The Earthquake in Greece

Suddenly, the fate of the global economy may rest on an obscure leftist party and its young, charismatic leader.

Sunday's elections in Greece have shaken markets around the world, fearful that a country suddenly thrust into political chaos won't be able to pay its crushing debts and might even exit the euro. No wonder: They also mark a leap into the unknown for Greece itself. For 35 years, two political parties have dominated the game: the conservative New Democracy (ND) party and the centrist Panhellenic Socialist Movement (PASOK). But this Sunday's national elections hit Greece like an earthquake, shifting the tectonic plates that lay beneath the surface of the Greek political landscape.

Not since the 1977 national elections has a party other than ND or PASOK emerged as one of the top two contenders. Yet, angered over a declining economy, cuts in pay and pensions, rising unemployment, and deepening corruption, a significant portion of the Greek public embraced a "throw the bums out" approach to this past weekend's parliamentary elections. As a result, in a massive protest vote, the previously marginal Coalition of the Radical Left (SYRIZA) was flung into second place.

Now, for the two traditional parties of the Greek political system to stay in power, they will likely be forced to form another volatile ND-PASOK coalition government. But with the Greek public directing its ire at the political establishment, both parties' future hangs in the balance, and so too might the liberal, pro-European Union platform they've promoted since the fall of the military dictatorship in 1974.

At first glance, this might not seem so obvious. After all, in absolute terms, ND was the winner of the election, securing more votes than any other party. As a result, ND is the first party to receive the mandate to form a coalition government. Moreover, because it secured a plurality of the vote, ND gets an exclusive "winner's bonus": 50 extra seats in the 300-person Parliament.

As any good student of governance will tell you, however, all politics is relative. As such, the winner of the latest ballot showdown in Greece in relative terms was SYRIZA. The numbers leave no other conclusion.

In the 2009 elections, PASOK won 44 percent of the vote, giving it a majority in Parliament thanks to the winner's bonus, which was then only 40 seats. ND came in second place with 33 percent, making it the main opposition party. Only three other parties captured more than the prerequisite 3 percent of the popular vote required to earn seats in Parliament: the Communist Party of Greece (KKE) with 8 percent, the Popular Orthodox Rally (LAOS) with 6 percent, and SYRIZA with 5 percent.

This year's elections, in contrast, represent a stunning victory for the left. For starters, no party secured over 20 percent of the vote. Although ND has been certified as the winner of the contest, with a decline from 33 percent to 19 percent of the vote, the party's steep drop in support is embarrassing.

The biggest loser, though, was PASOK, which nose-dived from 44 percent to 13 percent -- a drop of 70 percent. As disgruntled as voters are with ND, Sunday's tallies send a clear message that most Greeks blame PASOK for their current woes.

Two winners were the nationalist Independent Greeks, which was formed only in the past two months but still managed to win 11 percent of the vote, and the fascist Golden Dawn, which also emerged from out of the blue to earn 7 percent of the vote. The surprise showing for Golden Dawn, an avowedly neo-Nazi group whose leader promised to instill "fear" in his political adversaries, in many ways is already overshadowing the coverage of the results around the world.

Despite these gains on the right, though, the biggest winner was SYRIZA, on the left, which with a jump from 5 percent to 17 percent went from the periphery of Parliament to the mainstream. As a result, SYRIZA is in a position to offer Greek society something it has not seen since the 1960s: a viable third party.

Greece's left would have even been in the majority had its two other major left-wing parties -- KKE and the Democratic Left (DA) -- been willing to join forces with SYRIZA heading into the elections. The two parties secured 8 and 6 percent of the vote, respectively, which when combined with SYRIZA's 17 percent would have given the left an insurmountable 31 percent. Their disagreements, however, paved the way for ND to earn first bite at governance, while leaving KKE and DA marginalized as power brokers.

