Alphen, Netherlands. 26
January. Mahatma Gandhi once said, “Freedom is not worth having if it does not
include the freedom to make mistakes”. Europeans
have made a lot of mistakes these twenty-years past. The victory of Alexis Tsipras and Syriza (Coalition of the Radical left)
in yesterday’s Greek elections will reverberate far beyond Ekklesia where European democracy was born. Indeed, Syriza poses a challenge not just to
Greece’s place in ‘Europe’ but to the entire European order. As such Europe is a facing a series of power
struggles no less important than the Peloponnesian Wars that decided the
balance of power across the Adriatic in the fifth century BC.
Power struggle one will
concern who pays. It will essentially be a struggle between the Northern and
Western European taxpayers and savers of the eight or member-states that pay for
the EU and much of Southern Europe. With
the Greek economy having shrunk by 20% since 2009 and with 25% of the
population unemployed the frustration of the Greek people with austerity is
understandable. These past six years
have indeed robbed Greeks of both “hope” and “dignity”, as Tsipras has
said. Tsipras also says that he will
seek a 50% cut in Greek debt, re-employ large numbers of civil servants (in
what was once an appallingly bloated public sector), raise salaries and pensions
and offer free electricity. In other ‘worlds’,
Tsipras intends to pile on debt and return to the bad-old days when as a Dutch
taxpayer I had to fund Greeks via spiralling, growth-killing Dutch debt.
Power struggle two will
be about who is in charge. This will concern primarily (but not exclusively) the
relationship between Chancellor Merkel, the Germans and the Greeks. Both the Greek Left and Right shamelessly
painted their greatest benefactor – the German people - as Nazis for insisting
on cuts and reforms in return for large injections of German money. This was outrageous and unfair. Yes, Germany
had to bear some responsibility for Greek debt.
Indeed, if the Euro helped to lower the cost of borrowing for Greeks it
also offset the cost of German production. Taken together low borrowing costs
and low productions costs fuelled export-led German growth for almost a decade.
However, implicit in the
German view of ‘austerity’ is simply the belief that a state must live within
its means and generate economic growth via an efficient and competitive economy. That is why last week at German behest 80% of
the risk of Mario Draghi’s massive €1.1 trillion of quantitative easing bonds will
be borne by national central banks. This
is not without political irony. The Euro-evangelising Germans are indicating
they will not accept debt mutualisation and thus a move towards a European
super-welfare-state. The Greeks on the
other had are betting that there will be such a move, that their debt will
become someone else’s problem and their vision for the EU is precisely a
European super-welfare-state in which they are forever drawing welfare.
Power struggle three
will concern the importance of ‘rules’ in the EU. It will concern primarily the relationship
between EU citizens, member-states, and distant Brussels and Frankfurt-based EU
institutions. In the absence of
political union, monetary union was established on a set of principle, rules
and practices enshrined in the Stability and Growth Pact. Sadly, the French and
the Germans were the first to break the key rule that fixed the debt-to-GDP
ratios. By so doing they established a
precedent for rule-breaking whenever politically-convenient that has ripped credibility
from the heart of the single currency rendering the Euro what markets term a ‘soft’
currency.
With the Syriza victory Europe is about to
witness a game of chicken for the future of Europe and it will start next
month. Greece must repay €6.7bn to the
IMF and ECB at the end of February if the next tranche of my money (Emergency Bail-out)
is to be triggered. If Syriza defaults on the debt Greek banks
could soon collapse and the country go bankrupt. A stand-off is clearly in the offing as German
lawmakers are this morning threatening to block the money.
The key issue will be
the nature and extent of the inevitable compromise. Will the so-called (and much hated) Troika
really ensure Greece continues with reforms within the bounds of the so-called ‘Framework’? Or, will the Framework be abandoned thus in
effect opening the door to full debt mutualisation? Of course, whatever happens Brussels
propaganda will present the latter as the former but the truth will out.
Like many Europeans I
am willing to make sacrifices for Greece because I have no wish to see fellow
Europeans suffer. However, if I make such sacrifices I want to see Athens
making the necessary reforms so that Greece and other Southern European can face
the same reality I must in the competitive world of the twenty-first century.
And yet I see no such reforms and instead I am continually lectured about the
need for ‘European solidarity’ as the EU becomes ever more a mutual
impoverishment pact and drags me and my family down with it.
Perhaps the safest
thing for Greece to do now is to exit the Euro, return to a devalued Drachma (with all the necessary social
support from the rest of us), recover and reform. That would, of course, pose another challenge
to Brussels. What is Greece were to do
far better outside the Eurozone than within it?
In any case, to caricature
Odysseus - beware Greeks seeking gifts!
Julian Lindley-French
