Economics has driven the debate on the eurozone crisis, but it is the politics we should be worrying about. After all, the postwar European project was all about using economic integration and its benefits to emancipate the continent from its bloody past. But now in southern Europe, violence is returning as a direct consequence of the austerity programmes that are touted as the price of continued eurozone membership. What is at stake is not just membership of a monetary union; it is the nature and future of democracy itself.

In Spain, austerity protests have revived the debate over regional secession. Leftwing activists are on the march in Lisbon and Paris. But Greece, most beset of the debtor nations, offers the clearest evidence of fracture. Last week’s general strike is the precursor of worse to come as the government struggles to implement the latest round of cuts.

We used to praise the way a two-party system had emerged soon after the junta had fallen in a country with a long history of political instability. Indeed, Europe itself could take much of the credit for facilitating Greece’s transition. Now it is unravelling as the crisis reveals Greek democracy’s fragility. One of the two historic ruling parties, Pasok, has already shrunk faster than anyone could have predicted – from 44 per cent of the vote in 2009’s general election to 12 per cent in June. If the government of Antonis Samaras falls, the same may happen to New Democracy on the centre-right. The cause is clear: seemingly endless austerity, plus the Greek electorate’s reasonable perception that these parties were the chief architects of the imbroglio.

What is likely to be the result? The closest parallel is perhaps Italy, where the end of the cold war led to the disappearance of Christian Democracy and brought Silvio Berlusconi to power, along with the Alleanza Nazionale, heir to the postwar neo-fascists. In Greece the future is bleaker economically and the prospects even less reassuring.

On the radical left, Syriza offers a new home for many former Pasok supporters. Yet its leader, Alexis Tsipras, offers no plausible alternative to austerity. Instead he calls for a new Marshall plan – something entirely out of his hands – and hopes Greece can become the catalyst for a social revolution across Europe, ignoring the fact that even leftwing voters in creditor nations have little wish to lend Greece more.

On the right, there is real nastiness in the shape of the neo-Nazi Golden Dawn: along with the usual Holocaust denial, torchlit parades and straight-arm salutes, the party’s contributions include soup kitchens for “real Greeks” and attacks on migrants and street traders of the wrong skin colour. Now, without a serious programme to confront the crisis, the party’s leaders are reviving the polarising rhetoric of a civil war most Greeks thought had been banished for good.

Extreme right wing parties have not fared well in Europe in recent years and there is no reason to think this one will do much better in the long run. But that is not the point: the continued growth of Golden Dawn – recent polls putting it at 12 per cent probably underplay the real figure – is a marker of a very disturbing social disintegration. A new violence is emerging on the streets and in daily life.

Can the old two-party system transform itself and the Greek state, or will it collapse and usher in the extremists, the demagogues and a kind of anarchy? The prospects are dim. The fragile coalition that governs in Athens is squeezed between the troika’s politically indifferent negotiators and an increasingly restive public. The former wants it to show its commitment to cuts and structural reform. But the latter also has its demands, chiefly that the politicians, even though they are drawn from the old ruling class, show they have the will to punish their own and atone for their past ways.

It is a tall order. The continuing trial of a former Pasok defence minister and the announcement of corruption investigations into leading figures from both main parties will not be enough to allay public anger: it is hard to imagine what would. With the US presidential elections coming up in November and the German polls the following spring, the international community is likely to opt for muddling through for the next six or more months.

Whether this government can last that long is a moot point. But if it falls, then in at least one EU country the fundamental achievement of postwar integration – the relegation of the continent’s violent past to history – will be thrown into doubt.

The writer’s latest book is ‘Governing the World: the History of an Idea’

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