Flirting with Disaster

Take a quick glance at this year’s list of the world’s most failed states and you’d be forgiven for thinking that, despite the headlines, all’s (relatively) well in Europe. But while the vast majority of countries atop the Failed States Index (FSI) are in Africa, Asia, and the Middle East, the West is by no means immune to the risks of state collapse. Case in point: Greece, the cradle of democracy, which has been at the heart of the crisis eating away at the eurozone for the past two years.

Since 2010, the country’s FSI score has worsened by 4.5 points and its rank by nine spots, landing Greece at 138th out of 177 states this year — in the "less stable" category for the first time since the Fund for Peace (FFP) first included the country on the Index, in 2006. Greece also earned worse scores across almost all of FFP’s 12 assessment indicators for the second year running, with the country’s political and economic scores seeing the largest lapses. And the FSI ranking only takes into account events from 2011, leaving out all the drama in the first six months of this year.

So is Greece a "failed state" — or on its way to becoming one? It certainly demonstrates some of the hallmarks: a national debt larger than its economy, burgeoning unemployment, a heavy reliance on international actors, and political instability. But with repeated stopgap measures to avoid collapse — the latest coming with the narrow victory of a pro-bailout party in this past weekend’s elections — the country has managed to hold on, just barely, so far.

Greece’s backsliding on the Index comes as no surprise given the events of last year. In 2011, the Greek economy continued to weaken, as the unemployment rate hovered around 20 percent for the year, with an estimated 50 percent of young Greeks out of work. Like in 2010, political crises ensued, and the perceived legitimacy of the Greek government plunged, with more and more Greek citizens questioning the ability of elected officials to drag their country out of the financial morass. Public rage was palpable as tens of thousands of Greek took to the streets last June to protest proposed austerity measures that included significant tax hikes and virtually eroded the Greek safety net. The protests were just one symptom of society’s deep anxiety caused by the recession — which continues to be felt in 2012. Aside from a rise in the rate of violent crime, suicide, prostitution, and drug use, Greece’s political parties have become polarized, with the ultranationalist, neo-Nazi Golden Dawn party even receiving 18 seats in the parliamentary elections this past weekend.

Adding to the mayhem, the catastrophe in Greece has brought into question the viability of such lofty ideals as pan-European prosperity and social and economic equality, as the country dragged down its European Union brethren. Greece, which joined the eurozone in 2001 after failing to meet the criteria in 1999, has long been the red-headed stepchild of the monetary union. By mid-2011, after only 10 years of membership, it had racked up a debt load on par with 150 percent of its GDP, unheard of elsewhere in the union. Meanwhile, similar strains spread to other EU countries. Ireland, Italy, and Portugal continued to worsen in 2011, with their economic and political indicators taking the hardest hits. Although Spain held steady throughout most of 2011, it began to show signs of steady decline by the end of the year.

Germany has led a somewhat begrudging charge to protect the financial and political integrity of the eurozone, helping to push through an agreement in October to write-off 50 percent of Greek debt, but forgiveness did not come without repercussions. By late in the year, both the Germans and the European Central Bank were once again leaning heavily on Greece to implement further austerity measures. Caught between an enraged population and a bullying Germany, Prime Minister George Papandreou stepped down in November after multiple attempts to pass a more severe austerity package failed. In his place, the former head of the Bank of Greece, Lucas Papademos, stepped in to try to solve the Greek financial meltdown, but this did little to assuage the general anxiety gripping the country. Pressure to implement austerity continued into 2012, with the Greek parliament finally agreeing to impose harsh austerity measures in exchange for 130 billion euros in February. Far-right parties have been quick to capitalize on the population’s disillusionment, using anti-austerity rhetoric to gain significant support in the 2012 elections: The pro-euro New Democracy party, which earned 29.6 percent of the vote this past weekend, only barely edged out the left-wing, anti-bailout SYRIZA party’s 26.9 percent.

