The political and social situation is more fragile than bond markets might imply.
The Wall Street Journal
Greece's coalition government has survived the abrupt exit of one of its junior partners—at least for now. The Democratic Left party withdrew its two cabinet ministers and two deputy ministers Friday to protest Prime Minister Antonis Samaras's decision, earlier this month, to close down the Greek public broadcaster.
But a government in Athens that tempts collapse every time it tries to trim the fat isn't likely to survive its full four-year term, let alone deliver on the austerity commitments it has made to Brussels and the IMF.
Mr. Samaras's executive decree to shutter the Hellenic Broadcasting Corporation, or ERT, wasn't exactly a model of effective state downsizing. In late April, the Greek Parliament passed an emergency bill that fast-tracked the dismissal of 2,000 government workers by the end of May. The measure came after years of unfilled promises to shrink the state workforce. The latest target mandated by Brussels—4,000 layoffs by year's end—suddenly looked achievable.
Things didn't go as planned. When euro-zone officials visited Athens earlier this month, they found that only 99 state workers had been let go, according to one account in the Greek press. Payment on a €3.3 billion tranche of bailout loans was thrown into jeopardy.
In response, Mr. Samaras abruptly fired ERT's 2,700 employees on June 11 and promised to create a new public broadcaster with a fraction of the staff. Euro-zone officials approved disbursement of the aid money three days later.
But on the streets of Athens, ERT's demise became a cause celebre. Declarations of solidarity poured in from media outlets and politicians across Europe. A broadcaster with middling viewership that toed the government line in its news coverage turned into a supposedly sacred bedrock of Greek democracy and culture once the ax came down.
Mr. Samaras was right to stand behind his decision, even as his coalition partners, the center-left Democratic Left and Pasok, threatened to call snap elections. For three decades ERT has been one of many vehicles in the Greek bureaucracy for political patronage. After every election, the winning party's loyalists were rewarded with cushy sinecures at the broadcaster. Mr. Samaras called ERT a "Jurassic Park" of waste and corruption.
But sometimes it's the most unlikely spark that can set a place ablaze. For many months now, Greece has been enjoying a reprieve from bond-market pressure with a little help from Mario Draghi. The Samaras government says it will run a budget surplus this year if interest payments are excluded, and Athens's streets are much more peaceful than they were a year ago.
The calm now looks close to an end. Greece's ability to reform and reconfigure its economy is running up against the political and social realities of a country that is in its sixth straight year of recession. Another round of civil-servant layoffs, another tax hike, a high-profile racist killing by the ultranationalist Golden Dawn party, an accidental death at the hands of police: It could be almost anything that causes the next shoe to drop.