What does all this mean for Greece looking forward? Obviously, the immediate answer will depend on whether ND can form a ruling coalition. If it can, it looks like Greece will continue to implement austerity measures -- albeit perhaps at a more cautious pace and with modified terms -- in hopes of keeping the vault door to future bailout funds open.

But time is short. Under Greek law, if the first-place party cannot form a government within three days, the mandate goes to the second-place party. (The third-place party also gets a shot, if necessary, three days after that.)

That said, there's no reason to panic just yet. Even if SYRIZA earns the mandate and manages to somehow seize the reins of power, the changes in Greek policy will hardly be "radical," as the Coalition of the Radical Left's name misleadingly implies. The party's young, charismatic leader, Alexis Tsipras, has made it clear that he has no intentions of withdrawing Greece from the eurozone, let alone the European Union. Instead, we should expect a more nuanced approach to economic revitalization, which would likely include an aggressive renegotiation of the bailout terms currently in place between Greece and the "troika" composed of the EU, the European Central Bank, and the IMF, as well as a demand for more public investment in lieu of loans.

The more troubling scenario, of course, is that none of the top three parties is able to form a coalition government, which will throw Greece right back into political turmoil and force another round of elections in June. Should that happen, we might see an additional undercutting of the two traditionally dominant parties as Greeks bank further on the fringe forces of the political spectrum. At a time when more than one in 20 Greek adults is turning to a neo-Nazi party for solutions, continued uncertainty could translate into greater extremism -- especially a disavowal of established liberal-institutionalist safeguards and a promotion of dangerous nationalist causes. That's something that could pose a long-term threat not only to Greece, but to all of Europe.

For years, Greek politicians sacrificed the public's welfare for political -- and sometimes personal -- gain. The May 6 elections were a loud, clear rejection of this practice. The voters spoke -- and they resoundingly demanded improved leadership, with greater accountability.

If Greece's new legislators are prudent, they'll heed the call of their constituents, for anything less could risk transforming the cradle of democracy into Europe's cradle of despair.

Matt Cardy/Getty Images


A Kremlin Made of Sand

Vladimir Putin may not be as secure as he thinks.

When Vladimir Putin returns to the Russian presidency on Monday, May 7, the pageantry surrounding his inauguration will aim to portray a picture of unassailable strength, a confident master of his domain invulnerable to pressures from within or without. But things are not quite as stable as they seem. Over the next few years, Russia's domestic and foreign policies will be shaped by an unfolding and increasingly sharp conflict between the consequences of the two events that took place in the past four months: Putin's reelection and the ensuing mass protests that erupted in more than 100 of the largest Russian cities.

Yes, the protesters represent a small minority of the Russian population, as the Kremlin never tires of reminding us, and the demonstrations seem to have sputtered out for now. But what of it? When has there been a truly great modern revolution started by a majority of the people? Or one that took place all at once?

Instead, what we may be seeing is a Russian version of a familiar post-authoritarian democratization that swept through Greece, Portugal, and Spain in the 1970s, South Korea and Taiwan in the 1980s, and Mexico in the 1990s. Having reached unprecedented prosperity and personal freedom, the middle class in each of these countries began to demand a say in how its country was governed.

This is not just a political conflict. It is a clash between two moral sensibilities, two political moralities, and two visions of what constitutes meaningful and dignified citizenship. This means that neither side is likely to give up, retreat, or compromise. It will be a struggle to the bitter end, no matter how long it takes.

But it may not be that long. Before Putin's reelection, a poll showed that 35 percent of Russians polled said they thought the election was "dirty" -- i.e., fraudulent. That means that, with all the caveats and margins of errors, millions of Russian citizens do not consider Putin a legitimate president. They were convinced that the Central Election Commission, the Kremlin's wholly owned subsidiary, would produce whatever numbers the boss ordered.

The Kremlin is well aware that millions may feel angry and cheated, which is why no meaningful liberalization is likely after the inauguration. Authoritarian regimes do not tinker with the system when they feel insecure. With the regime badly needing to bolster the legitimacy bruised in the Duma and presidential election, foreign policy is likely to be shaped by the domestic need for an external enemy. So I would not expect any new "resets." Quite the opposite is more likely, as this week's threats by high-ranking military officials to strike preemptively at missile defense sites in Europe remind us.

