Inflation, the elephant in the room

Of course we talk about Ukraine a lot, given that the war signals tectonic geopolitical shifts and demands everyone’s attention. But there is an elephant in every room in Greece, from every local kafeneio to every gilded hall, that we’re not talking about enough. And that is inflation and the fact most people feel they can no longer make ends meet. It dominates every conversation and is of concern even to people who thought they were done with just getting by: They survived the economic crisis and the pandemic, and did not expect another bomb to go off.

Anyone who underestimates the impact of skyrocketing prices is making a big mistake because we’re not just taking about tomatoes going up 5 cents. We’re talking about desperation and shock as rife emotions – and no expert can predict whether this will continue, whether prices will fall and when, or whether this is all related to the war.

The problem is not just Greek, of course, nor is it due to the war or any other single factor. The Greek government is doing what it can to deal with the problem, but the fiscal realities are tough, with inflation coming on top of the pandemic, which required a policy of subsidies over many months. There will be a political fallout to all this and it will be global. No one should be surprised to see homemakers banging pots or yellow jackets out in the streets again. Like tinder for anti-systemic populism, inflation of this magnitude has always been linked to extreme political phenomena. And there will be no one to blame in this case, not some foreign factor nor social media, because the sense of desperation is very real.

There are no easy solutions and the Greek prime minister, along with the other leaders of the European South, are looking hard. But these are extreme times and I have a feeling that the solution will lie outside the box. The pandemic “killed” unfettered globalization and the notion that major crises can be managed without the state, only on the strength of the private sector. Some shocking proposals and solutions no doubt lie ahead, such as caps on profits and the nationalization of vital sectors. No one can guarantee that these will solve the problem, because the pressure will be too great.

The rising cost of living and popular discontent may also prove the secret weapons of Russian President Vladimir Putin, who is counting on the Europeans not taking two paths open to them: stopping gas imports from Russia and sinking their countries into an even deeper recession and social crisis for at least a year, or responding militarily. Or they can do nothing at all.

There is nothing easy about a Western leader having to choose between hunger and war. And it seems impossible that we should even be talking about this in Europe, in 2022.