Europe’s at­tack on Greek democ­racy

Financial Mirror (Cyprus) - - FRONT PAGE -

The ris­ing crescendo of bick­er­ing and ac­ri­mony within Europe might seem to out­siders to be the in­evitable re­sult of the bit­ter endgame play­ing out be­tween Greece and its cred­i­tors. In fact, Euro­pean lead­ers are fi­nally be­gin­ning to re­veal the true na­ture of the on­go­ing debt dis­pute, and the an­swer is not pleas­ant: it is about power and democ­racy much more than money and eco­nom­ics.

Of course, the eco­nom­ics be­hind the pro­gramme that the “troika” (the Euro­pean Com­mis­sion, the Euro­pean Cen­tral Bank, and the In­ter­na­tional Mon­e­tary Fund) foisted on Greece five years ago has been abysmal, re­sult­ing in a 25% de­cline in the coun­try’s GDP. I can think of no de­pres­sion, ever, that has been so de­lib­er­ate and had such cat­a­strophic con­se­quences: Greece’s rate of youth un­em­ploy­ment, for ex­am­ple, now ex­ceeds 60%.

It is star­tling that the troika has re­fused to ac­cept re­spon­si­bil­ity for any of this or ad­mit how bad its fore­casts and mod­els have been. But what is even more sur­pris­ing is that Europe’s lead­ers have not even The troika is de­mand­ing that Greece achieve a pri­mary bud­get sur­plus (ex­clud­ing in­ter­est pay­ments) of 3.5% of GDP by 2018.

Econ­o­mists around the world have con­demned that tar­get as puni­tive, be­cause aim­ing for it will in­evitably re­sult in a deeper down­turn. In­deed, even if Greece’s debt is re­struc­tured be­yond any­thing imag­in­able, the coun­try will re­main in de­pres­sion if vot­ers there com­mit to the troika’s tar­get in the snap ref­er­en­dum to be held this week­end.

In terms of trans­form­ing a large pri­mary deficit into a sur­plus, few coun­tries have ac­com­plished any­thing like what the Greeks have achieved in the last five years. And, though the cost in terms of hu­man suf­fer­ing has been ex­tremely high, the Greek gov­ern­ment’s re­cent pro­pos­als went a long way to­ward meet­ing its cred­i­tors’ de­mands.

We should be clear: al­most none of the huge amount of money loaned to Greece has ac­tu­ally gone there. It has gone to pay out pri­vate-sec­tor cred­i­tors – in­clud­ing Ger­man and French banks. Greece has got­ten but a pit­tance, but it has paid a high price to pre­serve these coun­tries’ bank­ing sys­tems. The IMF and the other “of­fi­cial” cred­i­tors do not need the money that is be­ing de­manded. Un­der a busi­ness-as-usual sce­nario, the money re­ceived would most likely just be lent out again to Greece.

But, again, it’s not about the money. It’s about us­ing “dead­lines” to force Greece to knuckle un­der, and to ac­cept the un­ac­cept­able – not only aus­ter­ity mea­sures, but other re­gres­sive and puni­tive poli­cies.

But why would Europe do this? Why are Euro­pean Union lead­ers re­sist­ing the ref­er­en­dum and re­fus­ing even to ex­tend by a few days the June 30 dead­line for Greece’s next pay­ment to the IMF? about democ­racy?

In Jan­uary, Greece’s cit­i­zens voted for a gov­ern­ment com­mit­ted to end­ing aus­ter­ity. If the gov­ern­ment were sim­ply ful­fill­ing its cam­paign prom­ises, it would al­ready have re­jected the pro­posal. But it wanted to give Greeks a chance to weigh in on this is­sue, so crit­i­cal for their coun­try’s fu­ture well­be­ing.

That con­cern for pop­u­lar le­git­i­macy is in­com­pat­i­ble with the pol­i­tics of the eu­ro­zone, which was never a very demo­cratic pro­ject. Most of its mem­bers’ gov­ern­ments did not seek their peo­ple’s ap­proval to turn over their mon­e­tary sovereignty to the ECB. When Swe­den’s did, Swedes said no. They un­der­stood that un­em­ploy­ment would rise if the coun­try’s mon­e­tary pol­icy were set by a cen­tral bank that fo­cused sin­gle-mind­edly on in­fla­tion (and also that there would be in­suf­fi­cient at­ten­tion to fi­nan­cial sta­bil­ity). The econ­omy would suf­fer, be­cause the eco­nomic model un­der­ly­ing the eu­ro­zone was pred­i­cated on power re­la­tion­ships that dis­ad­van­taged

Isn’t Europe

all work­ers.

And, sure enough, what we are see­ing now, 16 years af­ter the eu­ro­zone in­sti­tu­tion­alised those re­la­tion­ships, is the an­tithe­sis of democ­racy: Many Euro­pean lead­ers want to see the end of Prime Min­is­ter Alexis Tsipras’s left­ist gov­ern­ment. Af­ter all, it is ex­tremely in­con­ve­nient to have in Greece a gov­ern­ment that is so op­posed to the types of poli­cies that have done so much to in­crease in­equal­ity in so many ad­vanced coun­tries, and that is so com­mit­ted to curb­ing the un­bri­dled power of wealth. They seem to be­lieve that they can even­tu­ally bring down the Greek gov­ern­ment by bul­ly­ing it into ac­cept­ing an agree­ment that con­tra­venes its man­date.

It is hard to ad­vise Greeks how to vote on July 5. Nei­ther al­ter­na­tive – ap­proval or rejection of the troika’s terms – will be easy, and both carry huge risks. A ‘yes’ vote would mean de­pres­sion al­most with­out end. Per­haps a de­pleted coun­try – one that has sold off all of its as­sets, and whose bright young peo­ple have em­i­grated – might get debt for­give­ness; per­haps, hav­ing shriv­eled into a mid­dle-in­come econ­omy, Greece might be able to get as­sis­tance from the World Bank. All of this might hap­pen in the next decade, or per­haps in the decade af­ter that.

By con­trast, a ‘no’ vote would at least open the pos­si­bil­ity that Greece, with its strong demo­cratic tra­di­tion, might grasp its des­tiny in its own hands. Greeks might gain the op­por­tu­nity to shape a fu­ture that, though per­haps not as pros­per­ous as the past, is far more hope­ful than the un­con­scionable tor­ture of the present.

I know how I would vote.

Newspapers in English

Newspapers from Cyprus

© PressReader. All rights reserved.