But everyone, including top government ministers and establishment economists, know that even with all the nationalist bluster Moscow's PR shop can kick up, the system cannot continue indefinitely without a radical de-centralization of politics, the economy, and the justice system. Foreign investment is down, and net capital flight is at a record high so far this year because of what investment analysts euphemistically call an "unfavorable institutional environment." Translated into plain English, this means Russia has a perverted legal system, with courts for sale, universal and absolutely shameless corruption, shakedowns of businesses, thievery, and inefficiency.

In the short term, Russia's most serious risk stems from a near-fatal dependence on the price of oil. Twelve years of Putinism have moved Russia perilously close to being a petrostate, with all the political, economic, and social niceties those are known for. According to UBS analysts, a $10 change in oil's per-barrel price changes the price for balancing the budget by 1 percent of Russia's GDP. Last September, Alexei Kudrin, then finance minister and deputy prime minister, estimated that if the price falls to $60 a barrel, Russia's economy would register zero growth or even contract. To balance the national budget in 2004, Russia needed oil at $27 dollars a barrel. Last year the break-even point was $115. Thus far, the projection for this year is $117.

This is why Russia is likely to face a severe fiscal crisis as early as 2014, even with the world's third-largest hard currency reserves. In the words of one of Russia's most respected economists, Sergei Guriev in a recent talk at the Center for Strategic and International Studies in Washington, the state may "run out of cash" to pay for the huge increases in the defense budget and the social commitments Putin ratcheted up on the way to reelection, first and foremost the pensions of retiring baby boomers.

Yes, countries can tighten their belts. But this task, politically risky enough even in mature democracies like France or Britain, could be fatal when millions may believe that the president's election was fraudulent and his rule illegitimate. The regime's worst nightmare is that millions of angry pensioners may join the hundreds of thousands of middle-class protesters.

These protesters are not quite a full-fledged political opposition yet. But they are already something ultimately more threatening for the regime. They are a civil rights movement. They reject the system not so much because of specific political or economic grievances (though they have plenty of those as well), but because they find it indecent, undignified, offensive, and unworthy of them as people and citizens. This is a morals-based movement against effective disenfranchisement and inequality before the law, owned by the state. "Justice" (spravedlivost) and "equality before the law" (ravenstvo pered zakonom) are among the key slogans at the demonstrations. Sound familiar?

I first came across this moral essence of the Russian discontent when I traveled through Russia last summer and interviewed leaders and activists of grassroots organizations and movements. Five months later, I read the same slogans on the banners of demonstrators in YouTube videos, as well as in photographs, blog posts, and interviews with Russian and Western reporters: Don't lie to us! Don't steal from us! Listen to us! Don't step on us! We are not a herd! We are not a faceless crowd. We are the people!

I was reminded of these words by an unexpected development on March 4, the day of Putin's reelection. In a total surprise, opposition and independent candidates won 71 seats in Moscow's 125 district municipal legislatures -- around 1,500 seats total. Still a tiny minority and with little power, almost all the winners were under age 30 and ready to struggle for a long time.

One of them was a 20-year-old journalism student named Vera Kichanova, who won a seat on the district council in Moscow's Yuzhnoe Tushino district. The American media -- bless 'em! -- duly noted her "outsized boxy glasses," "pageboy haircut," and "multicolored tights." But fortunately, they noticed something else. She was a member of Russia's tiny Libertarian Party and an admirer of the American Tea Party. Ideally, she said, she would like Putin to say, "I'm tired; I am leaving." But as this is not going to happen, her plan was to follow small steps. "If you see a breach in the iron wall," she said, "it makes sense to try to go through it."

And this is as good a summary as I've heard anywhere of what has happened to Russia in the past few months -- and of what is likely to happen next.