Brian Stewart: The danger in shoving Greece too far

Greece's current mix of street chaos, imposed hardship and growing despair raises one of modern history's more ominous questions: How much pounding can one nation take before it explodes and takes others down with it?

The economic austerity that the rest of the eurozone is forcing on recession-wracked Greece has even been compared to the disastrous reparations imposed on Germany following the First World War.

Those terms were so onerous that they were at least partially responsible for undermining Germany's fragile post-war democracy and boosting a rising extremist tide that carried the Nazis into power in 1933.

We're in much different times, of course, but some human reactions are predictable in periods of severe stress.

When a population is pushed to the wall, its pride battered and its hopes for the future crushed, you can pretty well guarantee that large numbers will react politically in new ways and fight back, often violently.

Such times are perfect breeding grounds for extremist parties, violent street warriors and the inevitable counterattacks by police and security forces.

The upheavals we've been seeing these past months could be a mere foretaste of what's possible in this historically turbulent country.

Scarred by history

Don't forget that immediately following the devastating German occupation of Greece during the Second World War there was a civil war that claimed the lives of more than 100,000 Greeks between 1946 and 1949.

Later, a long descent into political chaos led to a military coup and rule by a brutal junta between 1967 and 1974. It was an ugly record that left deep emotional and ideological scars.

Greece of course has enjoyed some good years since, but none recently. And five years of grinding recession, now culminating in the current debt and euro crisis, represents a dangerous test of its stability.

Just remember the "apocalyptic" warning of Jose Manuel Barroso, president of the European Commission, when he warned two years ago that Greece and other southern European countries could fall into civil war or military coups as a result of this economic crisis.

His warnings were pooh-poohed at the time but they don't sound so outlandish today.

Ground zero

"Greece is a breath away from ground zero," its prime minister, Lucas Papademos, bluntly warned this week, adding the country is "in danger of uncontrollable economic chaos and social explosion."

This was not simply political hyperbole. The risk today is that too many people see Greece as just a sloppy economy that needs punishment and discipline for past extravagances, following which it will slowly grow its way back to health.

One has a sense, though, that the eurocrats and bond market economists, as well as many European leaders, have simply not thought through the secondary effects of all this pain.

To many Greeks, there seems no way out of this horror show. How can a nation work its ways out of such a huge annual deficit when austerity lays off ever more workers and adds to a wild decline in the overall economy?

The upheaval also drives off potential investors and tourists alike.

The Greek economy has fallen 18 per cent in recent years, and unemployment is up to about 20 per cent. But even that figure hides the massive social dislocation that is underway as half of those under 25 can't find work.

Add in the fact that over 60,000 businesses have closed over the past two years, and another 55,000 Greek businesses are expected to collapse this year. The loss in personal savings alone is incalculable.

In the countryside, barter is often replacing the normal economy, not something that will help anemic government revenues.

I know of one teacher in an island fishing village who has been asked to take fish and local cheese from poor families as payment for their children's education. Money is simply all gone.

One of the recent publishing successes in the country is a new book called Starvation Recipes: Life in Athens under Nazi Occupation, which is being snapped up by families in difficult circumstances.

The advice includes chewing more slowly to make food last longer, and the need to pick up crumbs from the table.

A Greek tragedy

Things can't go on like this, you say, and you're right. Yet no one seems to expect any real improvement for years. Perhaps a decade! In the meantime it is all going to get much, much worse.

"On the current path which is not sustainable in my viewwe may very well see Greek GDP go down 25-30 per cent, which would be historically unprecedented,"economist Uri Dadush of the Carnegie Endowment for International Peace told Reuters this week. "It's a disastrous crisis for them."

Indeed, it isas if Greece is being transposed back to the Great Depression. The unemployment figures and the shrinking of its economic base now almost parallels that of the U.S. at the depths of its economic collapse in 1932-33.

But there the similarities end. Greece today has neither hope, nor a very workable government, nor inspiration at the top, as the U.S.had under Franklin Roosevelt.

The weak Greek coalition government appears barely capable of surviving, and growing numbers of voters are turning to fringe parties on the far left or right.

What's more, not only are the street demonstrations growing in size but they are being joined by increasing numbers of the middle class and store owners. Nervous security forces say the number of violent attacks has tripled in recent weeks.

Last November, the then-Greek government mysteriously purged the heads of the military high command and got rid of scores of army and navy officers, which caused speculation the move was aimed at warding off a possible military coup.

Such a coup doesn't seem likely at the moment, but you can't rule it out if Greece is shut out of the eurozone and national survival seems at stake.

Should Greece "blow," as some fear, the shockwaves could create similar unrest in other weakened European nations, battered by imposed austerity and few prospects of growth.

It's hard not to conclude that those anxious to make an example of Greece, to force it either to bend to Europe's will or to leave the eurozone altogether, may well get the result they want.

But it may prove a Pyrrhic victoryand the stuff of tragedy, which the Greeks, through the ages, have taught the world.