Greece’s economic woes have also given rise to another worrying trend reflected its scores on the Index: xenophobia. Reports surfaced last year that immigrants were increasingly being targeted for attack. Frustrated by the combined austerity measures and lack of employment opportunities, a rising number of young Greeks turned their support to the far-right party, Chrysi Avgi. Throughout 2011 and 2012, the party has held large anti-immigrant rallies that often precipitated attacks on the country’s growing population of Afghan, Iraqi, and Pakistani immigrants. In several instances, homes and shops owned by foreign nationals were burnt to the ground or looted, and the owners were physically attacked. Hate-speech and racist rhetoric, including labeling various immigrant groups as "dogs" and "vermin," were ugly punctuation marks at political rallies. There has been a spike in immigrant attacks in 2012, since Chrysi Avgi increased its share of the vote. Victims are now fearful of reporting attacks to the police, after it was revealed that as much as 50 percent of the force voted for Chrysi Avgi in the last elections.

The anger did not stop with immigrants. Germany, which took the lead in negotiating the Greek bailout and simultaneously strong-arming the government to make more severe cuts to salaries and social services, also came under attack. Harkening back to World War II, when Germany occupied Greece, images appeared in the press depicting German Chancellor Angela Merkel as Adolph Hitler and other German politicians as Nazis. These images, and the sentiments they stirred, were quickly seized upon by Greek political figures from both sides of the spectrum. As the economic crisis continued to boil, and Papandreou tried to balance the demands of Greece’s paymasters with the very real needs of his country, he came under attack from all sides for bowing to the Europeans. Although there was a temporary lull in protests and attacks following his resignation, by the close of the year it had become apparent that the dual economic and political crises gripping the country were not amenable to quick fixes. Although Greece was able to halve its massive debt in 2012 by securing a debt swap, political instability continued with the three top-ranking parties unable to form a government in May. Renewed efforts to agree on coalition arrangement are now underway.

The tragedy of Greece, and the slow swan dive of other EU countries on the FSI, calls into question the overall viability of the great European experiment. Critics of the economic union have long warned that the euro was only as strong as its weakest link. If 2011 was any indication, trying to impose a monetary union on 17 countries with widely disparate political and social cultures can quickly come apart at the seams. If Greece does indeed drop out of the euro — as has seemed increasingly more likely in 2012 — others might too. Thus, an economic union meant to bring stability, peace, and affluence to all its members, while detoxifying the poisonous history of the continent, may go the way of many tragedies, with the hero falling on his own sword.

As the events of the past two years and Greece’s worsened performance on the FSI show, the country could be described as sliding toward state failure — though it is not quite there yet. While other states have certainly experienced their own effects from the financial crisis, Greece has been hit particularly hard; the country now has a dysfunctional government that is unable to provide adequate public services to its citizens, a flailing economy heavily reliant on foreign aid packages, and thousands of businesses that have closed, racking up unemployment figures. Still, while the Greek government doesn’t carry out its functions particularly well, it provides basic services and the rule of law generally prevails.

However, Greece has lacked the capacity to bounce back like some other Western countries. Iceland, for example, which was one of the first victims of the financial crisis in 2008 when its banks defaulted on $85 billion, saw its FSI economic indicator score soar to 6.2 (out of 10) in 2011, higher than Greece’s current 5.9. (A high score denotes worse performance.) But Iceland’s leaders responded quickly and efficiently to the crisis. Although long-term economic recovery remains a concern, the OECD’s latest estimate sees Iceland’s economy expanding 2.4 percent in 2012. The country once again ranks in the FSI’s "sustainable" range, the best-performing bracket.

Greece, meanwhile, has been let down by its weak institutions — namely, a corrupt government and inefficient spending. The Greek government took far too long deciding how best to handle the crisis, reflected in the country’s high score of 5.4 in the "state legitimacy" category of this year’s FSI. Greek politicians have so far been unable to pull together, prolonging the time it took to receive the EU’s bailout package.

The entry of extremist parties into Greece’s parliament will surely make consensus more difficult. Nonetheless, the new government is a step in the right direction. But while European leaders may be taking a breath today following the weekend’s positive results, it’s still a bit too soon to relax. In order for Greece to step back from the precipice of implosion, its government will need to create a legitimate, functional state that can earn back the trust of the public.