended, the two families, which led Greece's main center-right and center-left political parties, picked up the pieces. They carved out spheres of influence in the economy, the trade unions, the universities, the army, the security forces, the professions and the civil service. This influence and power dug deep into the country's body politic at the expense of strengthening accountability and good governance.

By the time Greece joined the EU in 1981, a system of clientelism and patronage was entrenched. But then, European—and U.S.—leaders were not too bothered about that. What they wanted was a stable, pro-Western country on Europe's southern flank.

Stable it was, but far from democratic and transparent. Greece's state institutions functioned in a haphazard way. Ministers responsible for the huge sums of EU development and structural funds that were supposed to modernize the country's infrastructure—as well as its institutions—were often left unaccountable.

Corruption was rife. Neither of the two political families was willing to address Greece's endemic democratic deficit, which is one of the root causes of the current economic crisis.

In January 2015, the Greek electorate catapulted Tsipras and his radical-left Syriza party into power on the promise that he would end the austerity measures Greece had been forced to accept in exchange for European funding, as well as tackle the corruption. Tsipras also pledged to modernize Greece.

Tsipras delivered on none of these promises. He threw away many chances. He failed to rein in the country's oligarchs. He failed to dismantle cartels. He failed to tax the rich. In short, he failed to make use of the opportunity to modernize Greece's political system.

Six months is a very short time to introduce such changes. But Tsipras could at least have begun to tackle the corruption and the iniquities of the system.

The prime minister's interlocutors—the European Commission, the International Monetary Fund, the European Central Bank and Germany—were never told in detail how Tsipras was going to restructure the Greek economy. His loquacious finance minister, Yanis Varoufakis, exuded incompetence and arrogance and little professional substance or credibility. As time wore on and trust diminished among all sides, Grexit was becoming a self-fulfilling prophecy.

It's all very well for Greek radical left- and right-wingers to say good riddance to what they see as the diktat of the EU. But what kind of country do they want? One that is beholden to Russia? One that is lumped together with the Western Balkans?

For its part, the EU for decades turned a blind eye to Greece's dysfunctional political and economic system. It was as if the political elites in Brussels and other EU capitals were just relieved that Greece was in the EU (and NATO), and that this part of Southern Europe was stable.

But Greece, abetted by the EU, was sowing its own seeds of instability through the unwillingness of the Greek elites, the Greek public and the EU to complete the country's transition to democracy. There was almost an assumption that Greece's accession to the EU and its membership in the eurozone—which it was notoriously unprepared to join in 2001—would somehow come good in the end.

This unwillingness to reform is the reality engulfing the Western Balkans, where corruption and the influence of local oligarchs are further weakening the region's path to strong and sustainable democracies. Grexit would mean Greece joining this group of neighboring countries, which are Europe's waiting security challenge. Such would be the very high price of Grexit.

Judy Dempsey is a nonresident senior associate at Carnegie Europe and editor in chief of Strategic Europe. This article first appeared on the Carnegie Europe website.